Going with the flow

Weatherford International Ltd is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. The company operates in over 100 countries and employs around 46,000 people worldwide.

eProduction Solutions, Weatherford’s production optimisation business unit, has been operating in Great Yarmouth for more than seven years.  Excellent design, engineering and manufacturing skills have enabled Weatherford to offer an attractive range of production optimisation systems. These include subsea well control, flow metering and reservoir monitoring, all of which help increase production, reduce operating costs, minimise well failures and increase efficiencies in the field.
“Our strength lies in the technical design of our control panels,” says a spokesperson at eProduction solutions.  “The control panel is critical for managing all aspects of a drill, from making vital decisions with real-time data to avoiding emergencies such as emissions of hydrocarbons from a well head. It all results in a more efficient field operation.”

Securing more business

In early 2005, one of Weatherford’s clients, BP, had great success in the Caspian basin, an area rich in oil and gas deposits. On the back of this success, Weatherford secured several contracts worth hundreds of thousands of pounds, to provide BP with wellhead control systems.

It soon became clear that Russia was opening up as a potential growth market and Weatherford joined a UK Trade & Investment trade mission to Russia in 2005, to gain additional contacts in the region. At that time the production optimisation group had no Russian presence, although Weatherford had a small Russian operation of around 2,000 employees.  “During the mission, UK Trade & Investment introduced us to Kosmo-Neft-Gaz, a Russian oil equipment company,” says the spokesperson. “Kosmo had come to the UK with UK Trade & Investment on an inward mission in 2005 and was already looking for suitable trading partners.  After our initial discussions at the mission we kept in close contact with Kosmo and after some negotiations, in August 2007 we signed a joint venture agreement which allowed us to expand our product optimisation business into that region.”

Closing the deal

The joint venture is a specific manufacturing and technology agreement, producing well and automation control panels for one client, Russian company Gazprom. Gazprom is one of the world’s largest extractors of natural gas. Under the terms of the agreement, Kosmos-Neft-Gaz and Weatherford’s Great Yarmouth production optimisation facility jointly design, engineer and manufacture a wide variety of control systems used in the exploration and production of gas.

The control panels will be used in all areas of the production optimisation process, in the form of single and multi wellheads controls, artificial lift systems, safety shutdown systems and complex subsea systems.

“This deal is worth in the region of £3 million, which is huge for us,” says the spokesperson. “The joint venture provides us with new avenues to pursue, local expertise and a local sales channel so that we can grow our production optimisation business more rapidly. We are so grateful to UK Trade & Investment for setting up the initial meeting, and allowing us to follow it through to such a successful end.”

The future

In the last year, Weatherford has already started to reap the rewards of the joint venture. Most of the assembly and manufacturing is done on Russian soil, avoiding red tape and other legislation concerning imports, which may otherwise have been a barrier to trade. Manufacturing by the joint venture company also complies with regional technical standards, known as GOST, assuring customers that the products are tested in accordance with Russian standards.

“There’s no substitute for having a local presence when you are trying to get established in a new region,” says the spokesperson. “Our joint venture partner allows us to access new customers, and to deal with all the nuances of local business that we would otherwise take years to learn. We’re really excited about the prospects for our company in Russia and the surrounding area.”

The UK - Russia

Russia is the UK's 16th largest export market, with historically strong performance in the field of engineering, financial services, ICT, power and energy and sports and leisure infrastructure. Over the past few years, trade between Russia and the UK has increased significantly. In 2007, UK exports to Russia reached an all time high of £2.8 billion, an increase of 36 per cent on 2006 figures.  

Russia has not been immune to the global economic crisis and, in line with other high growth markets, forecasts for economic growth are down. However, despite this, Russia's fundamentals remain strong in the medium to long term even if growth does dip. Russia's massive potential will be enhanced further if Russia pushes through a range of institutional and economic reforms necessary to complete the transition to a stable, rules-based economy. Russia is therefore designated as one of the UK Trade & Investment's High Growth Markets.

Fast facts
Company:    Weatherford International Ltd
Country:        UK
Industry:        Oil and Gas
Website:        www.weatherford.com