Have visa, will travel

My cable TV has been out of action for the past five months, despite the cable company sending people round on no less than five occasions to fix it.  Last time they sent a trio of gormless looking men around, one of whom carried all his necessary tools in a carrier bag, and another who stunk to high heaven.  Sure enough, they left without managing to fix the problem.  I also have a problem with receiving normal terrestrial TV, in that the picture is always terrible no matter how many gormless, smelly men turn up to do something about it.

So as it was I missed the big match last night, and Paul Scholes’ wondergoal which has put Manchester United into the Champions League final against either Liverpool or Chelsea.  Now Man Utd’s win has set up an all-English final, which will be held in Moscow on May 21st.  I do not know what the ticket allocations are, but I assume there is a set number for each team’s supporters and probably a portion which can be bought locally.  Holding the final in Moscow was always going to present serious visa problems for travelling fans, but now it looks as though the problem will be doubled.  Rather than having the fans travelling from two countries and applying through two embassies for their visas, now the Russian embassy in London is going to have to process upwards of 40,000 visas in 3 weeks.  I have no idea how they are going to manage this, short of either waiving the requirements for anyone holding a ticket, or rapidly bringing in extra staff who can cope with the workload.  I can’t see them doing either of these.

Which makes me wonder if there are going to be several thousand very disappointed English football fans left holding useless tickets come 21st May.  Tickets are on sale on the internet now, for a whopping £1,400 and upwards.  I will be monitoring this situation very closely, because I am a Man Utd fan without a ticket, but in possession of a visa and with a place to stay in Moscow.  These two might prove to be harder to get than a ticket after a couple of weeks, and I’m hoping maybe I can pick up a spare one somewhere along the way.

Nizhnekamsk Nel’zya

I have had to postpone my trip to Nizhnekamsk, for a reason which is most typically Russian.  Apparently, Nizhnekamsk is a closed city, although I had no difficulty getting in or out or wandering around when I was there four years ago.  This means that there is a law requiring any foreigner staying at a hotel in the city to have an invitation letter from the company they will be visiting, or so our travel agent in Yuzhno-Sakhalinsk told us.  So I told them not to assume I am there on business, that I am on vacation.  After much whirring of tiny brains, our travel agent made some enquiries.  Apparently, they will know I am not on vacation because I have a work visa.  Well yes, I said.  That’s because I live and work in Sakhalin.  But can I not go on vacation to Nizhnekamsk?  Of course, our travel agent here could not find enough initiative amongst the whole lot of them to find this out of their own accord, it took several phone calles back and forth before they said that it is illegal for anyone on a work visa to stay in a hotel in Nizhnekamsk without an invitation letter from a company.  If I was on a tourist or business visa, apparently it would be okay.

Personally, I think our travel agent here is telling porkies in order to avoid doing any work or thinking.  They love the easy stuff like flogging tickets from Sakhalin to Moscow, but ask them to help you with anything slightly complicated and you get the usual and repetitive “not possible” response familiar to anyone who’s been in Russia more than five minutes.  The company I am visiting has for some reason struggled to get me this letter, but the travel girl there said she’d spoken to the hotel and said it would be okay if I said I was on vacation.  But I seem to remember me not being allowed to stay in a hotel last time I was there (on a business visa), so I don’t know what to believe.  I’d guess it would be okay if I just turned up, but we would be getting there at half past midnight, and if I couldn’t get a room I would be in the shit.  Nizhnekamsk might have undergone some improvements in recent years, but it’s not a place I’d want to sleep rough.  And arriving at that time means I wouldn’t even be able to get myself an apartment to stay in like I did last time, so I’m pulling the plug on the whole trip until I can get a proper invitation and a hotel booking.

The thing which baffles me the most is why Nizhnekamsk would be a closed city.  The travel agent, almost certainly talking nonsense, said it was because of military installations nearby, but Nizhnekamsk is hardly in a strategic location and Sakhalin, which is one giant military base in a genuinely strategic location, has no such restrictions.  They have a huge chemical plant there, but the one in Angarsk was three times the size and that didn’t stop foreigners checking into hotels there because of it.  The only thing I can think of is that they have an enormous factory there making poor quality tyres for distribution and use across the entire country, and the FSB are concerned that a sneaky foreigner might run off with a Kamaz tyre or two and sell the technology to one of Russia’s many enemies.

What a shambles.

The Language of Compromise

This made me chuckle:

Gazprom is “a bit disappointed” by protracted talks with BP’s Russian venture, TNK-BP, about taking a controlling stake in the Kovykta gas field, the Russian gas giant’s deputy chief executive Alexander Medvedev said today.

“The ministry of resources can call the licence back if conditions are not executed. The ball is not in our court. We are a little bit disappointed,” Reuters quoted Medvedev as telling a briefing.

The ball is not in Gazprom’s court, but if “conditions are not executed”, i.e. TNK-BP doesn’t sell them a controlling stake, then Gazprom will ensure the ministry of resources shuts them down.

There was a time when Russians used to deliver speeches – Khruschev was good at them – as if nobody was around to hear them. It looks as though those times have returned. Either they really don’t give a damn what the world thinks about property rights in Russia, or there were some meaty slaps to foreheads partway through Medvedev’s briefing.

Russian mega-projects: are the plans realistic?

Continuing on from the post two below this one, I should emphasise that the $2.6 trillion required by Gazprom and Rosneft is only that amount needed to develop Russia’s offshore fields. The onshore developments will need separate funding, as this article in Upstream Online tells us:

Russia’s Gazprom Neft is planning to more than double its oil output by 2020 through a series of buy-ups, the oil arm of gas giant Gazprom said in a strategy document released today.

Gazprom Neft, which produced around 43 million tonnes of oil last year, flat on 2006, has been fighting declining production since its former owner, billionaire Roman Abramovich, sold the company, then called Sibneft, to the gas giant in 2005, a Reuters report said.

I’ll intervene here to say that Abramovich seems to have made a pretty smart move in flogging off a load of declining oilfields for top dollar. He would have had to invest in them himself to keep up production rates, instead he’s just offloaded them onto Gazprom and walked away with the cash. Nice! Anyway, I digress:

Gazprom Neft, which expects Gazprom to hand over the right to develop all of Gazprom’s 11 oilfields within the next two to three years, has said it plans to invest up to $4 billion per year to 2020, or around $50 billion, to boost output.


West Siberia will remain a key region for the company and East Siberia and the northern Nenets region will also be developed.

$4bn per year is one hell of a lot of money for a single company to invest in oil and gas projects, if not much beside the $62bn per year that they say they are going to have to come up with to develop the offshore fields.

To put this in perspective, consider the Sakhalin II project, the largest integrated oil and gas project in the world (by cost), involving Russia’s first offshore platforms and first LNG facility. Put simply, the Sakhalin II project involves the installation and upgrading of an ancient platform they hauled out of some inlet in Canada just to get some sort of production going, followed by the construction and installation of two brand-new modern offshore platforms, an onshore processing facility, two 800km pipelines running in parallel, and a combined LNG plant and oil export terminal. For a more detailed, but still brief overview, go here. Anyway, this project was originally budgetted at $10bn, but the costs have slipped slightly and it’s now looking at coming in at $20bn. The major expenditure on this project has been in the last 4 years during the construction and installation of all these pipelines, facilties, etc., a phase which is due to be complete by the beginning of 2009. So for argument’s sake, and these numbers are rough, let’s take the expenditure as being $16bn over 4 years, which is $4bn per year.

In other words, Gazprom Neft – and this is just the oil arm of Gazprom, not the entire company – thinks it is going to be running projects of the magnitude of the Sakhalin II project from now until 2020, or possibly lots of smaller projects combining to the same value. And this is what is causing me to wonder where these figures are coming from and what they are based on.

Firstly, as the Sakhalin II project has shown, cost and schedule overruns on projects in Russia are serious. There are many reasons why the Sakhalin II project found itself overspent and behind schedule to such a degree, several of which are through the actions of the Russian government. Constantly changing visa laws, dubious customs clearance procedures, Russian content requirements, a restrictive labour code, and selectively applied environmental regulations all combined to add enormous costs to the initial estimates. Some of these obstacles might be removed should a mega-project be run by a state-owned company such as Gazprom or Rosneft, but this is doubtful. Anyone who has worked for a nationalised company in the Middle East will tell you that working on behalf of a government company does not make negotiating the maze of other government departments any easier. It took the government-owned Kuwait Oil Company more than four months to get me a permanent security pass from the state oilfield security police to allow me onto the Burgan oilfield, where I was working daily on a ten month project. The environmental barriers might be pushed aside on a Gazprom project, but I can’t see the customs authorities being any more generous, by which I mean forgoing their unofficial cut, out of solidarity with another state-owned enterprise.

Also important is the fact that the Sakhalin II project overspent and overran partly because of Shell’s failure to manage the project correctly, particularly in their selection of subcontractors and monitoring of progress in the early stages. Shell’s reputation for project management has taken a beating on the Sakhalin II project, and deservedly so in many respects, but it should be understood that the project has been carried out in an incredibly remote and harsh environment with no history of this kind of work being done in the country before. Any company managing this project would have faced the same difficulties Shell has done, and it is very unlikely that any company would have done a much better job. So all things considered, Shell have not made a bad fist of the job. Not too good either, but it’s not a disaster, and in ten years everyone will probably be saying what a great job it was. Production receipts tend to have that effect. Anyway, if Shell as one of the most experienced companies at executing mega-projects in harsh environments struggled more than usual on the Sakhalin II project, how exactly is Gazprom or Rosneft going to fare once they have a go? Neither company has previously undertaken a modern, technically challenging mega-project involving hundreds of subcontractors from dozens of countries, employing thousands upon thousands of people of a bewildering array of nationalities. I’m not sure either has even run a small project with one main foreign subcontractor. I’m not sure if they even have a procurement department which can prepare tender documents in English. I’m not even sure if they have a procurement department. You get my drift. So chances are, whatever calculations and estimations they have made, they are likely to increase significantly over the course of a project, especially if either company falls into the trap of allowing conflicts of interest to go unchallenged, such as the head of contracts and procurement awarding major packages of work to a subcontractor owned by none other than himself. These practices are rife across Russia, and it would be pretty optimistic to assume they won’t occur on oil and gas mega-projects run by nationalised companies.

Secondly, there is the question of who is actually going to carry out these projects, which companies and what people. It is no secret to anyone that there is a serious shortage of skilled people in the worldwide oil and gas industry at the moment, and the high oil price has rejuvinated dozens of expansion, modification, and upgrade projects as well as blown the dust off plenty of planned developments. Workers in an industry like this can afford to be fussy about which projects they join: the Sakhalin projects have lost hundreds of their Malaysian, Indonesian, and Philippino labour force as new projects come up either back in their home countries or in sunnier climes such as Australia. The Sakhalin projects have been competing heavily for skilled resources against the mega-projects in Qatar and elsewhere in the Middle East, usually without much success. For most people, Sakhalin and northern Russia is a place to go and gain some experience and save some money, and once you have a decent skillset, people tend to disappear somewhere more accommodating. Therefore, one of the hardest jobs Gazprom and Rosneft are going to have is attracting and retaining the skilled workers needed to man these projects, and to do that they are going to have to pay probably more than anywhere else. If this manpower premimum hasn’t been considered in the estimations of how much these development projects are going to cost then it should have, because for the next decade and possibly more the Russian projects are going to have to be primarily manned by foreigners.

The giant projects on Sakhalin have produced a good number of Russian workers who have, considering the few years they have been learning, developed astonishingly quickly, and will no doubt find themselves in prominent positions on future projects. But as a proportion of the available working population, which is small to being with given the country’s size and the work to be done, there numbers are way too low. It is a sad fact that in the experience of every company involved in the Sakhalin projects, if you take 10 Russians onto the job, 1 will be brilliant, 1 good, 1 average, and 7 utterly useless. We put several hundred through our training school on the island, of which a grand total of none are still with us. Admittedly we were taking on ex-soldiers and criminals from the labour departments (as we were compelled to do) and hence our recruitment pool was hopelessly poor, but the proportion of ordinary Russian men who fail to make the grade on an oil and gas project either through alcohol consumption, failure to turn up to work, or lack of self-motivation is shockingly high for a country looking to develop rapidly. Which is a shame, because as I said, there is a good core of Russians who within months became as capable and reliable as anybody else, who I know feel a bit let down by a lot of their compatriots. But even Russia cannot take these for granted, because the oil and gas industry is very much global, and if Russians can take a position on a foreign project for more money, chances are they will. So one of the enormous challenges facing Gazprom and Rosneft is how they will staff their projects, especially as they have made it increasingly difficult to bring foreigners to work in Russia, the costs for which will simply be passed on.

The other challenge they will have is to identify which companies will carry out the work, and more importantly, under what terms. As most individuals in the global oil and gas industry are fussy about which projects they can join, as are most companies. The American company Fluor, one of the largest and most experienced oil and gas project management and construction companies in the world, has an order backlog of $30bn. It is in no hurry to bid jobs low just so it can fill its order book and keep its staff employed. Technip in the Middle East a few years ago won so much work it struggled to execute it. Any company working in oil and gas that is struggling for work right now is going to be out of business altogether pretty soon. There is enough work, more than enough, for everybody. So if anybody is going to be bidding work on Russian mega-projects, they will already have seen the lessons of Sakhalin I and II, and be in no hurry to underprice them. The situation in which AgipKCO has found itself on the Kashagan project in Kazakhstan is telling:

Kashagan operator AgipKCO has set back the award of the last big first-stage contract for at least two innovative drilling barges by cancelling a long-standing tender for lump-sum offers and asking for prices based on man hours, writes Vahe Petrossian.

AgipKCO has told the two rival partnerships led by Technip and Keppel Fels, which submitted technical and commercial bids last year, that their prices are too high, a source said.

“They rejected the bids and are considering a reimbursable commercial package,” the source said.

The new requirement is based on estimates of the man hours required to complete the job, which could involve up to six of the cantilevered barges.

This would eliminate all or most of the risk factor priced in by the bidders placing the risk on the client instead. The risk factor is estimated at between one-fifth and one-quarter of the prices quoted so far by the bidders.

The value of the planned contract under a lump-sum arrangement had been estimated at more than $500 million.

Here we had two consortia (a third dropped out earlier) bidding a technically demanding scope which had never been attempted before, in a country where the government changes the laws whenever it feels like it. Unsurprisingly, the contingencies built in were collosal to the point that the operating company, AgipKCO, could not afford to award the job. So AgipKCO has now resorted to accepting reimbursable terms whereby the winning consortium gets paid for manhours and materials expended at agreed rates, instead of a lump sum for completing all works. If the job overruns, the operating company will have to keep paying for the work to continue, an approach which doesn’t give the engineering companies the same incentive to work efficiently. On the Sakhalin II project workscopes, laws, and other circumstances changed so much that Sakahlin Energy reluctantly agreed to accept a change to reimbursable terms for some subcontractors who had fallen way behind and were facing insolvency. Bearing all this in mind, it is certain that any engineering company bidding a mega-project in Russia, especially a ground-beaking Arctic offshore project, will include either an enormous contingency and a raft of conditions in its lump sum bid, or will refuse to accept anything other than reimbursable terms. Such is the uncertainty which faces companies who venture onto Russian oilfields that they will be treading very carefully indeed.

So what does all this mean? Have the Russians taken all these factors into account when coming up with their investment figures, confident that they can pull off without a hitch for 20 years what Shell have struggled with for the past 4? They did put a man into space, after all. Nobody knows, certainly not me. But this what I think. Consider for a moment that these figures of X-billion in developments and investments have been thrown about like confetti for the past few years, but as of yet nothing has really moved forwards, and if anything large steps have been taken backwards from actually preparing the ground for the years ahead. Who can honestly say that massive investment will be easier for the Russians to get in 2008 than it was in 2005? And do the large foreign companies essential for performance of the works have any greater confidence to trust those who will be managing them now than they might have had three years ago? So far, these numbers are all theoretical.
The world is heading for an economic slowdown, and Russia has a new president in charge. So much that was certain is now less so. The Shtokman project has just started, with the main players in place and the first early works subcontracted. All eyes will be on this one, eyes eager to see past the project and into the future of the Russian oil and gas industry. One of the keenest pair will belong to me, who is guessing that these multi-billion dollar figures are been bandied about without due consideration of what they actually entail.

A Return to Nizhnekamsk

So, as a follow up to this post, I can now confirm that I will indeed be making a return to Nizhnekamsk, scene of my first ever trip to Russia four years ago.  I leave Sakhalin on Monday, spend two days in Nizhnekamsk, then come back to Sakhalin via Moscow. 

The 24-hour journey each way aside, this should be a hoot.

Gazprom and Rosneft win big, but at what cost?

Two very interesting articles on the Russian oil and gas industry appear one after another in Upstream Online, and I am not sure whether or not their juxtaposition was intentional.

The first:

Russian state-controlled giants Gazprom and Rosneft have been handed monopoly rights to all hydrocarbon developments on the Russian shelf, Natrual resources Minister Yuri Trutnev has confirmed. Trutnev’s statement – made in an interview with Moscow financial daily – comes after the upper house of parliament, the Federation Council, approved amendments to the law on foreign investments in strategic sectors, which limits foreign participation in developing Russia’s biggest oil and gas reserves. Once the amendments – which were approved by the State Duma earlier this month – are signed into law by the president, the two state-control giants will automatically be handed operatorship of any new offshore projects.

The amendments to the subsoil and offshore laws give the right to develop Russia’s offshore reserves only to those companies “which have five years’ experience in working offshore Russia and in which the state owns at least 50% interest”, he said. State-run Gazprom and Rosneft, as well as Zarubezhneft, are the only companies that meet the amendments’ requirements

….

Trutnev told the paper the two state giants will share the resources between themselves without holding auctions or tenders.

Which, for those of you who aren’t familiar with the background and terminology, is the door finally slamming shut on not only foreign energy companies playing major roles in Russia, but also any independent Russian operators not owned by the government. Foreigners and independents are now going to have to be satisfied with being a junior partner in a consortium run by Rosneft or Gazprom, i.e. the Kremlin. This will no doubt cause broad grins to appear across the faces of much of the Russian population.

The second article might not.

Russia needs 61 trillion rubles ($2.6 trillion) of investment to develop offshore oil and gas deposits, said Rosneft boss Sergei Bogdanchikov.

Exploration alone of offshore regions until 2050 will cost 16 trillion rubles and production 45 trillion rubles more, Bogdanchikov told reporters and government officials in Moscow today.

$2.6 trillion!! Ouch!! Even in oil and gas terms over the period in question ($62bn per year), that is a serious amount of money. The obvious question must be where is this investment going to come from? Gazprom, despite being rumoured to be the largest company in the world by some measure or other, is heavily in debt:

Gazprom’s total long-term borrowings, including affiliates, rose to 1.105 trillion roubles [$47.3bn] from 806 billion roubles [$34.5bn] at the end of 2006.

Net debt fell by 28% in the first half of 2007 to 578 billion roubles [$48.1bn].

Bear this in mind next time you hear about Gazprom investing in trans-saharan pipelines, Libya, and Nigeria. Despite the political rhetoric and talks of the massive potential and influence of Gazprom, it is Russia’s most indebted company.  In other words, Gazprom is unlikely to be in much of a position to be financing mega-projects any time soon, and if it is going to sink billions into places like Africa, having never run a major project on home soil let alone in a political minefield like Nigeria, Russians might be waiting a while for their offshore gas receipts.

Will Rosneft be in any better position to fund this development? They are in slightly better shape than Gazprom:

Rosneft said its net debt fell to $23.8 billion at March 31 from $26.3 billion at Dec. 31 and $27.8 billion at Sept. 30.

But having borrowed heavily to fund acquisitions, not least that of Yukos at a knock-down price, they are not in much of a position to be stumping up $2.6 trillion.

And what about the Russian government? Surely they have loads of cash, what with its stabilisation fund topping $160bn or thereabouts? Yes, but there are a few obstacles in the way of spending this money. Firstly, it is supposed to be a reserve in order to balance the federal budget during times when the oil price drops beneath $27 per barrel, and although this is unlikely and tapping into the fund could be done whilst leaving enough for a rainy day, the amount that could be withdrawn is limited. Secondly, much of this fund must be earmarked for the reforming and upgrading of Russia’s outdated institutions and crumbling infrastructure. The Russian government has wisely not tapped the stabilisation fund for this purpose yet, as Russia is already battling against inflation which is in danger of affecting Russia’s army of low-paid workers, and particularly pensioners. But expenditure in these areas will have to come eventually, and unless Russia wants state-of-the-art platforms offshore and no roads, running water, or electricity onshore, the development of the Arctic oilfields is going to have to wait. And when somebody actually does the calculations of what it will cost to bring Russia’s institutions and infrastructure up to modern standards, the cost of developing and operating the Arctic oilfields is probably going to seem like chump change.

Almost certainly, Gazprom and Rosneft, and by extension the Russian government, are going to have to borrow this money, and equally certainly they are going to have to borrow this money from the west. Those schlopping sounds you just heard like wet cloths hitting a tile floor are the broad grins of several million Russians, beaming from reading the first article, falling from their faces. Oh dear! Hasn’t the Russian government just spent the past three years telling everybody that relations with the west don’t matter?

Actually, they do. Just as we need Russian gas, they need our financial services. Take this by way of example:

Russia’s biggest oil producer Rosneft is seeking $2 billion worth of loans from Deutsche Bank and Societe Generale to refinance debt used to buy the assets of bankrupt producer Yukos, sources involved in the deal said today….

The Russian giant was forced to seek cash in the loan market after abondoning a sale of bonds in July as the collapse of US subprime mortgages caused yields to soar. The company has a deadline of 19 March to refinance $5 billion of the 12 month bridge loans used for the $22 billion acquisition of Yukos assets in May last year

….
The loans, which fall due in March and September, were arranged by ABN Amro Holding, Barclays, BNP Paribas, Calyon, Citigroup, Goldman Sachs Group, JPMorgan Chase and Morgan Stanley.

I bet not too many Russian newspapers carried the story – from January 2008 – that the primary Russian state oil producer was seeking loans and refinancing packages from western banks, as we are bang in the middle of a lengthy narrative whereby Russia has repaid all its foreign debt, has loads of oil and gas, and hence stands atop the world once again telling the US to eff off.

Actually, Rosneft and Gazprom are in a relatively common situation here. Most of the national oil companies in the Middle East have enormous reserves and massive production figures, but are loaded down with enormous debt from the days when oil was $10 per barrel, not to mention that these companies have elevated expenses due to them generally being inefficient, overstaffed, and used as a piggy-bank by the sitting government. It is not uncommon for the giant national oil companies of the Gulf States to partner up with a cash-rich western supermajor in order to provide the investment needed to develop a new project or upgrade a field.

But the major handicap that Gazprom and Rosneft face when they apply for a loan with a western financial institution or partnership with a supermajor is that their owners – the Russian government – have demonstrated that they don’t respect the contents of a signed agreement, and they feel they can do whatever they please to their contracted partner because they have the monopoly of force in the country. Having used the blunt instrument of selectively applied laws to forceably take control of major projects or entire companies from foreign investors and independent Russians alike, one would think twice, and three times, before investing money into a major Russian oil and gas project. A paragraph in the last article I quoted is telling:

Rosneft may pay interest of 0.95% more than the London interbank offered rate for a five-year loan term, a banker involved in the deal told Bloomberg. The rate is about 0.5% more than the Moscow-based company’s existing loan, added the banker.

There may be several reasons for the increased rate of interest on the loan, one of which is almost certainly a deterioration in trust – and thus an increase in risk – between the lenders and Rosneft. In working so hard to increase the levels of mistrust between themselves and, well, everybody else, the Russian government has now increased the risk attached to any inward investment.

Without a doubt, Russia will still attract inward invesment, enormous amounts of it, and much of this will be into its oil and gas sector. But this investment will come at an increased cost, be it in the form of upfront payments or reimbursable terms on major projects, higher interest rates from banks and financial institutions, or more stringent guarantees and performance criteria. At a time when Russia is going to be shopping around for $2.6 trillion of investment, it could probably have handled things better this last few years.

Atyrau Again

I’m back in Atyrau, my noisy old propellor plane having stayed up in the air just long enough to get us across the Caspian safely.  I’m staying in the same crap hotel which I was in a few days ago, but they’ve given me a slightly better room.  They’ve hoovered the carpet, and the TV now works.  Included in the selection of channels is one showing free-of-charge hardcore German porn 24 hours per day.

Now that’s what I call an improvement in service.

From Atyrau to Baku

I woke up in my undersized bed in the hotel in Atyrau a whole three hours after I went to sleep.  The state of the room hadn’t improved in that time, and switching on the TV revealed a total of four channels available, none of which had a steady picture.  There was no kettle, no bottle of water, no glass, no pen and paper, no slippers, no laundry bag, no spare pillow or blanket, nothing but a bed, table, chair, TV, and wardrobe.  The bathroom wasn’t much better.  There was no toothmug, and the soap and shampoo was provided using a plastic dispenser of the sort you find in an airport toilet, each with a crude label on telling you which was which.  This was important, as the contents looked identical.  They had a unique form of towel which allowed you to look at yourself in the mirror as you dried your face, and the shower door had the structural integrity of a shower curtain.  These standards continued throughout the hotel down to the restaurant, which was a gaudily decorated, high-ceilinged affair serving a breakfast which was bloody awful.

At 9:00am I was picked up and taken to our local office, and then at 11:00am I got in one of the company cars to get taken to the airport.  Unfortunately, on the way my driver made a minor traffic violation in the form of causing a speeding Audi to use his brakes and his horn simultaneously right in front of a gang of traffic police who were enthusiastically waving their stripey sticks about.  By the reaction of the police and the number of them involved you would have thought my poor driver had run over the president’s daughter.  One policeman pulled him over, another took his documents and handed them to a third, who then went over to a police van containing another policeman.  All of them had massive hats, and nothing spells importance in the former Soviet Union like a massive hat.  Then the policemen all stopped worrying about my driver and went to deal with the three or four other drivers who’d been pulled over, leaving him standing on the side of the road like a bollard.  Then they left all the other drivers standing about while they just wandered about with everybody’s documents in their hands.  After about 10 minutes of standing about and wandering about, another police car turned up and two uniformed men got out, and there were handshakes all round.  Then another policeman turned up from somewhere, and there was another round of handshaking.  Everyone looked at the drivers, and then the documents, then another 10 minutes passed during which nobody did anything.  Had another driver not been summoned to collect me and take me to the airport, I’d probably still be stood there now waiting for the policemen to decide to do something other than stand about and shake hands with each other.

I didn’t see a lot of Atyrau, but it looked to me like the oil towns in west Texas would have looked like in the 1930s.  The surrounding landscape is flat, sandy, and featureless, and made me glad that Sakhalin at least has hills to look at when you’re waiting for your water to come back on.

Atyrau airport was busy processing about 4 passengers when I arrived.  I didn’t even bother going into the Passenger Services office to enquire about my bag, which I had been told had been located in Moscow and would be sent to me on Friday.  I whisked through check-in and security, who had no objection to me bringing aboard a razor and a can of shaving foam, and onto the immigration counter.  The immigration officer was a woman who had misinterpretted her job description to go beyond merely checking and stamping documents to include demanding to know every movement of the person at the counter for the past month.  The poor bloke in front of me was Russian and had come into a different city in Kazakhstan, then travelled overland to Atyrau, and now wanted to go to Baku.  This seemed to present enough of a problem to the immigration officer than he had to explain why and how he is leaving from a different city from that which he came into, and when he is coming back, and where he is going once he has come back, and what he intends to buy his wife for her birthday.  I can understand immigration officers interrogating foreigners who enter their country, but why the hell they care about foreigners leaving I have no idea.  Fortunately, I had no such problems and she just scowled at me, asked me if I was getting a visa upon arrival in Baku, and let me through. 

The departure lounge in Atyrau airport boasts signs every few metres saying “Wireless Internet Zone”, so I hauled out my laptop and waited the 5 minutes for it to fire up and get to operating temperature in expectation of being able to do some surfing for an hour or so.  Sadly, when I attempted to look for available wireless networks, none was found.  I can’t say I was surprised.  The aircraft which flies you between Atyrau and Baku is operated by the well-known international airline SCAT Airways, and the plane is some Russian thing with two noisy propellors and a fuselage made partly from metal plates rivetted together.  However, once aboard I was impressed by the leg room, and even though it was as noisy as hell, it wasn’t too much to put up with for 2 hours or so.  They even served us some food consisting of a chicken that had been found squashed on the runway and some soggy cheese, which I didn’t think was too bad.  Then again, I’ll eat anything.  The service was okay too, and it goes without saying that it was better than that offered by Lufthansa, who pride themselves in not dismissing those who are rude, ignorant, and incompetent from their employ.

Entry to Baku for a Brit requires a visa, which can be bought on arrival for $100 on presentation of a completed application form and two passport photos.  For people like me who are daft enough to arrive without passport photos, there is a bloke there who can take them for you for $15 for four.  Nice work if you can get it.  Anyway, I was whisked through immigration once they were satisfied I’d stumped up the cash, and met by our company driver who took me through Baku to my hotel, which was an awful lot better than the one in Atyrau, excellent in fact.  It was some branch of the Radisson and they gave me a tenth floor view over the Caspian sea, which wasn’t much to look at but it was nice all the same. 

Baku is an odd place.  It looks and feels much more like Turkey than Russia, and a few buildings aside, it doesn’t even look as though the Russians were ever there.  The Azeri national pasttime for males seems to be the same as that in Turkey: for over 40s, buy a cheap grey suit and nasty jumper, grow a moustache, and stand about in groups outside a shop; for under 40s, buy a leather jacket, don’t shave, and talk incessantly into a mobile phone.  Almost all the signs were in the Azeri script, which is very similar to Turkish, and almost none in the Russian Cyrillic.  But everyone spoke Russian, which gave the place a strange feel.  The first thing I did was go to buy some new clothes, as the ones I had on I’d been wearing since Sakhalin, and people were starting to prod me and tell me I reeked.  I quickly found out that Baku is an incredibly expensive place to buy clothes: a t-shirt, shirt, and two pairs of boxer shorts cost me $223 from Camel Activewear.  It was better than Sakhalin though, where you’d end up paying that for a pair of pointy snakeskin shoes.  The weather in Baku was pretty good, well into the twenties during the day, and a lot warmer than it is in Russia.  Baku is full of policemen all in the same uniform (as opposed to in Russia, where every policeman seemingly designs his own), and despite the hundreds of shifty-looking blokes standing about and the narrow, dark streets, the place feels safe enough.  The policemen don’t seem to put much effort into traffic control though, and people park anywhere they feel like leading to terrible traffic jams in the city.

In the evening I decided to head out to the area of the city where the expat bars are located, and after wandering around hopelessly for a while I finally stumbled on one.  Having seen one, it later turned out that I’d seen them all.  The average age of the expat patrons was about 58, a number equal to the number of tattoos the average person had on his hands, wrists, and forearms.  These bars are like retirement homes for the oil and gas industry, and it isn’t a pretty sight.  The major players in the oil and gas industry have been bleating for years that the average age of the workers is way too high and that in a few years most of them will retire with nobody to replace them, a complaint towards which I show no sympathy whatsoever.  However, Baku was proof enough that their complaint is a real one.  I saw about three or four expats under 35 years old, and I was the youngest in most bars by about 20 years.  With all the bald heads, white hair, fading tattoos, and poor teeth, it was pretty depressing. 

Sakhalin is a lot different.  Part of the problem with the oil and gas industry is that once someone has found a nice cosy position in a nice warm place such as Abu Dhabi, Singapore, KL, or to a lesser extent Baku, they are going to make sure they hang onto it.  The warmer, sunnier oil towns are full of expats who have been there far too long and should have been turfed out years ago, but find themselves in the position of either being able to renew their own contracts or being drinking partners with those who can.  There is no way these incumbents are going to open the door to somebody of 32 years old who is prepared to work the same job at half the price and question the status quo of the four-pint lunch and the girlfriend driving the company car.  What saves Sakhalin from this fate is that it is not a place you can settle into a comfortable, cosy life very easily.  Some manage it, but I’m sure from my writings on the place you’ll get the picture that it is not like living in Dubai or Singapore.  Wading through snow to buy some rotten vegetables probably loses its appeal once you reach a certain age.  The result is that relatively few older people come to Sakhalin, and those that do tend not to stick around too long.  As a consequence, Sakhalin has become a Mecca for young people in the oil and gas industry to get themselves into a senior position which would be unthinkable in most other oil towns.  I know project managers in Sakhalin who are in their early 30s, general directors in their late 30s, senior engineers who are in their late 20s, and a well-paid piping engineer who is all of 22.  I got a general manager’s job here when I was 29, three months after I was told in my last appraisal in Dubai that I would need to do at least another 5 years before I could be relied upon to manage the writing of proposals on my own.  What I love so much about Sakhalin is that there is youth in abundance, most of whom are smart, competent, and highly ambitious.  The reason for this is because Sakhalin does not serve the wishes of those in the industry who are looking to protect their own positions, and the doors open up for the younger generation.  Captains of the oil and gas industry need to take note of this, preferably by way of reading this blog and inviting me to whizz around on a private jet giving lectures on the subject.

Baku is not so fortunate, and I found it rather depressing.  Sakhalin has by and large manage to avoid the expat bars becoming cliched sports bars full of gaudy football memorabilia, without a local or female in sight who isn’t an out-and-out prostitute.  Sakhalin bars have a good mix of locals and expats, and all but one stays well clear of putting sports memorabilia on its walls (and the one that does makes a reasonably tasteful job of it).  Baku bars, by contrast, are covered in St. George crosses, Union flags, Scottish saltires, and penants saying “Born in England, Live in England, Die in England”, which is an odd thing to put up in a Baku pub.  There is the obligatory Irish theme pub containing various paraphenalia such as authentic Irish, erm, brass diving helmets.  The only women appeared to be either the odd expat wife of an expat man, or local girls in their twenties who probably didn’t come in for the conversation.  I did have bags of fun chatting in Russian to the bar staff in each place though, and it threw them a bit to find a Brit sitting at their bar who understood most of what was being said (most bars had at least one ethnic Russian working behind it, and they all seemed to speak in Russian).  It appears Brits speaking Russian are pretty unusual in Baku, despite the huge number of expats who come through there.

So that was Baku.  This afternoon I am climbing aboard my rickety old propellor plane with the service which outshines Lufthansa’s and heading back to Atyrau, where I will be spending the next few days.  If I see anything interesting, I’ll write about it.

From Sakhalin to Atryau

I’m now in Baku, sitting on the tenth floor of a rather nice hotel overlooking the Caspian Sea.  I’ll write about my journey from Sakhalin to Atyrau in this post, and about Baku in the next.

My flight from Sakhalin to Moscow was not half as bad as I expected, for the sole reason that the seat spacing was inexplicably good.  The plane was clearly second hand, and down the sides of the seats were the remains of the meal which was served on the plane’s maiden flight, but there was ample legroom, even for a giraffe like me.  In fact, it probably had as much leg room as any other plane I’ve been on, and even though my contact at the airport arranged for me to have a spare seat beside me, I let a Russian chap sit there once he asked me nicely having found a screaming infant beside his own seat further back along the cabin.  It appears as though Transaero is making steps to becoming a fairly decent airline, and the standard of aircraft has improved massively since I first flew with them 18 months ago.  They had a nice glossy in-flight magazine with decent articles and boasting details of their fleet made up almost exclusively of Boeings, and their list of destinations was impressive for a Russian airline.  Okay, they put Atyrau a few hundred kilometres too far down the Caspian Sea and Sharjah was now in Iran, but the effort was there.  As usual, the entertainment system (consisting of a TV monitor every twenty feet along the ceiling) didn’t work, but they did come up with the novel idea of renting portable DVD players and a selection of films for $20 a go.  Once again, I have to say that the food was more than edible, and the service attitude of the staff did not conform to the stereotype of Russian airlines.  Which means that Transaero are clearly much better than Lufthansa, whose staff are the rudest, most unprofessional, useless bunch of clowns ever to have worked in a service industry.

Domodedovo airport has undergone some pretty good improvements since I first visited, and now there are ample good cafes, bars, and shops to wander around.  Unfortunately, none of the business lounges can be accessed through the Priority Pass system, and it is said that to get in by paying will set you back a few hundred dollars.  Somehow I don’t think I’d get that past the nose of my boss on an expense form.  Anyway, I checked into my flight some 6 hours before takeoff and wandered aimlessly around and around for an hour before settling into a chair in a pretty nice cafe on the top floor, called Vienna.  The cafe had silhouettes of Mozart all over it and score sheets of his music, which was a bit odd considering Mozart was from Salzburg and not Vienna, but it was a decent enough joint all the same and a pasta dish with a couple of beers was only 700 Roubles.  This sum of money in Sheremetovo airport would get you a sandwich from last week and small cup of tea.  Or 14 beers.  I was seriously tired by about eleven o’clock, as it was 6am Sakhalin time. 

Clearing immigration was the usual chaos, with two only counters being open (from an available eight), then three, then back to two, then for all practical purposes one as the other had hit a logjam of some sort.  One of the logjams was me.  Firstly, the chap behind the counter had no idea where Atyrau was and had to go off somewhere to find out.  Then he encountered a more serious problem.  I was officially leaving the Russian Federation on 31st March, but my flight was on 1st April, at forty minutes past midnight.  This confused him completely, and he had to ask his mate, who was as dimwitted as he was and looked it to boot.  Then he made a phone call, got the number wrong twice, gave up, and wandered off somewhere.  Eventually he came back, stamped my passport, and let me through.  Something occurred to me during the time I was standing like a lampost at the counter.  No matter how complicated or serious the problem appears to be at immigration counters, no matter how many people in uniforms draped in gold braiding and medals with massive hats get involved, the person always ends up with his passport stamped and waved through.  Always.  I’ve never yet seen a problem at an immigration counter which resulted in the person concerned being told to sod off back where he came from.  Maybe the Russians should stop pretending they are checking anything and just install machines which stamp your passport on your way through.

I managed to sleep for a couple of 15 minute sessions by leaning awkwardly onto the next seat and placing my swede on my rucksack, but it wasn’t much use.  By the time I boarded the plane to Atyrau, I looked like a zombie.  Fortunately I managed to sleep on this plane, but it was one of those slumbers which involves your head coming bolt upright every few minutes accompanied by a loud slurping as you retrieve the drool which is making its way down your jumper.  Half an hour outside Atyrau they dished out immigration cards for all foreigners to fill in, which were all rather complicated.  Some parts were in Russian, Kazakh, and English, some parts in Russian and Kazakh, and other parts only in Kazakh.  I was struggling like hell, until I asked the Kazakh lady beside me for help, and she pointed out that even she didn’t understand some bits and suggested I should leave them blank.  For all the notice the immigration officer paid to it upon arrival, I might as well have left the whole lot blank.  I still have no idea why they make everyone fill these things out.  I can’t believe they get used for anything, and there is no information on them which is not already contained in your passport and visa, both of which they scan into a machine.  Except possibly an address at which you are staying, which I make up anyway by putting “Marriott Hotel” no matter where I am going to.

Immigration was as chaotic as it is in Russia, with the bloke manning my counter having seemingly never seen a passport before.  How he got all those medals and rank insignia is anyone’s guess.  Once I got through to the Republic of Kazakhstan, I discovered my bag had not made it through.  I was not altogether surprised, as I’d checked in very early and as I watched my bag disappear (upside down) along the conveyor belt, I wondered if some baggage handler wasn’t going to put it to one side, finish his shift, and clear off home without a proper handover.  I went into the office in Atyrau airport over which some wag had put a sign saying “Passenger Services” which was occupied by a load of Kazakh women.  I told one of them my bag hadn’t arrived, and I think she’d have shown more interest if I gave her a transcript of one of my dreams.  By looking and sounding extremely grumpy, I got her to put her full effort into resolving the problem – which she did by handing me a completely blank piece of A4 paper and telling me to write down my problem.  I started to take the piss.  I asked what I was supposed to write.  She said write down that my bag has gone missing.  I asked her is that all I should write.  She said I should write down the bag’s colour.  I asked if I should write only that my black bag has gone missing.  Finally one of the other women stepped in who was a lot more helpful, and I got less grumpy.  In fact, the other women were all rather nice, and I suspect they all thought the first woman was being uneccesarily bitchy to this rather dashing British chap who had come into their office speaking Russian.  Or something.  Anyway, they told me to sit down, offered me a cup of tea, and started handing out sweets and chocolates.  I thought this was all rather touching, not that it got me any closer to reunification with my bag.  Eventually some bloke turned up who knew what to do, and he dug about in some drawer and came up with a proper form for those with lost luggage.  The woman who handed me the blank piece of paper just stood there looking dense.  I then found myself having to translate from English into Russian for a Frenchman who had arrived in Atyrau to find the wheel on his suitcase had been ripped off.  If he ever gets any compensation for that, I’ll swim the Caspian.

I got dropped off by the company driver at what I was told was one of the best hotels in Atyrau, which is a bit like discussing the best strip bar in Riyadh.  As soon as I checked in, at 5:00am local time, I asked the receptionist if she could send me up a toothbrush seeing as my bag had got lost.  She said they didn’t have any, and nor did they have a razor, but I was free to buy these items from the shop in the foyer of the hotel, which was miraculously open.  But first I needed some money, and there was an ATM in the hotel,  but I had no idea what the exchange rate was between the Kazakh Tenge and any currency I might have heard of.  The small currency exchange beside the shop was closed and its digital display in darkness, so I asked the receptionist what the rough exchange rate was between the Tenge and the US dollar.  She helpfully told me the currency exchange was closed and I should check in the morning.  I grew exasperated and asked her if I should take out 10, 100, 1000, or a million Tenge in order to buy a toothbrush.  She said she didn’t know.  I asked her the same question again, and she must have thought I was going to wring her neck (I was) unless she answered, because she quickly gave me a sensible answer.

Having spent 2,760 Tenge ($23) on a disposable razor, deodorant, two pairs of grandad socks, and some shaving foam, I took the lift up to my room, which might have had the carpet hoovered once before, featured a sink to which the taps were barely attached, and a toilet seat which had split in half.  The place was a dump, but the bed was horizontal and there was no jet-engine roaring beside me, so I really didn’t care.