In this exclusive interview, General Director of the Astana-based Kazakh Institute of Oil and Gas (known by its Russian acronym KING) Dastan Kozhabekov discusses the challenges the oil industry faces and the opportunities the current situation offers.
In late September, the 10th KazEnergy Eurasian Forum “New Energy Horizons: Prospects of Cooperation and Investment” will bring together oil and gas industry professionals from Kazakhstan and many other countries. It is apparent that the industry is going through some turbulent times right now. The world has to face oil prices volatility and demand and supply fluctuations. Several countries devaluated their local currencies. All of that builds uncertainty and increases risks for the energy sector. What lies ahead for the Kazakh oil and gas industry and why is it important to have an event like this at such a time? Is this a “feast in time of plague?”
It surely is not a “feast in time of plague!” When are we going to have a better moment to get together and reassess what is going on, if not now? This will be a great opportunity to collectively brainstorm how the industry reacts to the new challenges and how we convert the “race for barrels” of the last couple of decades into the “race for efficiency.” This is a unique platform to set up the dialogue between industry professionals and other stakeholders, such as national companies, relevant ministries and other state institutions.
Now we live in times of all kind of divergent forecasts for the future. Some are crying blue murder and some are overestimating how much the crisis is an opportunity. Here at KING we are staying neither pessimistic nor overly optimistic. It is important to evaluate the situation realistically and act accordingly. Yes, there is crisis. Yes, it demands internal changes in the way we do things, but it is obvious that the oil and gas industry will handle it and hopefully come out of it stronger. This is what we are working for.
So you are saying that the oil industry profession will stay in demand no matter what. How about the growing popularity of electric cars all over the world?
Not only electric cars can be mentioned here. The world is on the verge of a lot of technological breakthroughs. Some trends do seem to have a potential to influence the traditional energy industry. Quantum energy storage units’ emergence has a chance of transforming the energy balance in the world by restructuring the oil consumption. Nuclear energy is another area of promising advances. Further development of fast breeder reactors capable of accumulating fissile elements and using high density nitride uranium-plutonium fuel can change the landscape of energy sources.
However, nowadays these technologies are just shaping up; there is not enough computing power and other tools. Lack of the right algorithms is the other side of the problem. At the same time, oil has found so many applications in our life, not only as a fossil fuel source but as a source of a huge number of petrochemical products. So, I am quite confident that the profession will be around for many years to come. But we should all understand that the “oilman of tomorrow” is a very different kind of a professional who is very advanced with IT technologies. Digital oilfield systems, wireless sensors which not only collect the information but also process it in real time and other information technology applications are becoming more and more of an everyday reality in the Kazakh oil and gas industry. KING is staying on top of this trend; we are transforming what a conventional design engineer’s workplace used to be. Applying cloud computing to design activities, using parametric modelling and BIM-technologies allow us to stay up-to-date and keep the quality at a very high level.
Is this crisis a threat or an opportunity? We feel like in terms of the diversification of the local Kazakh economy it is definitely an opportunity. Finally, the oil companies have to really think of how to lower the costs and how to structure the expenditure. “The race for the fast revenues” has to become “The race for efficiency,” like we said already. Never before has the need to increase capitalisation and save been so important. But you need to save right and stay smart about the potential threats for your production processes. How do you achieve that? It can be achieved if the technical solutions are provided by people with a skill set combining technical and managerial competence. So, the demand for these competent companies such as KING is increasing under these conditions. We can offer solutions which can help optimise both capital expenditure and operational costs. The clients nowadays are in much need of economically-sound technical solutions and quality engineering is in high demand.
Nonetheless, KazMunayGas has sold KING’s shares…
The shares were sold as part of the privatisation plan of Samruk Kazyna. We are looking at this the way that privatisation proves that our company has great potential. The investors apparently agree with us and they see the future in this business as well. And we see another objective confirmation that we are competent and popular and that is, of course, a positive sign for us. It is important to realise that the value of KING is not the buildings or design software packages; it is in the brainpower of our staff, people who ultimately generate that value for our shareholders. The fact that the company was acquired for a decent amount of money proves that KING is valuable in terms of its team, its know-how and its competence and knowledge of the market.
Does that mean that engineers should not be afraid to become unemployed?
When we talk about how KING’s team is valuable, we need to realise that we are not only talking about the technical competence of the engineering team. It is also managerial competence which leads the company to success. When the strategy of where the company needs to be going is defined, it is very important for its successful implementation that the organisational chart is aligned with this direction and allows achieving strategic goals.
This is why when I became the General Director, building an efficient managing team was my top priority. I am proud to talk about that because I am no less confident in the top professional level of KING’s management than in the qualification of our experienced engineers. But what is the managerial competence? It is the grand total of knowledge, experience and leadership of the people in charge. Leadership is a very important quality of a good manager – to be able to inspire people and lead by example. This is the type of people we have here at KING, because special attention was paid to these quality combinations when the team was being built. We managed to combine previous outside-of-the-energy sector experience (banking sector, logistics, finances, private business, etc.) with the deep understanding of oil and gas industry amongst our top management. We are well balanced with experienced staff members whose expertise roots back to the early ages of the Kazakh oil industry and young energetic IT and engineering professionals who give us an edge in that “smart” oil and gas industry of the future we talked about. So this synergy of the experience and youth allows us to be optimistic about our future.
Do you have your own recipe of how to develop those leadership traits and not get rusty as a professional?
The recipe is one and only. Work hard and work a lot. Stay open and transparent; try to constantly learn new things, continue to grow and try to pay attention to as much detail as possible about your trade. Gather the best professionals around you and allow them to do their job and they will help you develop as well. When I was studying for my MBA at Massachusetts Institute of Technology (MIT), I had some class mates who were 56 years old! While studying in the U.S., I observed the formula which seemed to work great there – every six years you have to go through an education course. This will not only boost your career, but also develop your brain muscle and help to not get rusty.
On a side note, I am now working on a panel of judges for the Innovation Man contest; the winner will be selected at the final stage during the KazEnergy Youth Forum. You should see how many talented, motivated, young and energetic guys take part in that event! I genuinely like participating in such activities because the energy and the optimism there are very contagious. When you see these motivated youth full of spirit and when you understand what they are capable of, you realise that tomorrow these young people will live in a totally different world which they will change themselves. And all that is taking into account that the oil and gas industry is and has always been very conservative. I actually sit on similar committees, scientific and technical boards, award panels and so on quite often. And when you get such exposure it is obvious that the ideas are there, the understanding of the modern world, in all its complexity, is there and Kazakhstan innovators have a lot to offer.
What do you think motivates these guys to go in for science? How do you make the youth more involved in the world of R&D?
The government can play a part in motivating the young guys to pursue a career in science or R&D or engineering. The mechanisms of science and industry synergy should be created and developed by the state, because unfortunately the industry does not formulate the problems for scientists now. There is a gap between what the industry needs and what the R&D researchers work on. A challenging task motivates the scientist more than anything else just by itself. Of course, the state and the companies at their level have to create the conditions for this kind of people to realise their potential. The tasks have to be formulated, the international cooperation channels need to be built and both financial and non-financial incentives have to be developed. The people who pursue a scientific career and plan to receive a long education have to be properly compensated through generous grants and allowances. This would allow them to concentrate on their research activities and not be distracted. On the other hand, this would automatically cut off the people just trying to make their resume look good.
In one of his lectures a few years ago, President Nursultan Nazarbayev mentioned the quote from Winston Churchill, who said in 1943 that “the empires of the future are the empires of the mind.” Today, when we create a chance for these young guys, when we give them a platform for growth like the KazEnergy Youth Forum, Innovation Man contest or Tech Garden Cup, when we give them career opportunities within engineering or any other companies for that matter, we are building our own future with our own hands – the empire of the mind of the future Kazakhstan.
The Kazakh Institute of Oil and Gas
Joint Stock Company “Kazakh Institute of Oil and Gas” (KING) is one of the largest engineering companies in Kazakhstan. It has a great deal of experience, providing various design services and delivering integrated scientific and engineering support for the projects in oil and gas and electric power industries.
The company possesses all the necessary licenses for implementing engineering projects, including the 1st category State License.
Among its clients and partners are the largest and the most respected national and international companies which are running the most advanced projects in oil and gas and energy sectors. The offices of KING are located in Astana, Almaty and Aktau cities. The subsidiary company – JSC NIPI “Caspimunaigas” in Atyrau – is one of the oldest design and engineering institutes in the Republic of Kazakhstan. This company celebrates 75th anniversary in 2015 and has contributed to almost every large oil and gas project in Kazakhstan throughout the time.
The personnel of KING group is comprised of more than 800 professionals, including more than 500 highly-qualified and experienced engineers.
KING is an active member of a large number of industrial associations such as the National Chamber of Entrepreneurs “Atameken”, “KAZENERGY” Association, Association of the Service Companies of Kazakhstan, Union of Engineering Companies, Kazakhstan Association of Energy Auditors and others.
Dastan Kozhabekov, 49, graduated from the Almaty Institute of Architecture and Construction, Industrial and Civil Construction Department with a degree in construction engineering. He received his MBA degree (Innovation and Global Leadership Program) from the Massachusetts Institute of Technology (MIT, Boston, USA). He also completed internships at Georgetown University (Washington, USA) and Cambridge University (UK), as well as at Enbridge (Canada).
He started his career as a design engineer, and since 1997 worked in a number of top level management positions at NC KazakhOil, KazTransOil, KazPetroMac, and KING. He was appointed General Director of KING in April 2014.