Why Ukrnafta is getting younger

The first half of this year turned out to be quite successful for Ukraine’s largest oil company, Ukrnafta. Its progress report for this period shows that both management and personnel chose the right way to increase output efficiency and carry out their plans; the company is functioning in a focused and balanced manner.

During the first six months of this year the company produced 1,581,600 tons of oil and condensate, 84,300 thousand tons (5.6%) more than the first half of the previous year (1,397,300 tons), and 52,100 tons (3.4%) more than the target (1,529,500 tons). There was also an increment registered in Ukrnafta’s gas sector: 1,679.4 million cu m extracted in the first six months of this year-121.4 cu m (7.8%) more than during the same period last year, and 91.6 million cu m (5.8%) more than the scheduled 1,587.8 million cu m. Twenty bore holes (14 oil and 6 gas ones) were drilled to achieve these results, and the boring scale reached 658,000 meters.

Ukrnafta also made a significant contribution to supplying Ukraine’s population with fuel. The company’s press center announced that its processing enterprises have produced 80,400 tons of liquefied gas and 1,161,000 tons of light fractions. In implementing the vertical integration concept, Ukrnafta is consistently expanding its network of filling stations. Today Ukrnafta has 523 filling stations in practically every region of Ukraine; another 20 will soon be opened.

Mykhailo HNYP, Ukrnafta’s deputy head and technical director (known as senior engineer in Soviet times), told The Day that Ukrnafta’s revenues are secured primarily by the company’s emphasis on accumulating fresh reserves by using the latest technology. He referred to bore hole no. 510, where a horizontal drilling technique was used, producing a debit of 150-160 tons of oil every 24 hours. This is Ukrnafta’s second bore hole of this kind. Although there were some problems with the first one, the company acquired experience and showed good results at no. 510. Organizational and technological measures were developed together with scientists, which permitted the company to increase extraction. This is a transition to richer horizons. As far as gas is concerned, the technical director named bore hole no. 27 near Hoholeve, a village in Poltava oblast. In the past it yielded between 15,000 and 20,000 cu m ? every 24 hours. Today the output has increased by about 10 times.

Hnyp says that upgrading technological discipline has considerably boosted company revenues. Also, working in summer is better and easier. Oil workers, especially drilling personnel, work in difficult conditions. They have to work outdoors in snow and rain, often knee- deep in water and liquid clay. They also have to stick to a rigid schedule and cope with all kinds of problems related to gas condensate fields.

Today all the bore holes are functioning normally. “We deliberately reduced the extraction rate a bit, so we won’t have such good results this month in order to have some reserves,” Hnyp admits candidly. “This month we confronted a serious problem at the Poltava Oil and Gas Extraction Administration. We had to close the oil field because the development license didn’t belong to us. We were working there under an agreement on joint investment activity. This means a reduction of 180,000 cu m of gas and approximately 30 tons of oil per day. Until the government figures out the problem, which is now in the judicial phase, as they say, this problem will continue. Someone had his license taken away; another one didn’t get a license, while we do not have the right to work. If we do, we will be fined. The good news is that it’s summer, not winter, because this gas field supplied gas to adjacent populated areas.”

When our conversation turns to state-allocated prospecting areas, Hnyp again emphasizes existing problems: “If we have reliable companies like Ukrnafta, Ukrhazvydobuvannia, and Chornomornaftohaz, which keep supplying oil and gas and have accumulated a great deal of professional experience, finance, resources, personnel — companies that have something to work with — then why shouldn’t the state give them licenses, without all this red tape? But then a firm appears out of the blue with nothing but hard cash, and it gets a license. Then there is a big risk that this company will use the license the wrong way. That’s the problem.”

Ukrnafta’s technical director believes that the state has to revise the official approaches to the division of state-financed prospected oilfields. These must be assessed by means of normal procedures; then the development and equipment program submitted by interested companies has to be looked at. “Whoever has the best program should then pay for the geological work and pay the government back its costs plus revenue, and then he can start operating under state control,” says this expert. So far, he says, the situation has yet to be sorted out, as one court hands down judgment only to be struck down by another, and there is no end to this practice.

Hnyp believes, however, that these hardships will not halt the company’s development. Owing to its effective management, this company has the opportunity to fully implement all the resources it has accumulated over the years of operating on the market, including its cadre potential. He recently returned from the second conference of young Ukrnafta specialists. It was held at a research institute in Ivano-Frankivsk and aimed at increasing young specialists’ creative potential. There are 229 young people on the company’s payroll, including 196 with college or university degrees and 33 with a basic or secondary specialized education.

These people have excellent prospects in the company. The management abides by the principle that paving the way for young people is not only a moral obligation but also an economic necessity. Ukrnafta has a policy of building its young staffers’ careers. Many of them are given key posts and placed on a special list for leading engineering and managerial promotions. On-the-job training plays a positive role in the process of accelerated professional adjustment, upgrading, and revealing young specialists’ potential. This training lasts one to two years and is implemented through individual training programs supervised by veteran company experts.

During the conference in Ivano-Frankivsk, it was decided to help young specialists take part in conferences, exhibits, workshop seminars, and refresher courses on all levels in order to raise their professional level, help them during their postgraduate courses, provide them with adequate conditions, and dispense with formalism in young specialists’ councils at enterprises. Transforming them into an active tool of influence on young people is a way to organize the viable activities of young specialists engaged in production.

Before long there will be a significant increase in the numbers of young staffers at Ukrnafta. The conference announced that Ukrnafta’s demand for graduates of Ivano-Frankivsk National Oil and Gas Technical University and other Ukrainian schools of higher education would be increased to 95 in 2007, 100 in 2008, and 105 in subsequent years. Special ceremonies to initiate young specialists are planned in every structural unit of the company.

At the end of the conference, several of the best young company specialists were noted for the excellence of their submitted projects: Oleh Nikulin (drilling section), Ruslan Zabolotny (geology and oil-and-gas prospecting), Vasyl Sarakhman (oil and gas preparation, oil-and-gas field equipment section), Dmytro Smahulov and Taras Matviyishyn (oil and gas extraction section). As Hnyp told The Day, all the projects submitted by the young specialists will be considered by the technical council. He predicts that many of these projects will be introduced into production.

Of course, working with young people is not limited to the company’s specialists. A lot of attention is focused on physical education and sports, as The Day learned from Ivan Mahun, first deputy chairman of Ukrnafta’s human resources division, and Ihor Sadiv, head of personnel. Both of them enlarged on the recent sports competition in Alushta in which more than 250 athletes from all the company’s structural units and central office took part. The Okhtyrka, Dolynske, and Chernihiv oil-producing districts placed first.

Sadovy says that every year Ukrnafta sends 2,500 children of its employees to summer camps. Accommodation vouchers are given to their parents in accordance with a collective agreement, at 10 percent (80-100 hryvnias) of their actual cost. Naturally, employees of child-rearing age remain with the company, whose ranks expand every year.

There is no problem of an aging workforce here. In 2001 the average age of the company’s employees was 41.4. Now it is down to 39.4 years. In other words, Ukrnafta is getting younger. The reasons are obvious: regular raises, good prospects in terms of professional growth, and the company’s care for the social development of all its employees.