Oil, Russia and Scottish Whisky. Interview with Rhod MacKenzie

Mark: Hey, folks let’s learn something new about the oil and gas industry.

All right. We have our monthly guest from Russia.

Hey, Rhod.

Rhod: Hi, Mark. How are you?

Mark: I’m doing awesome. Rhod MacKenzie is with Rusmininfo and Rhod is actually as you can tell from his accent really not Russian, but he’s been there for a long time. And he knows the oil and gas industry especially in that part of the world. So, today we’re going to talk about what’s going on.

So, Rhod, it sounds like you had some fun recently at a conference?

Rhod: That’s correct. Now, I flew up to Moscow, as you know I’m based in Ufa down in the Urals which an oil producing district. And it was the CIS Petrochemicals Conference which is looking at the latest technologies, development in petrochemicals in Russia and the CIS, but also the development of the technologies and their application for worldwide applications within Russia.

And, I run into a couple of interesting guys there who came from not too far down the street from you, Mark. I said to them both the first ever video we did together and both have come back with very positive comments and ask you to send it right in their organization. So, when we actually publish this one online I’m going to say hi to Mitch Hindman who’s the global license manager for synthetic fuels technology catalyst and licensing. So, hi, Mitch I enjoyed meeting you I enjoyed the drinks and the chats that we had over the three days in Moscow.

And also Jakob Perlwitz. He’s with Air Liquide and he’s their Global E&C Solutions manager. And, again, we had some great fun great conversations and they both enjoy the show. So, hopefully I’m bringing you some new fans even if they are local.

Mark: What is small world, right? So, you’re halfway across the planet and you run to a couple of guys from the Houston area that’s – I mean that’s the world we live in, but I think that’s really cool.

Rhod: Yeah. I mean obviously the oil industry has always been global. Most of the easy to find oil has been taken, so you have to farther and farther the field particularly here in Russia we got — one of the largest countries in the world and 50% of the resources haven’t even been tap yet simply because they’re too hard to recover or the technologies need to be developed etc and there are solutions that you guys in the States developed in Alaska are particularly applicable in the Russian Far East etc.

So, it’s very much global and companies like Exxon Mobil etc and Chevron, they’re all common and they’re all – they’ve all been here a long time and they’re still looking to develop.

Mark: Yeah. And so, a lot of people understand that it’s a global commodity, right? So, that Brit price is the same here as it is in Tokyo as it is in Buenos Aires, right? It’s a global commodity so it’s a global industry, it goes hand in hand.

Rhod: Yeah. And it’s just finding it and getting off the ground that’s becoming a bit more difficult. I mean we talk every time on the oil price and between us I think we’ve got a reasonable consensus that we’re optimist about  the oil price and I think the last time we spoke the pessimist were talking that Drakken below 30 and here we are five weeks later where it’s actually at 45 for raw crude. And I think West Texas Intermediate is about 43.

So, and the consensus here from the Ministry of Oil and the Ministry of Economy is that pretty much what we predicted in the last one that it’s looking at 55 to 60 by the end of the year.

Mark: Yeah. And, I stick to that. Now, a lot of people in the news talk about the recent OPEC failure to agree on production freezes. What people understand is they were not going to agree on cuts they are going to agree on caps and it fell apart. I actually think that’s going to play almost no – it’s not having much of an impact on global oil prices.

Rhod:  I think you’re absolutely correct, I mean OPEC only had a level of power and the leaders back in the 70’s and 80’s. Now, it doesn’t have – the reason it had a level of power is most of the members of OPEC the oil companies are government owned, so, again, they can make policy decisions. But, now with most of the major oil companies around the world, they’re not going to went on with the exception of the Saudi Aramco and perhaps in Nigeria. So, they’re never really going to have that effect. The market always wins. I think whether you’re in the oil business or any other business,  you can’t back the market.

Mark: Right. Yeah. And the thing with OPEC that we think is we actually think we’re seeing the beginning of the destabilization of OPEC, so you have members not wanting to work together and that was their whole power is their ability to work together. And once that starts that genie is out of the bag, it’s not going to be put back in.

Rhod: Yeah. I think you’re right and countries like Russia and the US, they’re the largest producers in the world, I mean you take Saudi Arabia, but, again, that’s in second place, US is third, Russia being first. When you got the top two producing around ten million barrels a day, there’s no way that you can back the system.

Mark: Yeah. Which actually I think is good, I think it’s good for the world’s population, right? Let the free market control this commodity and I think it’s better for everybody.

Rhod: You know I mean I think that partially the oil price was manipulated. You get that with news of the stock market, etc. And, that can only last for a certain while, you know, the physical commodities actual oil physical oil rather than the paper oil will always dictate the price and supply and demand.

Mark: Yeah. We agree 100%. So, what else is going on in Russia as far as oil and gas?

Rhod: Oh, it’s been quite interesting in the oil and gas is the government because of some budget short fall, obviously caused by the lack of tax revenue from oil has been looking up privatizing some of these assets into oil companies in the firing line. One being the country’s biggest which is Rosneft which 68% owned by the government and they’re looking to sell an 18% stake and the Chinese have come up with the play.

Rosneft is a huge exporter of oil to the Chinese market and also to the Indian market. And they maybe that they won’t take that strategic stake as opposed to selling it all in the market to lots of small investors. Well, you see because the Chinese as usual are all playing a very catchy game.

Mark: Yeah. Yeah.

Rhod: On being Bashneft which is my local oil company which is the sixth largest and it’s a fully integrated oil company. And, then we’re going to sell either 25% or 50% of stake. So you know there’s a bit of actually going on for the first time in sometime in the oil industry.

Mark: Yeah. It would make sense for China to invest some money into Russia oil and gas companies because it supplies so much of their need and the same way with India. And, India if you look at the numbers, India’s eventually going to pass up China both in consumption of crude oil and gas and in also population. And I find that so hard to believe because my entire life everybody is talking how big the population was in China to think about Indian passing them up. I mean it’s a different world now.

Rhod: Yeah. And, very close to the Indian market currently because I’m doing a lot of work with organization called Polymer Update which is one of the reasons the CIS Petrochemicals, we provide them a large amount of information on polymers plastics and oil and gas based products which are I mean pretty much everything these days is made from of.

Mark: Right. It’s the perfect time, Rhod to talk a little bit about what you do and what Rusmininfo does. So, high level what are you going to do?

Rhod: Well, basically  we have a very sophisticated search and delivery engine that goes over 1,800 different new sites in the Russian language brings it back to our desktops and we select news based on particular parameters and translated from Russian into English.

Our clients have specific needs, I mention that needs to the petrochemical industry. So, if you’re a drilling company or a company who makes drill bits and you want to know who’s drilling for example, we can tell you who’s drilling. For example, news story today, in the first quarter of this year operational drilling was up 6% and next quarter drilling was up 9% in Russia. So, if you’re a drilling manufacturer you want to know where are the things happening, we can provide you with that specific information.

Mark: Yeah. And it’s not just drilling, it’s any type of service that would have an interest and figuring out where the business is in Russia, you have that data?

Rhod:  We have that. We have everything from finding it to refining it. So, if you do software for exploration, you know, you’re looking for  we can help you identify who’s looking identifying oil sites.

Mark: Yeah. That’s awesome. So, any companies out there in the world that’s looking to do business in Russia, reach out to Rhod, him and his team can help you make sure that you don’t waste time or money somewhere else.

So, Rhod it’s – we’re coming up on our time, how do you want to end this show?

Rhod: Well, we always end up talking about alcohol. So, tonight as you know Scotland where I’m actually from has a large number of islands around it. And a number of them produce whisky and it’s whiskey of a very kind of different sort of flavor and characteristics.

So, I’ll start off with the Orkney Islands which are some islands off the top of Scotland just below Shetlands which mostly royal people would always one of the major centers of the north oil industry. The Orkney actually has a big terminal where they bring it on shore and pump on or put onto tankers. They have major distillery there called Highlands Park.

Now, this is a very distinctive whisky, this the 18-year old. They do quite a number of – they do an 18-year old, 15-year old, 12-year olds and a variety of different ones. This has a very sea weedy and peaty flavor to it. It’s very, very distinctive and if you’re looking for something original, then that’s worth giving a try.

Another island which is pretty famous from over the sea to Skye, Bonnie Prince Charlie. Most people who remember their Scottish history and the ‘45 Rebellion etc. The only distillery on the Island of Skye which is a little bit like a mini continent because there are mountains and valleys and coastline. This is called Lagavulin. The nice thing about this one is it’s very, very distinctive because it’s the only one on that island and you can just taste the difference.

The largest of the whiskey island and it’s an island called Islay which just sounds like Islay. And it has probably the most distilleries of any island that I have ever come across anywhere in the world. For such a small island, I think the last kind of those 15. They have a very distinctive flavor. This is Laphroaig which is exchangeable. Again, it’s unusual because they use different flavored barrels. They buy their barrels from either bourbon companies in the United States or sherry companies in Spain which gives it a very, very unique flavor.

This is Bowmore and this is the Legend version and as you can read from the label, it’s – they actually use bourbon casks.

Mark:  Yeah. How cool is that that they actually go out in the world and source the right used cask to make sure they impart the flavor that they want in their whiskey. That is really cool. Yeah.

Rhod: That’s – the last one and let me show you. I think that is the last one, [0:12:14 Indiscernible] Lagavulin, ah, maybe not. This is a 16-year old Lagavulin which I think is very distinct.

Okay, Mark. That’s – I think that’s a bit of wrap.

Mark: So, Rhod I know where I’m going next time I want to taste a bunch of whiskey. I’m showing up in Russia in your doorstep. You have quite a collection.

Rhod: You’re more than welcome anytime, Mark.

Mark: Rhod, thank you so much for your time.

Rhod: Thanks.

Mark: Folks, I hope this helped. We will see you next time.