Helios Means First!
Shukhrat Danbai, the general director of Helios, answers questions from the our magazine
Helios has been functioning in the oil products market of Kazakhstan for three years. It is the only domestic Oil & Gas Company working to Western standards. Helios controls upstream and downstream processes - from the oil well to the end user and carries out thorough laboratory tests at each stage as the product makes its way from the refinery to the end user. The main priorities of the company are quality petrol, reasonable prices and a high level of service.
Mr. Danbai, what is the key to success for Helios?
I think that we were lucky to have been organized as a joint enterprise, while our foreign partners placed their primary emphasis on Western management models. That is why, while the rest of the vertically-integrated companies in Kazakhstan possess only a handful of filling stations, Helios has developed a network of 80 stations in Almaty, Astana, Karaganda, Ust-Kamenogorsk, Shymkent, Taraz, Pavlodar and Kyzylorda.
I would like to emphasize that one of the strategic priorities of Helios is to create an environmentally friendly company. That is why we have put vast sums of money into building filling stations that can be placed in the centre of a housing estate or a park, because we can guarantee their ecological and operational safety.The use of advanced technologies and state-of-the-art equipment is the key to safety in the operation of our filling stations. Firstly, the underground tanks that we use for storing fuel at the filling stations are triple-protected, with two-layer walls and concrete sarcophagi. They also have a gas equalizing manifold and the required ancilliary equipment. Secondly, the petrol tankers that we use for transporting fuel and lubricants are equipped with a system that prevents atmospheric emission of hazardous substances. They also have multiple-section tanks featuring two to seven isolated pressurized compartments for shipping several types of oil products simultaneously. Thirdly, the petrol pumps supplied by the Swedish firm Dresser Wayne are worth their high cost, being perfectly suited to the climatic conditions in Kazakhstan. Built-in electronic metering devices provide accurate measurement of the oil products sold and record the payment received. The pumps are equipped with fine cleaning filters, which enables our clients to receive refined fuel.
By using this level of technology, our company has been able to create a reliable petrol dispensing system with computer control of each transaction. So we can confirm the transparency of transactions, which we have stated publicly ever since the establishment of the company.Another important orientation of the company is the education and retraining of staff. This is carried out by the Helios Training and Engineering Centre, which trains operators, cashiers, refueling operators, managers and other specialists. Highly qualified experts in oil products supply run these courses. The training system is very dynamic, as it provides continual refresher courses for both executives and staff. For instance, this spring a group of employees took a course organized by Dresser Wayne representatives and received special certificates. Helios is the first oil products company to organize a training and engineering centre to provide continuous education and professional development for its staff.
What are the specifics of the Kazakh oil products market?
Let us take Almaty as an example. According to our calculations this city alone needs 2,000 tonnes of petrol per day, which is a half of the Kazakh market in oil products. The city’s filling stations buy petrol mostly from the Almaty petroleum storage depot. Today its share in the total wholesale trade amounts to 80% (of which about 20% is accounted for by Helios). The depot’s major clients are filling stations owned by individuals working under licence.
Usually these filling stations buy so-called “pyrolysis”, which is petrol with an octane level of 66 or lower. By mixing this with Russian or Kazakh petroleum, and adding petrol admixtures to raise the octane level, dishonest operators can gain an additional margin of $50-60 per tonne. It is not only the environment and customers that suffer because of this, but also the state budget, since no tax on profits, excise duty or environmental taxes are paid. The greater part of such petrol is smuggled, evading taxes as well. These businesses generally act to the detriment of ordinary people and the state.
I would like to mention that 70% of the filling stations in Kazakhstan belong to individuals and are mostly of the container type. They often do not meet fire and environmental safety requirements. That is why the state regulatory authorities should toughen the operating specifications when licensing of filling stations is introduced.
What role should the state play in regulating the market in fuel and lubricants?
State bodies must now apply tougher requirements to the market participants. However, without a single national monitoring system, it would be impossible to achieve a set of measures aimed at regulating the oil products market. A state monitoring body needs to have data on oil production volumes and crude supplies to refineries, also on petroleum imports and exports, reserves, internal market capacity, and so on. Unfortunately, the existing system for collecting information on the status of the retail oil products market is deficient, and market data are often inaccurate and contradictory. This is largely due to the fact that the owners of filling stations (individuals) intentionally conceal their sales figures and are not answerable to any state statistical bodies. Since it is almost impossible to define the dynamics of the internal market in this situation, it is constantly vulnerable to various economic shocks.
I believe that we should not reinvent the wheel. In Russia, for example, there is already a clear-cut licensing system for petrol stations that gives equal opportunities to every competitor in the oil products market. Russian state bodies not only regulate the work of the petrol stations, but also comprehensively monitor and control their activities. If Kazakhstan adopts the Russian market regulation model, i.e. passes a corresponding licensing bill, the problem of loading at the local refineries will be solved, and the internal market will be supplied with domestic oil products. That is the objective that has been declared by the government import substitution program.
What, in your opinion, is the main factor preventing the Kazakhstani refineries from reaching the optimum load level?
The point is that the state bodies do not take in to account the factors such as the smuggling of Russian, Chinese and Turkmen oil products at dumping prices, and lack of access to foreign markets for domestically produced fuel and lubricants. As a result of the low competitive edge of wholesale prices for Kazakhstani oil products against those for foreign fuel and lubricants, the load at our refineries makes up 15% at the most.
We need a competent state excise policy. This is not just my personal opinion: many companies have repeatedly gone to the appropriate state organizations requesting an increase in the import excise on oil products, and a cut in that on home produced fuel and lubricants. In addition, we need a system of excise exemption for companies that possess their own crude production and refining facilities and oil product storage tanks. Oil refineries, and companies working with them on commission, will continue to suffer losses of tens of millions of dollars annually, as long as the state bodies aim at merely resolving short-term problems. Only if the government and companies combine their efforts it will be possible to create a competitive internal market in oil products with equal opportunities for each participant.
In conclusion, could you say what is the secret of the popularity of Helios oil products?
It is basically due to the fact that our filling stations offer higher quality services than anybody else’s. Our marketing department regularly tracks customer comments and requests, and constantly upgrades the services offered. For instance, Helios Cards are very popular among corporate clients. As a result, 60% of the total retail turnover is non-cash. Also, our clients can use Helios smart cards at some filling stations in Russia.
In 2001 Helios filling stations were acknowledged to be the best in Kazakhstan. In the contest “Choice of the Year in Kazakhstan”, the company was awarded a medal of honour and a certificate as winner of the “Number One Filling Station in Kazakhstan for 2001” category. Our success in achieving this result was due to our corporate principles which have a positive influence on the production rate and level of servi?e, and cultivate patriotism and pride among our staff.
Table of contents
Invest in Astana! Adilbek Dzhaksybekov
Activities of Maersk Oil Kazakhstan GmbH Svend Andersen
Embamunaigaz: Still Up to the Mark Malik Omirzak
Oil Insurance Company: Cornerstone in Protecting Your Future! Zharkyn Alzhanov
Altynalmas: Marriage of Experience and Professionalism Nurlan Makulbekov
Helios Means First! Shukhrat Danbai
Brief Analysis of Draft Law ”On State Regulation of Production and Turnover of Certain Types of Petroleum Products” Olga Chentsova, Angelika Novozhilova
Kazakhstan and International Law Implications of the Proposed Law “On State Regulatory of Production and Turnover of Certain Types of Oil Products” Thomas C. O’Brien, Alyia M. Suleimenova
Outlook and Necessity for Developing Small Hydrocarbon Fields Elvira Dzhantureyeva
New Rules for the Purchase of Goods, Work and Services in the Performance of Petroleum Operations in Kazakhstan Olga Chentsova, Natalia Brainina
Certain Environmental Aspects of the Activities of Subsoil Users Aigul Kenjebayeva, Yuliya Mitrofanskaya
Issiue Deductibility of Interest on Foreign Currency Loans Bill J. Page, Gaukhar Iskakbayeva
Leasing in Kazakhstan: Legal Aspects of Development Tatyana Issyk