The most important outcome from the new law? Pro-active business engagement in the standardisation process

Nikolai Karpov

Interview with Nikolai Karpov, Head of Operational Improvement, Refining, Gazprom Neft

Sibirskaya Neft (Siberian Oil) magazine

It has long been established that standardisation is fundamental to a properly organised economic process; something that applies to the entire chain, from production management to final output — which, in the case of the oil industry, means producing end-products to strictly determined standards. Last year saw a very significant event for Russia’s national standardisation system, the operation and development of which will now be regulated under a specific Federal Law, No. 162-FA “On Standardisation in the Russian Federation.” Sibirskaya Neft heard directly from Nikolai Karpov, Head of Operational Improvement, Refining, Gazprom Neft, on the likely changes for business following adoption of this legislation.

— How was this area regulated prior to the Federal Law on Standardisation coming into force?

— There was one single law covering technical regulation, which also covered standardisation. But standardisation involves a separate, very complex and serious layer of questions — and on that basis, standardisation was found, in practice, to be a second-tier element. On one level, ultimately, it led to the development of the country’s standardisation system per se. In terms of technical regulation, standardisation has been separated out at the legislative level.

— What is the reason for such specialisation?

— Like any other piece of legislation, Federal Law No. 162-FZ is intended to dot the "i"s and cross the "t"s in an orderly manner. In which, objectively, there were more than a few gaps. The most important stated objective was to set out a single, cohesive policy on standardisation. And among those objectives intended to be resolved through this law, legislators cite: improving the standard of work in this area; product quality; creating the necessary environment to promote the export of goods meeting global demand; and proper resources management. How far reality will match expectations, of course, remains to be seen.

— The law is a fundamental piece of legislation; what do you expect, in terms of business development for Gazprom Neft, following its adoption?

— Obviously, we view all of these changes in terms of our own business — the production of oil products. Of course, everything is produced under GOST standards and pursuant to existing regulation, so for us it is extremely important to understand what changes will impact one standard or another, why this has been done, and whether our products can meet the necessary requirements. And the most important thing, in this context, arising from the new law, is proactive business engagement in the standardisation process.

— In what way? And that’s not happening now?

— Of course, we participate in the discussion of new regulation. We collect feedback from plants, outline our opinion, develop a response — and then just get back information to the effect that our comments have been accepted or rejected. Without any explanation as to the reasons for this, without any feedback, and without any commentary from legislators. The new law will reactivate — and, in large part, reanimate — the work of the Technical Committees on Standards which, in their time, were set up to develop regulation on standardisation, with the engagement of all interested parties. It is precisely through these Technical Committees that we can take part in discussing standards, put forward questions and, most importantly, get answers. Three specialists from our Refining Directorate are currently directly involved in the work of what is, for us, the most important specialist Technical Committee — Technical Committee 023 “Equipment and Technology in Oil and Gas Production, Refining and Processing” — now Intergovernmental Technical Committee 523. Moreover, our interest in a certain regulation seeing light would mean we will support such process.

— What exactly does that sort of support involve, and who was doing this previously?

— Developing a standard involves research, expertise. Companies in Europe spend tens of millions of Euros on this every year. We have a level of financing that might be described as “one ruble per document”. Money used to come, to a large extent, from the Federal budget. Which is, by the way, entirely understandable: why would business invest money in a system predominantly serving the state? That’s the way it was prior to the adoption of the law. But business is willing to take part in developing standards that give it a distinct advantage, that allow it to use the best practices contained in these documents. Those principles underpinning the work of the technical committees are defined in law, and take business interests into account.

— What other aspects of the company’s activities are impacted by the changes introduced under the Federal Law on Standardisation?

— The standardisation system itself is currently undergoing radical change; every area of activity is subject to technical regulations begin developed by the European Commission. Work is coming to completion on Russian GOST standards — which will now be adopted not as GOST-R Russian National Standards but as intergovernmental standards, enforceable worldwide by members of the Technical Committees. All of these countries fall within our sphere of interest, and are changing the rules of the game, on the domestic market too. Apart from which, we can now use existing international standards, including in developing the company’s own standards for internal business processes — on which basis national standards can, where necessary, subsequently be developed.

—What business processes are we talking about here?

— This year we are beginning a major initiative on outlining and standardising transversal business processes at corporate headquarters and refineries, to a high level of detail — right down to the level of specific individual executives. If we are able to establish an effective, workable management system, a standard for a single business process, then why not come forward with an initiative at the Technical Committee and disseminate our experience throughout the refining sector per se?

—What needs to be done in establishing such a standard?

— A good deal. For example, we recently dealt with the records (document) management system throughout our enterprises. It turned out, the old ministerial instruction is no longer valid, and no new standard exists. So there’s a serious gap in an area that is very important for refineries — the process of inputting accounts, logbooks, records of directives and memoranda, quality control reports, and so on. So we’re going to take the plunge and resolve the problem. This, incidentally, is important not just for specific departments within the company: standardisation of business processes is a job for all Directorates and Divisions.

—Has the company had any specific successes in standardisation? That is, anything currently being applied that is delivering a profit for the company?

— Yes. At Gazprom Neft’s initiative a new national standard — GOST R 55475-2013 “Winter diesel and Arctic Deparaffinizated (dewaxed) fuel” — has been developed and introduced. This has allowed us to iron out difficulties in the production and sale of winter diesel produced at our upgraded hydrotreatment facilities (which are equipped with dewaxing units). This technology allows us to produce high-quality fuels, as well as optimising the work of the production complex, making it more flexible.

Another important project has been our involvement in developing the automated Neftecontrol oil and oil-products metering system. Implementation of this pilot project within Gazprom Neft was directed at securing accurate and timely information on the production and movement of oil and oil products throughout the company’s production facilities. The outcomes of this project now form key documents underpinning the company’s standardisation system.

—Are there any issues in this area currently that you plan to address in the near future?

— There are always issues like this. For example, we’re modernising GOST 10227, governing the quality of aviation fuel. We received a request from the All-Russia Scientific Research Institute for Oil Refining and the Ministry of Energy to assess those changes arising from adapting this standard for the Customs Union. We didn’t present a range of different positions, but, rather, forwarded our proposals for developing the standard — although we’ve yet to receive any feedback.

Added to which, one shouldn’t forget the role standardisation has to play in the process of import substitution. In fact, business, in developing requirements for essential equipment, and making these binding under Russian regulation, while not applying them to imports, creates an incentive for the domestic oil sector’s machine-building and engineering industry to develop. And the new Law on Standardisation, incidentally, specifically promotes this — which wasn’t previously the case. So the situation vis-à-vis standardisation again proves the rule: that the best outcomes can only be achieved through partnership between government and business. Without that sort of partnership it’s difficult to resolve current issues in economic development, particularly in such complex times as we have now.

The new GOST standard for winter diesel

A new standard for winter and Arctic diesel fuel — GOST R 55475 — 2013 came into force on I July 2014, initiated by specialists from Gazprom Neft. Pursuant to the standard in force until 2013, the selection of hydrocarbon fractions for winter diesel fuel had to be undertaken at temperatures no higher than 340°C. Such fuel was obtained through straight-run distillation process. Today, however, a more effective means of producing winter and Arctic diesel fuels has been developed — through catalytic deparaffinisation. In this case, the upper temperature for distillation of diesel fuels will be the same as that for summer fuels: 360°C. This is a clear disparity with the GOST standard and became the means by which a new standard, covering all technological capabilities in oil refining, was developed. GOST R 55475 — 2013 “Winter diesel and Arctic De-paraffinisated fuel” was developed at the All-Russia Scientific Research Institute for Oil Refining in the space of two years. That standard, and the winter diesel produced through the appropriate technology, were subject to an approval process involving the most important automobile-engine producers — KamAZ and the Yaroslavl Motor Plant.