No. 3, 2004

Alexander Arzamastsev


JSC LUKOIL-Komi attaches major significance to the social aspects of its activities

In 2004, the Republic of Komi is celebrating the anniversaries of two wonderful events at the same time: in August, the Republic's oil industry will be 75 years old, and in September, it will be five years since LUKOIL acquired the assets of KomiTEK and started up active operations in the region.

A contradictory legacy

In order to understand what five years of working within the LUKOIL group has given the Komi oilmen, we need to take a look back into the recent past and assess what LUKOIL inherited and the level from which its operations took off.

At the end of the 1990s, the romance of the Komsomol construction projects was replaced by the harsh reality of new economic relations under the most difficult conditions of transition to a market economy. The new, capitalist owners of the Usinsk oil fields at that time had one extremely negative feature in common - the get-rich-quick mentality of the time-serving businessman. The inexperienced masters of the oil fields did not look far into the future, did even not try to invest funds in production, to say nothing of the social sphere. Their very simple "economic strategy" was to squeeze as much oil as possible out of the fields, at any price and as quickly as possible, in order to make maximum profits.

Until LUKOIL came into the region, the state of most oil production companies was quite deplorable - wear and tear of the fixed production assets was between 60 and 100%; drilling crews were dismissed, since no drilling was done any more; 600 of the 893 km of the on-site roadways were in dire need of repair; the debt built up over several years by the previous owners toward the budgets at all levels reached 1,218 mln. rubles.

The main thing, however, was that the uncivilized market relations rolled on, mercilessly crushing people who had devoted many years to developing the Timan-Pechora oil- and gas-bearing province. By the fall of 1999, about 2,500 people were either standing idle or on indefinite leave, receiving miserly allowances. Several thousand workers (an absolutely enormous figure for a town like Usinsk, with a population of only 50,000!) were simply discharched, deprived of any salary and any means of subsistence. A multitude of diverse pickets, meetings, strikes and road blocks at the fields brought no results. Skilled workers left everything behind, sold their apartments and left Usinsk, which was turning into a ghost-town before the people's very eyes.

LUKOIL's takeover

When LUKOIL came to the Republic of Komi, the oilmen received, above all, long-awaited jobs, and, at the same time, quite reasonable wages. In 1997-1998, the average monthly pay in Komineft was 2,500 rubles, while a few months later, after joining the country's leading oil company, it was 9,000-11,000 rubles. Today, the workers' wages have more than quadrupled. Every year an indexation of wages is carried out, taking into account the rise in consumer prices and inflation.

Social payments, benefits and compensations amount to about 3,000 rubles per person per year. Over 285 mln. rubles a year are spent just on complying with laws granting benefits to people living in the northern areas.

Also quite importantly, the Company takes care not only of the workers' material well-being, but also their health. For example, medical checks of LUKOIL-Komi personnel have been carried out for cardiovascular and oncological diseases. The Usinsk city hospital has 7 comfortable new wards for treating oilmen. The introduction of a system of voluntary medical insurance has given the company's employees an opportunity to undergo the necessary checks and to receive treatment of the very highest standard. Such policies are already held by over 6,000 workers, for which purpose 35 mln. rubles were allocated in 2003 alone. Every worker is insured against industrial accidents. Every year, LUKOIL-Komi pays for over a thousand workers and members of their families to go to sanatoria and rest homes in Sochi, Kirov and Ukhta to restore their health, and almost a thousand children of oilmen every year spend their holidays at health resorts in the Crimea.

Nor are veteran oilmen forgotten: today, about 7,000 people are provided with financial aid. In 2002, LUKOIL-Komi introduced a system of private pension schemes and about 2,500 people now receive supplementary LUKOIL pensions.

These and other spheres of the Company's social policy are specified in the collective bargaining agreement adopted every second year. This is a sort of constitution, laying down the minimum standards for social protection of the workers and allowing only for improvement and strengthening. This is confirmed by the fact that, every year, the value of the collective bargaining agreement rises by an average of 15-20%. So the Usinsk oilmen have left the irreconcilable conflict between employers and employees behind them (though there were many trials en route) in favor of normal social partnership.

Focus on intergeneration links

"The worst thing that happened in 1997-1998," Felix Gelman, LUKOIL-Komi Deputy general director for public relations, recounts, "something that we feel to this very day, was the loss of continuity between generations of oilmen, the breakdown of temporal links. Experienced old-timers got as far away as possible from the excesses of Usinsk, while the young people, even those who received a good oil education, found that they were not needed here."

Today, LUKOIL-Komi is pursuing a targeted youth policy in an attempt to fill this generation gap. There are over a hundred young experts, graduates of various specialized higher education establishments all over the country, working in the Company. Recent graduates usually lack, above all, practical experience, knowledge of each link in the complex technological chain of oil production and transportation. For this reason, having come to LUKOIL-Komi, they spend the first 12-18 months mastering all the necessary work skills, under the guidance of an experienced mentor (this constitutes a real link between the generations), learning to work in a team and understand people. Each young expert tries to show what he or she is capable of; each of them has their own individual program for career advancement. They all enjoy the attention of their direct superiors and of the top managers of LUKOIL-Komi, who, every year, review the newcomers' reports and their suggestions for improving work.

According to Yulia Filippova, a young specialist at booster pump station 7 at the Vozeyskoye field, after graduating in 2002 from the Ukhta State Technological University, specializing in oil and gas field development and operation, she had to take a sort of "beginner's training course" actually in the field. Yulia recalls working as an oil and gas production operator and an agent injection operator, after which she was actually taken on as a trainee at the pump station. This was more than just a thorough acquaintanceship with the various jobs and processes; it was mainly the science of communication with people and understanding of their needs. This is essential for a future manager and it is now almost a year since Yulia has been a technologist, entitled to hold engineering positions. Next will come the most interesting part, according to Yulia. Every young expert works in the Company according to a special program. After a year they present their reports to the management: what they approved of and what did not while working in a production unit, and how processes and work organization in the company could be improved. At the annual meeting of General Director Vladimir Mulyak and his deputies with the young experts, these reports are reviewed and the future career of the recent graduate depends on the results of the review.

Within LUKOIL-Komi, there is an active Young Experts Council, which holds regular competitions of their various projects. Of special significance is the young people's social program, thanks to which, for example, several families have recently moved into comfortable new apartments (housing being an extremely acute problem in Usinsk). All these aspects of the company's youth policy, Felix Gelman believes, create a visible image of its future, giving every oil worker confidence in the morrow. Without this, there could be no healthy climate in the work team or corporate values of real significance for both beginners and veterans.

In real earnest and for long

The Usinsk oilmen realize that they find themselves under the real conditions of a market economy. Not by words but daily deeds do they prove the importance to them of the state of the environment in which they live and work and the invisible ties linking them to this place - linking them, moreover, not for a couple of years, as their time-serving predecessors believed, but in real earnest and for long, probably, forever. It is, of course, the oil companies that provide the lion's share of tax revenues into the budgets of many northern cities and towns. But LUKOIL has gone even further: cooperation agreements have been signed with many municipal authorities under which LUKOIL-Komi helps schools, healthcare and culture institutions, engages in improvements to and building of housing and other social facilities. Fulfillment of these agreements costs the Company a tidy sum, but they mean more than just financial cooperation with the regions. The joint efforts to improve one's native parts help strengthen human contacts, create a healthy and sympathetic climate of mutual understanding. The best illustration of this is provided by the fact that, over the last two years, there has been a sharp rise in the birth rate in Usinsk.

One of the main future sights of Usinsk will undoubtedly be the Russian Orthodox Cathedral of the Holy Spirit, currently being built with LUKOIL-Komi funds. It is already clear that many regional and republican centers might envy the scale of this construction. In answer to the question as to why Usinsk, a small town even by northern standards, with a population of only 50,000, needs a second cathedral people say that in Russia churches are not built by order, but are raised where there is a real spiritual need for them, where people themselves want them. After all, LUKOIL knows that people are its greatest asset.

This is just one example of the many charitable projects the oil company is implementing in the Republic of Komi, projects that affect all the main spheres of the people's lives. The Company's employees actively help schools, healthcare, culture and sports institutions, engage in improving and building housing and social facilities of importance to the Northerners. According to the traditions of LUKOIL Saturday workdays, Company employees participate in redevelopment of their town, refurbishing its streets, laying out new squares, planting trees and flowers. The Director of the Usinsk House of Culture, Alexander Sholokhov, supported by probably all the people of Usinsk, believes that the precise social orientation of LUKOIL's activities brings light and joy to the image of the town, making the people's lives more interesting and worthwhile.

All articles
Oil of Russia, No. 3, 2004
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