Exclusive Interview: Sintez CEO Andrey Korolev Speaks Out on Greece's DEPA, DESFA Privatization

By Pat Davis Szymczak, March 5, 2013

SINTEZ has thrived for two decades as an independent Siberian oil producer. It was a pioneer in Russian Arctic exploration, and has cut its teeth in international markets. Today, SINTEZ is perhaps the leading bidder in a tender to privatize Greece’s national gas company DEPA and gas grid operator DESFA. SINTEZ CEO Andrey Korolev spoke recently with Oil&Gas Eurasia in an exclusive interview focused on his company's vision of itself and its future.

Oil and Gas Eurasia: SINTEZ came out of the cooperative movement during Perestroika, and still thrives today as a successful Russian independent producer. What is the secret to this success?
Andrey Korolev: The founder of SINTEZ, Leonid Lebedev, was involved in oil products trading in the early part of the Russian cooperative movement. He built the business through pure entrepreneurial initiative, rather than through political connections or administrative means. Building on this success, he entered into oil production by obtaining a license for the Varyngsky oilfield in West Siberia through an auction. Out of that, he started Negusneft from scratch and 20 years later, the oil there is still flowing.

OGE: SINTEZ was a pioneer also in the Russian Arctic offshore?
Korolev: At a time when virtually no one was working on the Russian shelf, SINTEZ assembled an all-star team with extensive offshore project experience. Mr. Lebedev really managed to hire some of the best offshore specialists.
We invested over $100 million into the exploration and appraisal stage of the Pakhtusovsky and Admiralteisky Blocks, west of Novaya Zemlya and the Medynsko-Varandeyskiy Block in the Pechora Sea. We shot 2D and 3D seismic, drilled some exploration wells and discovered oil. The Medynsko-Varandeyskiy field was fully prepared for commercial drilling and we had determined that there was about 103 million tons of oil reserves in the formation.
However, when the government set its eyes on Russian offshore and it became clear that we’d have to give up those projects. We did so in 2012.

OGE: Why did SINTEZ seek out international projects?
Korolev: Realizing that opportunities for growth of an independent oil and gas company of our size are limited in Russia, we began to look at overseas projects. First, we went to Namibia where we shot seismic and drilled an appraisal well offshore.
We entered Indonesia a few years later, where we also shot seismic exploration and most likely in the near future we will start drilling. We also entered prequalification rounds in Libya and Syria, but decided not to proceed with those projects.

OGE: So how would you characterize SINTEZ Group’s overall strategy? What is your niche?
Korolev: We are primarily focused on power sector projects. In our view, it’s incredibly challenging and perhaps impossible for an independent player of our size to grow much larger within Russia, as far as oil and gas is concerned. The industry is an oligopoly and unfortunately there’s not a lot of room left at the table for independents like SINTEZ.
Our main upstream project in Russia is still Negusneft, but