In recent years the Russian refining and petrochemical industry has gone through different periods: breakdown, stabilization and boost. Now it is dusting itself off and starting to play an important role in the economy of Russia and the former Soviet Union (FSU). ­Up-to-date tendencies in the world's downstream industry, focused on reaching the highest profitability and a production of green fuels according to the newest specifications is increasingly affecting Russian oil companies.

For the time being, the general direction of Russian oil companies top management is to invest in oil production facilities and in the infrastructure for crude oil export. The downstream industry is increasingly becoming an interesting object for investment and to obtain profits. Vertical integrated Russian oil companies are seriously considering opportunities to change from raw material suppliers to suppliers of end products.

Effective Project Implementation

As a consequence, Russian refineries and petrochemical plants face the challenge to upgrade their facilities and improve efficiency of operations. It is therefore extremely important that the right project for the plant's specific needs is selected and implemented in a fast and effective manner.
Many Western contractors offer complete services for project implementation including the provision for the basic engineering package (usually prepared by the technology licensor), provision of detailed engineering, procurement of equipment and materials, and construction management or construction services.
Choosing a Western contractor may entail several problems: delays due to lack of knowledge of Russian codes and standards, lack of knowledge of permitting procedures and local equipment suppliers as well as experience with local construction companies, high cost due to major portion of works, services and equipment being provided from offshore and poor communication due to language barriers.
To avoid problems or at least minimize them, customers and contractors need to operate on a more effective way of project implementation. Successful project implementation should include the following issues: objectives to control project costs, schedule and quality, a properly organized structure to implement the project, effective day-to-day management to control operations during the project implementation and set up connections/cooperation between parties participating in the project.

Main Factors for Successful Project Implemation

Selection Of Technology/Licensor
A thorough analysis of available technologies should be made. Some of the important criteria for selection include: experience in Russia (including language skills), experience in operating units and similar services, scope and content of basic engineering design package, guaranteed process yields and product qualities, catalyst info guarantees, support during all project stages, operating costs, license fees, catalyst costs, and provision of adequate training.
Basic Engineering Design Package
This is a very important stage for the project. There should be close cooperation with the client to ensure all requirements are incorporated into the design. If it is preferable to maximize local content, the licensor should have good knowledge of Russian codes and standards either directly or with the help of a Russian design institute.
Detailed Engineering
In most cases, detailed engineering can be prepared by a competent Russian design institute. Since there are quite a number of serious differences between European or American standards and Russian standards for designing and fabricating equipment, it is necessary to support such an institute with consulting services from the licensor during preparation of detailed engineering.
Many Western contractors do not have detailed knowledge of Russian codes and standards - a major disadvantage that should be compensated with help of other sources - subcontractors, consultants or advisors, having that knowledge.

Project Management Structure

Based on our experience for effective project implementation we should recommend that the client forms a project group following the project through all its stages. This team can consist of about ten people or more, depending on the project scale. The client should supplement this group with an experienced project management consultancy (PMC) group, whose main role will be to coordinate all parties involved, monitor all stages of the project on behalf of the client as well as to control issues like QCS-quality, cost and schedule.

Procurement of Equipment and Materials

In order to minimize costs it is beneficial to purchase non-critical equipment and materials in Russia. In such case it will be necessary to have in-depth knowledge of local suppliers and their ability to deliver quality products on time and within budget. The supplier selection can have a major detrimental impact on the project schedule and costs. All items of equipment which are critical for the process technology should be purchased from experienced suppliers. To ensure that costs are minimized, competitive bidding is preferable.

Inspection And Expertise

To ensure quality and schedule it is important to carry out a full inspection program for all imported and local equipment. This process will identify potential future problems and help keep the project on track. For control items of equipment the presence of the client and licensor is required.

Construction

Usually local construction contractors are selected to perform all construction activities. In many cases it is advisable to place a construction supervision team from the project management consultant or constructor.
The main duties are to ensure control of safety, schedule, quality and cost. Experience in performing Projects in Russia is essential. Often construction conditions are extremely difficult due to climate conditions and short weather windows for importing equipment. Therefore logistics planning is critical to maintain the overall project schedule.

Commissioning And Start-up

During final stages of construction it is advisable to have a full check of the unit by the licensor to ensure the plant has been constructed in accordance with the licensor's process requirements. Any required changers will need to be implemented prior to the unit start-up and performance tests.
Once the unit is ready for start up, the licensor will give instructions for the operation parameters to be followed in order to carry out performance tests. A successful start-up and follow-on operation of the unit is not only a result of the high-grade construction, but also a performance of workmanship of the unit operators. All ­operators of the unit should pass through an appropriate intensive training before the unit is put into operation. This part of the project is the responsibility of both licensor and client, and the PMC should coordinate the aspects as well.

Conclusion

By approaching effective project implementation substantial savings - ranging from 30 to 50 % - can be made without impacts on the project quality. Project management is a tremendously valuable tool to successful project implementation. When properly applied, it creates logical, understandable and exceptional accomplishments.