In love with the sky

Vladimir Yegorov

Interview with Vladimir Yegorov, General Director, CJSC Gazprom Neft Aero

Gazprom Magazine

— Mr Yegorov, What sort of a year was 2010 for the industry?

— Overall 2010 was the year when we overcame the crisis. Passenger traffic grew to 57 million people (up by 26.2% compared to 2009), and we shipped over a million tonnes of cargo; that is to say, all indicators have improved significantly. 9.1 million tonnes of jet fuel was produced in Russia (6% more than 2009), of which Gazprom Neft was responsible for producing 2.1 million (an increase of 7%).

— And for your business?

— For us even 2009 wasn’t a bad year; performance indicators grew, we increased our market share and ranked first in aerial refuelling. Last year, in an already booming market, work was very comfortable. We sold some 2.35 million tonnes of jet fuel, with nearly 400 thousand tonnes purchased from third parties. Retail has developed very well, with over a million tonnes of fuel sold. In the retail segment we took 17.6% of the Russian market. But we don’t intend to stop moving forward.

By the way, when we talk this way about numbers we all too often forget about the people behind them, which is why I would like to say a few words about our team. If the staff at Gazprom Neft Aero did not love their work, then we would achieve nothing, there would be no progress at all. I am very pleased to say that our company employs people who are in love with the sky. Moreover, our team is still growing; in the space of a year our number of employees grew from 600 to 1500.

Geography of Deliveries

— And how is the construction and reconstruction of refuelling complexes going?

— We recently completed the renovation of the refuelling complex in Novosibirsk. Now it is the best equipped, state-of-the-art complex, not only in Russia, but in the entire CIS, and is fully compliant with Russian and international requirements. In addition, construction of a new complex at Sheremetyevo is underway; we plan to start refuelling aircraft there by the end of the first half of 2012.

— Which airlines use your services?

— There are many. It will suffice to name our key partners: Transaero, Aeroflot, S7 and Globus, UTair, STC Rossiya, Volga-Dnepr and Orenburg Airlines.

— You also provide services to Russian aircraft overseas. How has the geography of refuelling changed?

— We are constantly expanding it. By the end of 2010 we had provided fuel to Russian aircraft in 18 overseas airports. The volume of aviation fuel sold abroad has increased more than eightfold. We currently refuel Russian craft in Cyprus, Thailand, Turkey, China, India, Sweden, Norway, Singapore, Jordan, Tunisia and Egypt. In 2011 we plan to increase the number of airports to 30.

— Was your business affected by the upheavals in Tunisia and Egypt?

— No.

— In which countries do you carry out bulk deliveries?

— In Kazakhstan, Tajikistan, Mongolia, Afghanistan and Kyrgyzstan. By the way, we have registered a subsidiary company, Gazprom Neft Aero Kyrgyzstan. As of April this year the company operates at Manas International Airport in Bishkek. We are in the process of upgrading local refuelling capacities, and we hope that, within a year, they will meet all international standards.

In addition, during 2010 we integrated the aviation fuel business of Gazprom Neft’s Serbian affiliate company NIS. We are currently paying a lot of attention to the Balkan region, as there are some very promising markets focused there. However, successful competition depends on NIS increasing its volume of production. I consider this a matter for the near future.

Significant Events

— Returning to the domestic market, what do you say to the claims made by the Antimonopoly Service at the beginning of 2011?

— The FAS’ questions have arisen in connection with an alleged reduction in jet fuel deliveries to the Russian market. However, speaking only about our company, there have been no such reductions. On the contrary, in order to meet increased demand from the Moscow transport hub, we have purchased fuel from third-party suppliers and even borrowed from the State Reserves. It was a very significant step, but please note that by now we have returned everything we borrowed from the Reserves. Absolutely all obligations to supply aviation fuel under existing contracts and agreements were fully met.

By the way, in February an executive order was published stating that Gazprom Neft Aero was to be the sole supplier of jet fuel and provider of refuelling services to the Russian Armed Forces. This had been in the works for a year and a half. We are talking about 12 airports spread across all federal districts. We plan to send out around 20 units of refuelling equipment. We are utilising the modular laboratories built for us in Samara in order to control fuel quality, and are upgrading the local refuelling capacity.

— And when will you start refuelling?

— We have already started, on May 10.

— What other significant events have happened for you this year?

— In May Gazprom Neft Aero entered the ranks of the Association of Civil Aviation Airports, which includes over 300 companies. Both Russian producers and their counterparts in the CIS and the West are represented here. As a first step we have restored the work of the Committee for Aviation Fuel and Lubricants. Yury Shashkov, the General Director of Gazprom Neft Aero Novosibirsk, was elected head of the committee.

— What advantages does membership in the Association bring?

— The opportunity to exchange views with colleagues, participate in the drafting of legislation and, as a collective, propose changes in regulations. After all, what was accepted in 1967 does not necessarily meet the needs of 2011.

— What are the long-term plans of Gazprom Neft Aero?

— Our long-term scheme is called 5-3-100. In other words, by 2020 we plan to increase the annual sales volume of kerosene to 5 million tonnes, of which 3 million tonnes will be sold wingtip, and increase the number of airports where we operate to 100. At the moment we’re about halfway there, operating in 41 airports.

In addition, we are moving over to long-term contracts with a pricing formula. Under our strategic partnership agreement with Transaero we signed a formulaic contract to supply jet fuel for two years. The planned volume of fuel to be supplied to Transaero by Gazprom Neft Aero during that period is over 1 million tonnes.