OREANDA-NEWS. May 19, 2010. A crystal-shaped building in Sevastopolsky Prospekt captures the attention of those coming to Moscow from the south. Its facets emphasize the verified durability of the structure and something it represents. It is here where the central offices of ITERA International Group of Companies are located. Information on the enterprise is sort of intriguing. How did an independent company manage to win itself a place in the gas and oil market dominated by giants? How could a professional athlete enter the world of business as a head of a group of companies? What does ITERA mean? Is it an abbreviation or neologism, and if so, in which language? Why is the red race-car of Schumacher, a legendary racer, is exhibited in the lobby of the office building to make a conspicuous figure? Igor Victorovich Makarov, Chairman of the Board of Directors of ITERA Oil and Gas, LLC gives answers to these and other questions raised by representatives of the VIP-Premier Magazine, reported the press-centre of ITERA.

VIP-Inform
Igor Victorovich Makarov is Chairman of the Board of Directors of ITERA Oil and Gas, LLC. He was born in 1962 in Ashkhabad. He served for the Army after he graduated from the Turkmen State University in 1983. He was member of the USSR Bicycling Picked Team. He was a repeated winner and prize taker in All-Union and international competitions. He won the title of a world-class athlete. He began doing business in late 1980-s when he organized a small production company and began selling finished goods. He is running ITERA since 1992. He had been awarded state decorations of Belarus, Mongolia, Turkmenistan, as well as the Russian Orthodox Church, the plaque of "Akinfiy Nikitich Demidov" of the International Demidov Fund.

HISTORY INOSCULATED WITH THE BIOGRAPHY
– Igor Victorovich, what did your Company begin with? Why did your Company have extra strong connections with Turkmenistan and Belarus?
– Let me put it a candid way: I never thought of doing business. I saw my future in bicycling. The rank of a world-class athlete, the position of a winner in many competitions and the participant in the Olympic Games made a solid motive for that. My tertiary education was within that area, too. It was when the Soviet Union began splitting apart that I decided to get involved in something new. So, from late 1980-s and until now I went through all steps of business beginning from building-up a small production facility and the sale of ready goods to running a multibusiness company. My involvement with business started in Turkmenistan where I was born. After the disastrous earthquake in Ashkhabad my mother was sent on a mission there based on a quota. They know me well in that Republic: my sport career had played the leading role in it. I can feel their sympathy to me. It originated in the past years, and it is still there.

When we started the Company we wondered what its name should be. One of my partners suggested a mathematical term of iteration as a name basis. Iteration means a process of repeating a particular action based on the result of a similar previous action. It looks like running a bicycle, rotating pedals. So, we gave the name of ITERA to the Company.

 Saparmurad Niyazov, President of Turkmenistan, unexpectedly proposed to me at one of the meetings in 1994: "Igor, you are supplying so much food products to us! Why don’t you accept natural gas in payment for them? Our partners have payment problems". It is true that at that time the Ukraine, Transcaucasia Republics did not pay Turkmenistan for gas. Only 27 per cent of the gas supplied was paid in cash, while the remainder was paid in barter goods, that is to say, in TV-sets, refrigerators or even gumshoes. We developed swapping chains and established reciprocal settlements schemes. This resulted in expanded connections. Then, Russia became interested in us. Rem Ivanovich Vyakhirev, Head of Gazprom, said one day: "You have earned enough on natural gas from Turkmenistan. It is time to invest here". At that time there were about 180 companies that owned licenses on gas fields.

They hardly did anything to develop them, though. We bought out a few licenses and started the work. In 1998 when a crisis was raging in Russia we underwrote payments worth USD 580 million. That was our initial investment in development of the proprietary resource base. We were the first among independent companies that started production of natural gas in Russia. We produced about 10 billion cu m of natural gas within two years. We commissioned nine gas fields on our own or jointly with partners. ITERA was never involved in privatization, and I am proud of it. ITERA was the world third largest company from the viewpoint of the volume of supply and sale of natural gas. Then the situation suddenly changed to the worse for us.

We lost 87 percent of the business. To save the Company we expanded our business areas. The change in the geography of our connections was also a help. By the way, my father was a Kuban Cossack, and my mother was a Byelorussian. We established close connections with Belarus. ITERA was persistently developing international connections and turned into an international group of companies. Today we have 156 companies in over 20 countries. In the USA we represent the only Russian company that produces natural gas in Texas and Illinois. We are getting prepared to develop a marine block in the Caspian Sea shelf owned by Turkmenistan.

ITERA LAYING MODERNIZATION
– Is ITERA going to concentrate on a specific business area?
– As a matter of principle, I believe we should deal with energy-related businesses. We are better at this, though a lot depends on circumstances. Natural gas is the foundation of ITERA activities. The larger gas fields are being developed with our involvement in the Yamalo-Nenets Autonomous District, as well as one field in the Irkutsk Region. Aside from production and sale of natural gas we are taking efforts to be able to sell gas products, rather than raw natural gas. Natural gas products are way more expensive compared to natural gas. It is too bad that Russia sells raw natural gas to Europe. The same is true with gas condensate and oil. For example, a ton of gas condensate sells at one thousand dollars, while we buy gas condensate products at US\\\\$ 30 thousand.

I am glad that Dmitri Anatolyevich Medvedev, President of Russia, decided to modernize producing industries. We are in the process already. A large gas-processing project based on German technology is being implemented in Nizhni Tagil. The first stage is production of methanol. Then production of acetic acid comes. Implementation of these stages gives way to production of plastics, consumer goods and various other things. All this is going to be implemented based on the proprietary raw materials. In Bratsk we have a complicated field of natural gas with a large content of helium. Helium is in fact energy of the 21st century. A lot of helium is also contained in other fields in Eastern Siberia. Their active development fits the state interests.

Modernization of the economy has a certain difficulty. Natural gas is comparatively cheap in Russia. This is why consumers are not interested to modernize outdated production facilities. They are not interested to invest in implementing energy-saving technology. Increased gas price shall result in modernizing production facilities and technologies and ensure a technological advance. I understand that this measure is unpopular and has many opponents. If all is left the way it is now the Russian producers would ultimately and hopelessly lag behind their foreign competitors.

EXTENSIVE COOPERATION HELPS AGAINST THE CRISIS
– What natural gas production, transportation and sale problems does the Company you run confront with? What about cooperation with Gazprom? How do you expect to overcome the crisis?
– There is only one problem there: not all consumers may and wish to make full and timely payments for natural gas they had received. Every medal has two sides: delayed gas payments create scarcity of funds that need to be invested in natural gas production and development of infrastructure. Without these two things it is impossible to meet the growing energy demand.

Good business relations with Gazprom are in place. ITERA is a strategic partner of the concern. We jointly manage Purgaz, operate in the Irkutsk Region, and implement gas-related projects in the Baltic States. Since Gazprom controls the entire gas transportation system in Russia our Company, like all independent gas producers, coordinates its activities related to transportation of hydrocarbons. Generally speaking, ITERA, the independent gas producer, needs to ensure uninterrupted development, to find solutions to emerging problems, to develop a positive development strategy. This is not easy to do, but we can hardly see other possibilities.

– What foreign partners are you building your relations with?
– I have described the situation with Turkmenistan and Belarus. These two countries are very special to me. In addition to development of block 21 on the Caspian Sea shelf, ITERA is completing construction of a gas pipeline in the central Kara Kum desert and is implementing construction projects: hippodromes and a hotel complex in the Avaza resort zone. We are constructing Minsk-City, a unique complex, and a Business-Center with Parus (Sail), a high-rise apartment house. ITERA is a shareholder of national gas companies of Latvia and Estonia. It manages those companies jointly with Gazprom and other shareholders.

– How did the world economic crisis affect the ITERA business?
– As far as the crisis is concerned, it affected the ITERA activities an indirect way, that is to say via our customers. As a result, the volume of gas sold last year went down. This was accompanied by reduction of the planned profit. Nowadays, as judged by the growth of natural gas consumption, the economy of Russia is recovering. In the first two months of the current year ITERA sold more gas than it did in the same period last year.

THE ROLE SPORT IS PLAYING IN SOCIETY AND IN PERSONAL LIFE
– How is ITERA involved in the social policy of the state or how does it address the objectives of the socially oriented trend in the economy?
– I suppose, it is the Sverdlovsk Region where ITERA’s participation in the partnership of the state and private business and in the social component of the state policy is most vivid. Our Company had been supplying gas to the region since 1999. It has been supplying gas to all categories of consumers. Natural gas is being sold to state-financed organizations and to population at the state-set prices. At the same time, ITERA is an active participant in the Gas Provision Program in the Sverdlovsk Region. It is constructing gas pipelines, modernizing municipal heating plants. We are implementing social, cultural and charitable projects in the Region.

– What is the Katyusha Project being implemented with your involvement in bicycling? Given the fact that the Project has a feminine name, is it expected that woman's teams are going to be part of the Project?
– Katyusha, a professional bicycling team, was established based on a resolution by the Board of Guardians of the Bicycling Federation of Russia in 2008. In this respect we are in close cooperation with Rostechnologii (Russian Technologies), a state corporation, and with its General Director, Sergei Victorovich Chemezov, who has unique talents in implementing large projects. The Board of Guardians had received a weighty assistance from Aleksey Borisovich Miller, Chairman of the Management Board of Gazprom, who just recently became First Deputy Head of the Board of Guardians, S.V. Chemezov.

The Katyusha Project objective is to give a powerful impetus to development of bicycling in Russia and to lay a durable foundation for victories in the up-coming Olympic Games, World Championship and prestigious bicycle races and, what is more important, to make the Russian youth very much interested in this kind of sport. Moreover, we had established a continental and a youth ITERA-Katyusha teams. Last year the professional Katyusha Team won a worthy position among leaders of the world bicycling. From the technical viewpoint, our team is the world best now. We are proud to state that our athletes have everything they need to show good results. The perspective plan is to establish a woman’s bicycling team of a similar class. By the way, the lobby of our office building accommodates the race-car of Schumacher. He presented us his race car as a token of support to our sport programs and a symbol of dynamics and continuous forward movement.

– What does sport in general, and bicycling in particular, mean for you personally? Has sport including bicycling become a corporate devotion for your ITERA colleagues?
– Sport has played an important role in my life, primarily as achievement of personhood. It helps build the character. It made me accustomed to systematic work. It gave me a possibility to see the world, to enjoy the feeling of victory at home and at an international level. Together with my colleagues I continue to have training sessions on a regular basis in a cycle track in Krylatskoye. Within the ITERA Olympics we have a traditional bicycle race every September. Stars of the world bicycling participate in it together with members of our Company. This is a very theoric and engrossing event. The participants and spectators are always impatient about it. It is now a tradition that winners in the race donate the prize money to the Children Assistance Fund that helps children who suffer from various diseases.

– What do you think should be done, if we talking about the Olympic games in Sochi, to restore the glory of the country in sports?
– All that has to be done is to restore the system that used to be in place in the past where thousands of boys and girls could join sports, develop as athletes and achieve success. We had destroyed something that serves a good model for, say, the USA, China to prepare their athletes. Mass sport must be revived. It is impossible unless the state provides assistance. Business should be involved, too. I think we will be able to make appropriate conclusions from the Olympic Games in Vancouver to turn the loss into a springboard to the victory. There are possibilities to do it. They should be used. Our Company shall contribute to it.