The Man Who Built the Refinery

01.01.2016

All publications about him start with the same story. In 2004, an unknown businessman comes to Tyumen with company articles of association in his hand and an ardent desire to buy a disassembled oil refining unit. Then, imperceptibly, almost miraculously the Antipinsky Oil Refinery becomes the second largest tax payer in the region. Few are aware that Lisovichenko was not new to oil refining and Tyumen. That visit was a comeback rather than the first meeting.

IN THE THICK OF THINGS
 
1975. A graduate of the Sverdlovsk Law Institute arrives in Tyumen to take the job he is assigned to. The slogan “Your country needs you to produce Tyumen oil” is heard all over the country. One after another construction teams fly to the North, new plants are commissioned in the capital of this oil and gas region, a large-scale housing construction is underway. But Gennady Lisovichenki does not like it there… He did indeed get a job at the prosecutor’s office for Tyumen’s Central District, but there is no hope of getting a senior position, an apartment or good prospects. In June 1975, he leaves for Nizhnevartovsk. 
TV people had deceived him. What a large and beautiful city they showed – nine-story buildings, public gardens, parks! He took a bus across the city, but there was no city to see: clumsy two-story barracks, a movie theater and lonely birch trees: they were the ones shown on TV as a garden. But there was nothing to regret: Lisovichenko takes an investigator job at the district prosecutor’s office, in November he is awarded two stars and in May next year he gets an apartment. Very soon, new buildings pop up like mushrooms around his house in the fifth residential estate. 
There was plenty of work to do for an investigator: murders, rapes ... All sorts of people came then to the North. Plus poor industrial safety – one day a helicopter would crash, another day an oil well would explode. In 1984, Gennady Lisovichenko gets promoted to the prosecutor of the city of Surgut. In 1989, he is sent to Khavarovsk – this time as a deputy to the Khabarovsk Territory prosecutor Valentin Stepankov. 
Stepankov deserves separate mention. Appointed the First General Prosecutor of the Russian Federation in 1991, he plays an active part in the events that took place during those years. He personally participates in the arrest of the then USSR Minister of Defence Dmitry Yazov in connection with the State Emergency Committee (GKChP) case. As a member of the Supreme Soviet, he signs the Belovezha Accords declaring the dissolution of the USSR. Gennady Lisovichenko, with whom Stepankov fought party kleptocrats in Khavarovsk and who he appointed his aide is then based in Sochi and flies on business to Moscow. In 1993, their loyalty to the new government will end up in their dismissal. 
During the confrontation between the Supreme Soviet and President Yeltsin, the General Prosecutor takes the side of the parliament. No wonder that in October 1993 Boris Yeltsin dismissed him. Lisovichenko left his job before that. 
Up to 2003, he manages commercial oil refining entities on a give-and-take basis. At the time, he did not even contemplate building his own enterprise. But in 2004, Gennady Lisovichenko comes across an ad posted by the Federal Property Management Agency announcing the sale of a small refining unit which sits around disassembled at a customs warehouse. It turned out that Rosneft wanted to build a refinery in Antipino, ordered the equipment, but the idea was not supported by the company’s new CEO. The small ad strucks Lisovichenko as promising great prospects. But he needs money. He decides to meet up with Dmitry Mazurov (now the Chairman of Antipinsky Oil Refinery’s Board of Directors): 
- We already had small joint projects by then. I realized he was a great businessman, very energetic, and was able to raise the money needed, therefore I came to him with the idea, Gennady Alexeevich remembers now. 
That meeting opens up a new chapter in our character’s life, at the beginning of which he turns up in Tyumen with company articles of association under his arm and an ardent desire to build a refinery.
WHY DID I GO TO MAZUROV? BECAUSE I SAW IN HIM THE POTENTIAL TO RAISE MONEY. 
HEISAGENIUS! 
IDON’TKNOWANYBODYELSEAROUNDMEWHOIS ABLE TO FIND SUCH PRECISE SOLUTIONS TO PROBLEMS. BANKS BELIEVE HIM. 
HOW IT ALL BEGAN 
Veronica Melkonyan:It means it was your idea to build the refinery?
Gennady Lisovichenko: Yes. I was in charge of the construction and the refinery’s operations. I rented a tiny room at Sibir Consumer Services Center and started recruiting people. The first person I managed to convince was head of the capital construction department – he quit his job and joined me. I needed a chief power engineer and managed to convince the right candidate – he left his job at Tyumenenergo and still handles all power facilities at the refinery. I hired a former director of Isetsky Oil Refinery, invited a mechanical supervisor, chief engineer… From October 2004 to May 2005, I hired about 10 people. Dmitry Mazurov at the time was in charge of raising money. 
How much has been invested in the refinery so far?
About three billion dollars. You can see it all: it is in our units, equipment that works and generates good profits. Last year, however, we had a problem with profitability: the government puts pressure on refineries requesting them to switch over to Euro-5 standard. We will resolve this matter within six-seven months and have a stable income.
 
Companies with such investment volumes are few and far between in this country... 
Why did I go to Mazurov? Because I saw in him the potential to raise money. Heisagenius! 
I don’t know any body else around me who could focus on a problem and find a solution the way he does. Banksbelievehim. Raiffeisenbank was the first one… when we just came to greenfield lands and started the construction. I have no idea how Mazurov managed to convince them, but he did ...
How did the appetite grow?
First we build Workflow Phase I for 400 thousand tons and upgraded it right away increasing the capacity to 740 thousand tons. Thereafter it got very simple: we realized that all refineries with processing capacity below three million tons would become unprofitable. As we counted on a steady income, we made the next step – increased the capacity to over three million tons. Then we got a new idea: since the pipeline has a certain throughput capacity, why not increase the refinery’s capacity accordingly? The government indicated in no uncertain terms that the country needed refineries capable of deep oil refining. What could we do?
Build new units. By this summer, the refining depth will reach 97%. The equipment is just about ready for operation. In other words, we can already say that the task has been completed.
 
As of today, the refinery ranks 13th among similar enterprises. Are you a spiring to be come number one?
No, of course not. Just because we are limited by the pipeline throughput capacity: Transneft will not be able to supply more than 9 million tons of crude oil to us.
We bring 60-100 thousand tons per month by rail, but it does not make a big difference. There are refineries with the capacity of 25 million tons and we will not be able to draw level with them, of course.
… Nevertheless, the Antipinsky Oil Refinery had to face competition at the very start, even if only in the minds of public officials. Next to its site, a certain Tyumen Oil Refinery was supposed to be built. While its owners palmed the municipal and regional administration with promises, the Antipinsky Oil Refinery continued its construction. At the time when the Antipinsky Oil Refinery already assembled its equipment, the company was laying rail tracks and building the railway station, feather grass kept growing on the neighbors’ site. Since then, the company management has enjoyed the support of regional authorities, the both parties are open for contact, and it was with the assistance of local authorities that the company was able to obtain terms of reference to get connected to Transneft pipeline. The Tyumen Oil Refinery eventually sold its land to the Antipinsky Oil Refinery. 
BRANDOFTHECITY
Do you remember your first ton of refined oil?
How could I possibly not, if they launched criminal charges against at the time! (Laughs loudly).
How do you mean?
It did happen! I commissioned the refinery and they denied me a refining license. (Laughs). It is incomprehensible! The first ever refinery in the Tyumen Region is denied a license on spurious pretexts. The production could not be stopped as it was tied up with the railroad, Transneft, so I had to ship the product. The prosecutor’s office instantly initiated criminal proceedings against me.
I filed a claim with a court which qualified Rostekhnadzor’s actions as illegal and ordered them to issue me a license.
 
Who was your first customer? Do you remember? 
Oh no, I wouldn’t remember now. We have sold almost 30 million tons of products by now.
What effect does the present-day market situation have on you? Oil is getting  cheaper, it should be good for you, shouldn’t it?
Don’t go by the price tag at a filling station. We are wholesalers, and petroleum product prices at the international market are also going down. The only thing that is saving us is our export operations, and the ruble value evens it all out. As for me, I would rather not have such shocks. When the barrel price is stable, it is much easier to operate. If it is fifty dollars, let it stay at fifty, if it is sixty, let it stay at sixty...
I UNDERSTAND THAT I DID NOT COME BACK HERE IN VAIN: HAD I NOT GRABBED ONTO THAT IDEA BACK IN 2004, THERE WOULD NOT HAVE BEEN A REFINERY AND 2000 NEW JOBS HERE, I AM AFRAID…
How much would you want the oil price to be?
120!  Being a Russian citizen... But it does corrupt. See how shocked everybody is, they are talking about imports phase-out. I don’t think the problem can be resolved overnight.  It will take at least 10-15 years for any significant changes to happen in our industry.

The general impression is that the main source of income of our major businessmen is natural resources...
We are very rich in raw materials, why shouldn’t we be selling it? Another thing is that the bigger part of it should be processed within the country.

What part of your products do you export?
About 70%. We sell diesel fuel internally and export up to 100% of fuel oil and straight-run gasoline... And it’s good, because we earn hard currency. In future, the bigger part of gasolines will stay here, as we are going to cover the markets of Tyumen, Kurgan and other regions. Would you like the Antipinsky Oil Refinery to become one of the Russian signature brands? It would be very difficult to do. Have you ever seen at any filling station the name of the refinery that produced the petrol being sold? It doesn’t matter whether it is produced by Omsk or by us – the technology is the same. There are specific requirements every enterprise must meet.

I see. Each city is associated with certain companies... Could Antipinsky Oil Refinery be a symbol of Tyumen?

Why not? We have created a fair amount of jobs and continue creating them. The refinery is the second largest tax payer in the region. We are not going to stop even after we launch the production of high- octane gasolines in January. There are plans to build another production facility, a petrochemical plant. But it is still a secret. (Smiles.)
I love secrets so much...
“SynNeft” is the company’s code name, it stands for “synthetic oil”. We are working on getting the land now.  Unfortunately, it is very difficult to get federal lands, there is no clear-cut procedure, everything depends on the decisions of individual officials.
We do need a site, we cannot move forward without it. Hydrocracking is another issue we have to resolve: we have an agreement about the land, but we are held up for lack of money.
PERSONAL THINGS
Gennady Alexeevich explains why the refinery needs to hurry up with the purchasing of the equipment: it is manufactured by American companies and it takes very long to get it produced and delivered from the USA.
The equipment will be shipped from America across the Arctic Ocean by a liner. In Sabetta, it will be reloaded onto a river barge. It will go up to the Irtysh river and then to Tobolsk. In Tobolsk, the equipment will be reloaded onto a low sitting barge and finally arrive at Antipino where the refinery has built a quay.
“We unload the large-tonnage equipment and escort it at night to the refinery,” says Lisovichenko. “Electricians go ahead of us and remove overhead power lines to avoid the equipment catching on them. We have done it several times already!” 
The Director General’s eyes light up: he describes the procedure in detail and with undisguised pleasure. He is obviously delighted with both the gigantic scale of the construction and the refinery’s capabilities.
 
You are more of a production person than a businessman, aren’t you? 
That’s right. Thank God, the function to sell petroleum products is not part of my responsibilities! The refinery produces close to 700 thousand tons of petroleum products each month – it is a big number, you cannot even imagine how many tank cars it takes! Luckily, our tanks are always half empty and it makes me very happy. We have never yet stopped the production, nor have we ever failed our partners.
 
How much does your experience as a public officer help you in managing a large production facility? 
It does help in some matters – I know some prosecution officers, some of them have been promoted to certain positions: sometimes, it is worthwhile to get their advice. But still, public service and business are two different things. It is always easier to work behind your boss’s back. I met up with many of my ex-colleagues and acquaintances who are horrified to think that they will soon have to leave the public service. They don’t know what business is about and don’t understand how to integrated into this system. 
I COMMISSIONED THE REFINERY AND THEY DENIED ME A REFINING LICENSE. IT IS INCOMPREHENSIBLE! THE FIRST EVERREFINERY IN THE TYUMEN REGION ISDENIED A LICENSE ON SPURIOUS PRETEXTS. 
What was the most difficult thing for you in that respect? 
The relations with people are quite different. You have to understand the economics, be able to calculate, make provisions for contingencies, foresee. Although, as my colleagues say, I was a pretty good prosecutor. Had it not been for the change of power, I would have probably made a good career as a public prosecutor, I liked the job, it provided a certain stability, predictability. In business, you face a different problem every day, and so much depends on your decisions. This is the most difficult part.
What do you like about business?
The fact that we are creating a basis, a production. I am not in charge of some mickey-mouse “buy and sell” office: we have many employees, profitability, a good taxable base, we pay decent salaries to our employees.  This is what I like the most. I understand that I did not come back here in vain: had I not grabbed onto that idea back in 2004, there would not have been a refinery and 2500 new jobs here, I am afraid…
 They say private businesses in Russia face obstacles every inch of the way: they are strangled by taxes, inspections... However, we see a lot of production facilities being opened up in Tyumen.  Who is right? 
All sorts of things are being said, but... Maybe, I am just lucky? Nobody is strangling me. Nobody is coming to rob me. There are scheduled inspections: representatives of the military enlistment office, Rostekhnadzor, labor inspectorate come to conduct their checks... It is their job. They commend us for the most part. Even after the incident with Rostekhnadzor we find a common language with them. In general, we also enjoy comprehensive support on the part of the regional government. I invited Vladimir Yakushev for the opening ceremony of our Workflow Phase I which took place on September 30, 2006. He watched the first tank being filled up. It could be very clearly seen on the computer: the sectional view of the tank, diesel fuel level going up...
 
Could you sell there finery today? To Transneft,for instance. 
Not me. The other shareholders would not do it either, I think. Believe me, we have got a lot of offers. Some of them were very difficult to turn down ... What are we talking about, if all of my private property is pledged to Sberbank, as well as Dmitry Mazurov’s property!
IF WE GOT AN OFFER TO SELL THE REFINERY, I AND, I THINK, OTHERSHAREHOLDERS WOULD HAVE REFUSED IT. ALTHOUGH, WE HAVE HAD MANY SUCH OFFERS, BELIEVE ME. SOME OF THEM WERE VERY DIFFICULT TO TURN DOWN … 
GROUP OF COMPANIES AND QUALITY STANDARD
Are you planning to develop your own chain of filling stations? 
We currently have 31 filling stations under various names. This year we will try to bring them under one company and call it, say, New Petrol. Actually, we are planning to buy one more chain in Tyumen. Moreover, we already have an agreement with Gazpromneft for the purchasing of our fuel. It’s all about logistics: why bring fuel from Omsk, if it can be purchased from us?
We are going to set up a quality control service. We have just started manufacturing diesel fuel and are already being cheated on! A road tanker takes Euro 5 compliant fuel from us and delivers it at a certain destination, gets unloaded there and refilled with God knows what kind of fuel. We are planning that our representative will once a day go to filling stations, take samples and bring them to the laboratory. The analysis takes no more than three seconds. It will help us identify who dilutes our fuel (“You, son of a bitch, take fuel from us and dilute it! Next time you buy it from anybody else, but not from us!”)
Will fuel get cheaper?
You can go to two filling stations now – our station and the neighbouring one – and compare diesel fuel prices. Mind you that the both of them sell our fuel.
 
Last year, New Stream Group(which theAntipinsky Oil Refinery is part of) obtained a license to develop three oilfields in the Orenburg Region. How is that project going and why did you need it? 
To ensure our raw material security, we are planning to produce up to 4 million tons of crude oil per annum, which is a little less that 50% of the amount of oil required by the refinery. Our capacity has already reached 9 million tons per annum.
 
It is an advantage for you, isn’t it?
Definitely. New Stream Group will set up a complete manufacturing cycle – from crude oil production to selling petroleum products through the chain of filling statio. The Group also includes Mariysky Oil Refinery which we will try to build the same way as the Antipinsky. We know the suppliers, the kinds of equipment required, what licenses need to be obtained and where to obtain them. We will replicate it all, only at a smaller scale. The production volume there will amount to 7 million tons per annum. Plus we will start manufacturing petrochemical products, a new promising business line. Our Group will become as good as any vertically integrated company.
What will be your position in that entity?
We’ll see ... By 2020, we will complete the construction at the refinery, but I am definitely not going anywhere from Tyumen. There will be enough work for me to do here.
MOST PERSONAL THINGS 
In general, has Tyumen become an important city in your destiny? 
Most certainly! I built a house, got married here ... I am not fond of Moscow any more, haven’t been for a long time. I came here and some of my relatives followed me. They are all engaged in agriculture, hard working people to the bone. They have got an old tractor, but the crops they get are unbelievable! I wanted to buy them some land, put up cottages, let them grow wheat. But ... I couldn’t find a suitable land plot. They work with my son now. 
Would you like your son to work at the refinery? 
No, he should do his bit on his own. I am not going to do his work. If he joined the refinery, he would inadvertently shelter behind my name. He is building a plant in Isetsk now. I am not against family dynasties. If he sets up his own business, comes to me and say “let’s get together” – that would be a real family dynasty. I would certainly help him with money, but he hasn’t asked me for it yet.
 
Who has influenced you the most in your life? 
My uncle, he was a director of district thermal stations. A very sensible man, he put those stations into operation: he would get things right at one station, they would transfer him to another one. A highly active, hardworking and intelligent man!
 
Do you consider yourself a hardworking man? 
Definitely! Both at night and during the day – I was taught to work like that. When we commissioned Workflow Phase I, I slept at the refinery. If you work four times a day, nothing will be achieved. You should have a passion for what you do, live for it!
What did you want to become when you were a child?
A military pilot. My friend and I even tried to enter Orenburg 
THERE ARE PLANS TO BUILD ANOTHER PRODUCTION FACILITY, A PETROCHEMICAL PLANT. BUT IT IS STILL A SECRET.
Pilot School. They flunked the both of us because we had poor eye sight. My friend entered Irkutsk Aerotechnical School and after graduation flew strategic bombers. I decided I did not want to be an engineer. Without telling my mother I signed up for duty at the military enlistment office. At the time, our troops were sent to Czechoslovakia, I got there too and served there for two years. I had a half-brother who studied to be a lawyer. Unfortunately, he died of pyelonephritis. It was then that I decided to go to law school. I chose Sverdlovsk, completed pre-entry courses while in the army. I dropped in at home, went to Sverdlovsk, passed my exams and stayed there.
What is the biggest stroke of luck in your life?
My little bundle of life, my daughter Anastasia.
Your most cherished dream?
To buy a small aircraft and fly it. (Laughs). But it’s a dream that cannot be, I won’t be able to become a pilot any more. My son, however, took flight training at a pilot school and can fly small aircraft.
What were the most memorable moments in your life?

I remember my Young Pioneers induction ceremony. Such things do impress you, when you are a child. From today’s life... Something significant takes place at the refinery every year. But for some reason I still remember the following moment: on September 30, 2006 Governor Vladimir Yakushev and I are standing looking at the monitor screen. The monitor shows very clearly a tank being filled up with our first diesel fuel.

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