When you enter Moscow from the south a crystal-shaped building will definitely draw your attention in Sevastopolsky Prospect. Its facets stress the accuracy and endurance of the construction and of the company it personifies. The building houses the headquarters of the International ITERA Groups of Companies. The information about the company contains several intriguing data. How did the independent company find a place on the gas and oil market which is dominated by oil majors and gas giants? How did a professional sportsman manage to join the business and occupy a leading place in it? And what does ITERA mean – an abbreviation or neologism and in which language? Why does the ground floor of the office stun visitors with a red race car of legendary Schumacher? Chairman of the Board of Directors of the Oil and Gas Company ITERA Igor Makarov answers the questions of VIP-Premier.
Igor V. Makarov is the Chairman of the Board of Directors of ITERA Oil and Gas Company. Born in 1962 in Ashkhabad he graduated in 1983 from the Turkmen State University and served in the army. He was member of the Soviet national cycling team, champion and medal-winner of numerous pan-Soviet and international competitions. He is a Master of Sports of the international class. In late 1980s he switched to business and launched a small production and sales of ready-made products. Since 1992 he has been heading the ITERA Company. Awarded with state decorations of Belarus, Mongolia, Turkmenistan, as well as of the Russian Orthodox Church, and the honorary sign Akinfi Nikitich Demidov of the International Demidov Fund.
HISTORY INTERWEAVES WITH BIOGRAPHY
– Mr. Makarov, what did your company begin with and why does it have specifically strong business relations with Turkmenistan and Belarus?
– To put it bluntly, I was not planning to go to business. My future plans were linked to the cycling sport, as I have a degree of master of sports of the international level, won numerous competitions and participated in the Olympics. Besides, I have a corresponding higher education. But when the Soviet Union began to collapse I decided to switch to a new business and since late 1980s have passed all business career stages from small-scale production and sales of ready-made products to the leadership of a multi-core business organization. I began my business carrier in Turkmenistan where I was born. My mother was sent to work there after a devastating earthquake in Ashkhabad. I am well-known in the republic also due to my sport career. I feel their good attitude to me that emerged in the past years and has preserved till now.
When we were creating the company we had to choose a name. One of my partners proposed to use the “iteration” mathematical term as the basis, which means a repetition of an operation based on the result of a previous similar operation. It resembles cycling when you rotate treadles. Thus the ITERA name appeared.
In 1994 Turkmen President Saparmurad Niyazov unexpectedly proposed to me at a meeting: “Igor, you are supplying numerous food products to us, so take gas! Our partners have problems with payments.” At that time Ukraine and TransCaucasian republics did not pay Turkmenistan for gas. Only 27 percent of gas supplies were paid for in cash, while the rest were barter deals, i.e. payments were made with TV sets, refrigerators and even rubber boots. We defined exchange lines and designed mutual settlement schemes. As a result, relations expanded.
After that Russia displayed interest in us. Rem Vyakhirev who headed Gazprom at the time once said: “You have earned a lot on Turkmen gas, now you have to invest here.” At that time close to 180 companies possessed gas field licenses, but did nothing to develop them. We bought out several licenses and began to work. In 1998 when crisis was raging in Russia we remitted payments worth 580 million dollars. Those were our first investments into the creation of our own resource base. We were the first independent company to produce gas in Russia. In two years we produced close to 10 billion cubic meters of gas. We launched commercial production at nine gas fields all by ourselves or in cooperation with partners. ITERA did not participate in any privatization and I am proud of that. In 2001 ITERA occupied the third place in the world by the volume of gas supplies and sales. However the situation radically changed after that. We lost 87 percent of business. To preserve the company we expanded the range of its activities.
The changing geography of our relations also helped. By the way, my father came from Cossacks in Kuban and I am a Belarussian by my mother’s origin. We have established close cooperation with Belarus. ITERA began to actively promote international contacts and developed into an international group of companies. Today we unite over 156 companies operating in over 20 countries of the world. In the United States we are the only Russian-based company that produces gas in Texas and Illinois. We are preparing to develop shelf in the Turkmen-owned sector of the Caspian Sea.
ITERA AND MODERNIZATON
– Does ITERA plan to specifically focus on a concrete activity?
– We are already progressing along the path. A major German technology project to process gas is being implemented in Nizhni Tagil. The first stage targets methanol production, then acetic acid will follow crowned by the production of plastics, consumer goods and many other things. Only our own raw materials will be used. In Bratsk we have a difficult field with a major content of helium, which is the energy of the XXI century. There is a lot of helium at other East Siberian fields as well. It is in the interests of the state to develop it.
There is one difficult circumstance in the economic modernization drive. Natural gas is relative cheap in Russia. Therefore, the low price does not encourage consumers to modernize outdated production and invest into the introduction of energy-saving technologies. Increased gas prices would promote modernization of production facilities and processes and would ensure a technological breakthrough. I understand it is an unpopular measure, which has numerous opponents. But if everything remains as it is Russian producers will finally and hopelessly fall behind foreign competitors.
BROAD PARTNERSHIP HELPS FIGHT CRISIS
– Which problems does your company encounter in gas production, transportation and sales? How do you cooperate with Gazprom? What is your vision of recovery from the crisis?
– There is only one problem, as not all the customers want and can fully and timely pay for the consumed gas. Each medal has two sides: gas debts create a shortage of funds to invest into gas production and infrastructure development without which it is impossible to satisfy the growing needs in energy carriers.
We maintain good business relations with Gazprom. ITERA is a strategic partner of the company. We jointly manage Purgaz Company, cooperate in Irkutsk region, and implement gas projects in the Baltics. As Gazprom governs the whole gas transportation network in Russia, our company like all independent gas producers agrees with it all the actions in transportation of hydrocarbons.
ITERA as an independent gas producer has to constantly progress, search for optimal decisions to resolve emerging problems, and design a constructive development strategy. It is not an easy task, but we cannot imagine any other one.
– Which foreign partners do you cooperate with?
– I have already said about Turkmenistan and Belarus. I have a very specific and reverent feeling to the countries. In Turkmenistan, besides the development of the 21st bloc on the Caspian shelf, ITERA is completing the construction of a gas pipeline in Central Karakum and is engaged in various construction projects: a horse race course and a hotel complex in Avaza spa zone. In the capital of Belarus we are erecting a unique Minsk-City complex and a business center with the Parus (Sail) multi-storey residential house. ITERA is a stockholder of national gas companies of Latvia and Estonia and manages their operations jointly with Gazprom and other stakeholders.
– How did the global economic crisis affect ITERA?
– As for the crisis, it did not affect ITERA directly, but did it indirectly through our customers. As a result, gas sales decreased last year and the planned profit fell correspondingly. Today the Russian economy is recovering from the crisis judging by the growth in gas consumption. In the first two months of the year ITERA sold more gas than in the same period of the previous year.
SPORT IN PERSONAL AND PUBLIC LIFE
– How does ITERA participate in the social policy of the state and implement the tasks of the socially-oriented economic course?
– The most vivid example of ITERA’s participation in state-private partnership and its social contribution is offered by Sverdlovsk region. Our company has been supplying gas to the region since 1999 to all categories of consumers. Gas is sold at state-fixed prices to budget-financed organizations and the population. Simultaneously ITERA actively participates in the gas supply program of Sverdlovsk region by building gas pipelines and modernizing municipal boiler plants. We also implement social, cultural, and charity projects in the region.
– What is the Katyusha project implemented in cycling sport with your participation? As the name is female, does it mean women’s teams will be involved?
– The professional Katyusha cycling team was created in 2008 according to a decision of the Board of Guardians of the Russian Cycling Federation. We are closely cooperating with the Russian Technologies State Corporation and its Director General Sergei Chemezov who enjoys unique abilities to implement major projects. The Board of Guardians received major support from Gazprom CEO Alexei Miller who has recently become first deputy chairman of the Board, i.e. of Sergei Chemezov. The Katyusha project aims to give a major impulse to cycling sport development in Russia and lay a solid foundation for future victories at upcoming Olympic Games, world championships, prestigious world cycling tours, and most important – to get Russian youth involved in the sport as much as possible. Besides, we have created ITERA-Katyusha continental and youth teams. Last year the professional Katyusha team won a worthy place among world cycling leaders. From the technical point of view our team is already the best in the world. We are proud that our athletes have everything necessary for high results. In future we plan to create a female team of the same class. You saw the race car of Schumacher in the lobby of our office. He presented his car to us as a sign of support to our sport programs and as a symbol of dynamic and permanent movement ahead.
– What does sport and cycling, in particular, mean for you today? Has sport or cycling become a corporate attraction for your colleagues in ITERA?
– Sport played a major role in my life, specifically in the personality build-up. It formed my character and taught me how to work systemically. It gave me a chance to see the world and feel the taste of victory at pan-Soviet and international events. I continue to regularly train with my friends at Krylatskoe cycling track. Each September we hold a traditional cycling race there in the framework of ITERA Spartakiad that involves both our company employees and world cycling stars. It is a very spectacular and exciting event which participants and supporters are looking forward to. It is a tradition that the winners of the cycling race donate the prize money to the fund for assistance to children with various diseases.
– What do you believe we have to do in the framework of Sochi Olympics to restore the glorious sport image of the country
–It is necessary to revive the old system when thousands of boys and girls could come into sports, grow and achieve success there. We have ruined the system which the United States and China have borrowed to train their athletes. We have to revive mass sports, which is impossible without state support. The business community has also to contribute. I believe we will draw conclusions from the Vancouver Olympics and will turn the defeat into a victory springboard. There are all possibilities for that. They have to be implemented and our company will contribute to that.
By Yevgeny KOSOV and Valentin ALEXANDROV