Why Schlumberger, long a hired gun in oil-field services, is becoming a major force and scaring Big Oil
Pad 1b Lempyskoye is a pretty desolate spot. The drilling site for Russian oil giant Rosneft isn't much more than a snow-covered clearing in the endless evergreen-and-birch forest 1,200 miles northeast of Moscow. Its 37 staffers live in spartan trailers, and the lavatory is a rank hole in the ground beneath a metal shack. In the winter, temperatures drop to 40F or lower, and in the spring the whole area thaws into a mosquito-infested swamp. As a drilling rig bores well after well deep into the frozen Siberian earth, it is wrapped in green tarpaulin to protect workers from the wind and cold.
Little indicates that oil services provider Schlumberger (SLB), a multinational giant with headquarters in Paris and Houston, is in charge of drilling at Pad 1b. Nearly everyone wears the green jacket and overalls of the Schlumberger subsidiary in Russia that runs the rig, and there are no signs to indicate the foreign company's role in the project. When a board member recently floated the idea of rebranding the Russian operations as Schlumberger, the local team rejected the proposal. "I don't see what we would gain," says Maurice Dijols, president of Schlumberger Russia. "We need to keep the Russian identity."
Schlumberger has gone native in Russia. It has a global reputation as a leader in oil-field services, but its thriving Russian business has been built on three local outfits it has bought since 2004. In each case, Schlumberger revamped operations but kept enough of the old company intact to preserve its earthy Russian character. Schlumberger "doesn't make the assumption that the West is best," says Rob Whalley, a sturdy Briton who serves as the company's drilling czar in the country.
It helps to keep a low profile. Schlumberger has prospered by offering its services through local subsidiaries, even as Moscow has strong-armed Royal Dutch Shell (RDS) and BP (BP) out of premier assets, forcing them to hand over control of big fields in Siberia and on Sakhalin Island to state-owned Gazprom, now a Schlumberger client. Schlumberger has 14,000 employees in Russia, and its revenues there topped $1.5 billion last year, triple the level in 2004. "Russia could one day be as big for us as the U.S.," where Schlumberger gets nearly 30% of its revenues, says Chief Executive Andrew F. Gould, a British native who has lived in Paris for decades.
You could call Schlumberger the stealth oil major. Sure, giants such as ExxonMobil (XOM), Chevron (CVX), and BP dominate headlines in the global quest for crude. But they couldn't do it without Schlumberger. The company helps them scope out pockets of oil thousands of feet below the earth's surface, conjuring up their layer-cake images on a computer screen, and then threading drill bits through the richest bands.Schlumberger has figured out better than anyone else how the global oil game has changed, and it's helping to drive that change....MUCH MORE