Russian fuel and energy complex digitalization market

2021

Russian fuel and energy complex digitalization market: on the verge of new growth

According to a study conducted by SAP and Deloitte in 2020-2021, the fuel and energy sector is inferior in terms of digital maturity to banks, trading and telecommunications companies, consumer goods and automotive enterprises. If the level of "world best practices" when assessing the digital maturity of the fuel and energy complex is estimated by researchers at 3.7 out of 5 points, then in Russia this figure is 2.5.

Experts came to the conclusion that new technologies have significantly changed the market balance, leveled the traditional advantages of the Russian fuel and energy complex and force companies to change their strategy and introduce new initiatives. As the Deputy Minister of power of the Russian Federation Pavel Sorokin noted on the eve of the forum "Russian Energy Week" ^[1]Transformation of the fuel and energy complex in accordance with climate challenges is impossible without the introduction of modern digital technologies, in addition, digitalization allows improving operational efficiency and ensuring competitiveness in the global market.

The Ministry of Energy of the Russian Federation, together with representatives of the industry, is conducting great joint work to develop measures that will contribute to the accelerated introduction of digital technologies in the fuel and energy complex, Sorokin said.

At the same time, the last two years have been really difficult for the fuel and energy market, says Vladimir Leonov, technical director of AMT Group. According to him, the projects that started before the pandemic continued. This applies mainly to CII protection, network infrastructure optimization, asset management, etc., optimization IT projects. Projects were also carried out that directly affect operational activities. The rest were postponed.

We had planned several such projects that were supposed to start in 2020 - they were postponed first to 2021, then to 2022, - said Vladimir Leonov.

Ivan Shilov, an expert on working with industrial companies in SAS Russia/CIS, notes the recovery of the market after a turbulent period.

Companies began to raise their heads and, despite the barriers associated with the unstable macroeconomic situation and the following budget restrictions, began to launch initiatives related to improving operational efficiency and reducing risks in investment projects, he notes.

The Russian representative office of Siemens believes that the IT fuel and energy complex market, especially in the oil and gas sector, is on the verge of new growth associated with infrastructure investments in new production and processing capacities of large players.

Dmitry Sokolov, an expert at the Digital Production department of Siemens in Russia, notes that the drivers of the changes will be an increase in the complexity of technological processes, an increase in the cost of servicing assets, an increase in value and a lack of qualified personnel. As a result, solutions related to:

• optimization of technological processes based on digital twins and models,
• predictive analytics of equipment,
• risk-oriented infrastructure maintenance, based on a holistic representation of the state and history of assets "in numbers,"
• rapid training on simulators, remote control and technical support for the work of personnel at the site.

Timur Rakhimov, Head of TEK Enterprises at Satel, adds that the introduction of digital technologies in the fuel and energy complex allows achieving four main goals of the industry:

• ensuring cybersecurity and data exchange within companies,
• continuous monitoring of the state of the equipment and infrastructure of the industry,
• improving the reliability of the resource supply by reducing the accident rate and optimizing the time for troubleshooting,
• Reduce network losses.

Thus, by 2024, the digitalization of the fuel and energy complex will reduce the duration of power outages by 5%, increase the technological level of facilities by 5%, and reduce the number of accidents on networks by 20%.

At the same time, outdated equipment, reduced budgets for the introduction of innovative technologies and a shortage of specialists who can not only establish, but also control the work of digital solutions, hinder the global automation of the industry.

Dmitry Kichko, General Director of Edit Pro Group of Companies, among the barriers to the Russian IT market in the fuel and energy complex also refers to the desire of the leadership of industry companies to manage them in accordance with established traditions.

In many cases, its representatives still believe that enterprises can limit themselves to introducing basic IT solutions, for example, EDMS and ERP, the expert notes.

Pavel Sergienko, General Director of Infopro Group of Companies, also attributes the low digital maturity of power enterprises and insufficient support from the state to restraining factors.

The last announced barrier is designed to eliminate the strategic direction of the digital transformation of the fuel and energy complex, approved at the end of December 2021 by Prime Minister Mikhail Mishustin^[2]

The document assumes the introduction of the following technologies in the industry:

• Big Data
• neurotechnologies;
• Artificial intelligence - for big data analysis and support and decision-making systems;
• components of robotics and sensorics - to increase labor productivity, development and operation of hard-to-reach deposits in order to ensure the safety of life and health of employees of the fuel and energy complex;
• wireless communication - to monitor and diagnose facilities and employees of the fuel and energy complex, including to ensure their safety, reduce the number of emergency situations and injuries.

In addition, the introduction of radioelectronic products (including when introducing robotic solutions, digital personal protective equipment) of Russian origin is envisaged.

The strategic direction of the digital transformation of the fuel and energy complex was approved by Mishustin for the period until 2030. It should contribute to the accelerated transition of the country's energy sector to new managerial and technological levels that provide the conditions for the development of the industry.

The largest participants in the Russian digitalization market of the fuel and energy complex

ENERGY INDUSTRY Russia The company became the leader in the rating of the largest IT suppliers in terms of revenue for 2020. SIGMA Its revenues from the implementation of IT projects in this area increased by 70.7% and reached 7843.6 million rubles. The top three also included companies and. I-Teco LANIT

A detailed rating is published in a separate article.

The most popular classes of IT systems in the fuel and energy sector

According to the TAdviser project database, among the various classes of IT solutions in the fuel and energy complex companies, enterprise resource planning systems () ERP and systems () are most in demand electronic document management EDMS. It is these solutions in the TAdviser database that account for the largest number of projects completed in three sectors of the fuel and energy complex -, and. power oil industry Data gas industry on other classes of systems are presented in the diagrams below.

Vendors of IT systems, most often implemented in the fuel and energy sector

For each class of IT systems implemented in certain industries, the TAdviser database allows you to identify the most popular solutions and vendors of these products. See the [1] [2]diagrams below for which companies are developing the systems most often implemented in the Russian power, as well as in the oil and gas industry.

2020

Assessment of the demand of the Russian fuel and energy complex for advanced digital technologies at the level of 30.7 billion rubles.

According to estimates by the Institute for Statistical Research and Economics of Knowledge (ISIEZ), HSE the demand for Russian the fuel power complex () ENERGY INDUSTRY for advanced digital technologies in the next decade may grow 13.5 times (from 30.7 billion rubles in 2020 to 413.8 billion rubles in 2030). The HSE announced this on January 20, 2022. Using big data the iFORA analysis system, ISIEZ specialists considered the most promising digital technologies of the fuel and energy complex at the angle of their representation in the global research and market agenda.

The calculations were made on the basis of more than 169 thousand sources selected by the iFORA system algorithms from an array of highly cited foreign publications for 2020,

1st place in market analytics and 2nd place in scientific research are occupied by active-adaptive networks (smart grid) used in centralized power systems. These technologies provide reliability and increase the efficiency of energy transfer by integrating various types of devices of generating organizations, energy suppliers and consumers into a single environment.

Smart meters (3rd place in research and 2nd place in the market) contribute to economical energy consumption: they track its consumption in real time and transmit information to the consumer (for energy management) and the resource supplying organization (for making decisions on optimizing the use of infrastructure facilities).

Based on digital technologies, new business models are emerging, in particular promoting the wider use of green energy. The most common of them - "Energy as a Service" (7th place in the ranking of research and 3rd among popular business solutions) - allows you to receive energy management services and use the equipment of power supply companies for a subscription fee.

The top deserted energy extraction technologies - a digital mine and a digital field - close the top. Such projects usually cover all major exploration, production and logistics processes and allow for improved production and economic performance. Despite the demand for new methods of mining fossil energy resources, their share in the energy balance is gradually decreasing, as well as investments in new mining projects.

Many popular technological directions in science are also in demand on the market. The most current technologies are designed for final energy consumption. In the research agenda, 11 out of 15 technologies are used by consumers and requests, in the market - 12, which indicates an increase in the role of consumers. Many of the listed technologies are interconnected, so the development of some solutions will lead to wider adoption of others.

How was 2020 for the IT market in the fuel and energy complex

The fall of the Russian IT market in 2020 may be about 8% in dollar terms, IDC analysts suggest. Such a scenario is also very likely for the IT market in the fuel and energy complex, since the pandemic has led to a sharp decrease in economic activity on a global scale and the instability of global energy markets. Energy demand declined sharply, putting significant pressure on market prices.

The main blow fell on companies, one way or another, related to the production, processing, transportation of oil and gas. Companies are beginning to optimize budgets, including, of course, budgets for the development of information technology, - informed TAdviser technical director of TegrusAlexander Mikhailov.

Roman Ostapchuk, Deputy General Director for Technical Development of Step Logic, noted that by cutting budgets, industry companies began to make additional requirements and conduct additional checks on the planned economic efficiency of IT systems, which greatly complicated the decision-making structure.

We note a decrease in investment in IT development in the oil and gas industry. Each investment of money is carefully assessed in terms of the expected effectiveness of investments and potential risks, "Sergei Ponomarev, technical director of the ASCON integrator department, told TAdviser.

The situation with the implementation of projects on the market is ambiguous. On the one hand, the timing of a number of projects was significantly reduced, on the other hand, many companies in the industry postponed the implementation of large projects to modernize the IT infrastructure to a later time.

According to RAMAX Group Sales Director Alexander Savchenko, the industry postponed projects that are not directly related to the provision of operating and economic activities, and all new initiatives were much more carefully analyzed - mainly for payback on the horizon up to one year.

Thus, we are dealing with a full-scale revision of previously approved programs for the digitalization of business functions, - concluded Alexander Savchenko.

At the same time, in some sectors of the fuel and energy complex, namely in the electric power industry, a number of specialists noted a more favorable situation.

I do not argue that the pace of development is not as fast as, for example, in retail. But power is not the industry where, due to 2-3 solutions, most business processes can be automated. Here we work with federal-level companies and complex infrastructure, plus the industry itself is key to the economy as a whole and the quality of life of every person. Therefore, all steps should be gradual and conscious, - said Sergey Kolodey, CEO of Sigma, in a conversation with TAdviser.

However, by the end of 2020, the interest of serious industry players in large IT projects still began to return. As a result, business activity in the IT market for the fuel and energy complex also increased.

I associate this not only with the closure of the calendar year, but also with the "addiction" of the industry to a pandemic, remote work, as well as the realization that in such conditions it is possible and necessary to work even more successfully than before, - said TAdviser, director of business development at TEK Technoserv Consulting Igor Okhrimenko.

In 2021, due to projects postponed by many industry players in 2020, the information technology market for the fuel and energy complex is likely to increase.

Level of digitalization of energy industry

Energy companies are going through the stage of active digitalization of key processes, which began a few years ago. The main goal of enterprises in the introduction of information technologies, according to the vice-president of the Borlas group Arkady Karev, is to increase productivity and ensure uninterrupted operation of energy facilities. It should be noted that most enterprises in the industry are already seriously investing in their IT structures.

All players in the fuel and energy complex market are most seriously engaged in the tasks of digitalization. Moreover, the transition to digital affects literally everything among industry players: business processes of interaction within, with contractors and customers. The industry wants to automate all areas in which human labor can be excluded. For example, we recently calculated a project for robotic sanitary treatment of premises - offices and industrial facilities - one of the fuel and energy complex enterprises, "Mikhail Yusupov, project manager of the Reksoft IT company, told TAdviser.

Almost all enterprises of the fuel and energy complex have a large layer of IT solutions that close such areas as geophysical research, geological exploration, process control, etc. The ICT infrastructure is also doing pretty well, as it is the backbone of the IT landscape and must be kept up-to-date at all times. However, the composition of the solutions used and the degree of automation of business processes among enterprises of various sub-sectors of the fuel and energy complex vary greatly.

It is quite difficult to assess the level of digitalization of the fuel and energy complex. This is like a well-known example with an average temperature in a hospital, when there is a lot and good somewhere, and somewhere it is completely difficult and so-so. In general, it seems to be normal, but these are exclusively statistics. However, nevertheless, one can single out the most "advanced" in terms of informatization of the fuel and energy complex sub-industry, which, for objective reasons, include enterprises whose activities are related to the provision and accounting of electricity, the nuclear industry, - said Oksana Vysochanskaya, director of work with key clients of Hi-Tech, in a conversation with TAdviser.

The general director of Sigma, Sergei Kolodey, notes that for many enterprises from the energy sector, the issues of automation of basic business processes are still relevant: for example, reporting and document management. But there are those who are already introducing innovative products in the field of IoT, artificial intelligence, etc.

According to Vladimir Leonov, Technical Director of AMT Group, electric power companies are most actively introducing new technologies, and oil and gas companies are in second place.

Coal mining companies are a little more conservative, nevertheless, digital transformation is also underway there, - said Vladimir Leonov.

In the opinion of Yulia Kudryavtseva, director of strategic development at Forsyth, the coal industry is still just starting large-scale IT projects. Electric power enterprises are engaged in digitalization "quite actively." One of the leaders in the use of digital technologies, in her opinion, is the oil and gas industry.

An obvious indicator of the level of development of information technologies in the industry is the beginning of its enterprises creating their own competence centers for the most significant "end-to-end technologies": blockchain, artificial intelligence, robotization, artificial and augmented reality, unmanned aerial vehicles, etc. However, the role of information technology in the industry is still great only in servicing current needs. They still have a rather weak influence on the development of the fuel and energy complex.

The reason for this situation, according to Valery Milykh, head of the IoT group at Softline, is that many technical processes and equipment at industry enterprises appeared back in the distant 1960-70 years, then IT systems were introduced mainly to maintain the minimum necessary technological operations. His goal, in turn, was to achieve the minimum necessary result.

Unfortunately, many industrial enterprises, including those from the fuel and energy sector, are still showing not very high interest in digitalization. Of course, there are reasons for this - this is the high dependence of the IT market on foreign products, and the lack of a regulatory framework for regulating the digital economy. But I would like to note that the state is taking active steps to eliminate these barriers by stimulating demand for modern IT solutions, developing import substitution, and forming a legislative framework, "Vladimir Leonov told TAdviser.

Valery Milykh, in turn, drew the publication's attention to the decrease in the competitiveness of "traditional" technological solutions, caused by the fact that "time dictates other priorities, and the structure of consumers of fuel and energy services is changing."

According to some estimates, it is necessary to raise the efficiency of fuel and energy complex enterprises by at least 30% in order to provide them with confident positions in the near future. Nevertheless, the development is underway and the introduction of digital technologies by energy companies is in the focus of the Russian government, "Valery Milykh assured TAdviser.

IT Barriers and Drivers in the Fuel and Energy Sector

The main modern driver of digitalization and at the same time its barrier is undoubtedly the coronavirus pandemic. According to Sergei Kolodey, on the one hand, it provoked a difficult economic situation and, as a result, a revision of long-term projects, on the other, it gave a powerful incentive for the operational modernization of existing IT systems and the use of new technologies - for example, mobile technologies for interacting with consumers, optimizing infrastructure and equipment maintenance. However, other incentives and obstacles are also noticeable in the digitalization market of the Russian fuel and energy complex.

Barriers

One of the barriers to the digitalization of the fuel and energy complex is the lack of a strong innovative and industrial policy of the state, as well as quite a lot of pressure on it "new power."

Consumers are already beginning to compare the conditions for the provision of services by traditional fuel and energy enterprises with alternative ones. However, so far the fuel and energy complex is the basis for the country's development, the basis on which all subsequent production is built, which, in many ways, determines the competitiveness of the complex's products in the domestic and foreign markets. "Green power" and local generating capacities are not able, at least for now, to meet the needs of large groups of industrial enterprises and be the key to the country's energy security, - said Softline expert Valery Milykh.

The increasing global trend towards the development of distributed generation and hybrid power supply systems also has its negative impact on the fuel and energy complex, and, as a result, its digitalization.

The Russian market in this area follows the world one with some delay, but we will also be there. Accelerating the change of generations of technologies in power - the introduction of renewable sources, energy storage systems and hybrid power plants, distributed generation, intelligent management of energy facilities, intelligent consumption of energy resources, etc., leads to a reduction in the life cycle of IT systems and solutions. It is necessary to offer solutions with a quick return on investment, "Oleg Bezgin, director of ERP practice at the Digital Economy League group of companies, told TAdviser.

The development of digitalization of the fuel and energy complex is also complicated by a significant amount of equipment developed at the previous stage of technology development - in the middle and end of the last century. It is still in operation, functioning properly, has the necessary margin of reliability, but does not meet modern requirements when it comes to, for example, digital and intelligent networks. Replacing this equipment within a reasonable time, due to the pace of digitalization, also requires additional investment.

The development of information technologies in the industry is also negatively affected by a decrease in the qualification of personnel serving its technological equipment. This sad phenomenon occurs due to a decrease in the prestige of this type of activity and requires minimizing the participation of people in the management of fuel and energy complex systems. At the same time, technologically re-equipping industry enterprises is difficult and expensive, and the prospects for obtaining personnel with a high level of competence to work with new technologies, according to Valery Milykh, are quite vague.

An obstacle to the digitalization of the fuel and energy complex is also the lack of qualified specialists in the IT sector and at the junction of these two industries: on the ground, there are not enough specialists of the required level who would have the necessary knowledge and competencies, would be able to comprehensively assess the level and complexity of the task, build a step-by-step implementation strategy, prioritize the implementation of each of the stages, select resources and build a clear scheme of interaction to solve the tasks.

For several dozen companies - units of successful cases of digital transformation projects. Often, the fulfillment of tasks related to the digitalization of production ends at the level of automation of only one of the processes, "says Tatyana Konstantinova, director of the center for solutions for the industrial sector of RDTECH.

In addition, fuel and energy complex companies operate exclusively on their own infrastructure, although the global trend that has affected even very large organizations is the transition to external cloud platforms.

I admit that in the case of the fuel and energy complex, this is due to the fact that industry enterprises are among the critical infrastructure facilities of the Russian Federation. However, the transfer to the clouds of certain non-critical systems for business would significantly speed up the processes of putting new solutions into commercial operation, - believes Mikhail Yusupov, project manager of the IT company Reksoft.

In turn, Arkady Karev nevertheless notices a "cautious interest" in the use of cloud technologies among the fuel and energy complex enterprises. In his opinion, it is connected with the fact that in the conditions of increased requirements for data security and uninterrupted operation of energy facilities, industry companies retain some distrust of the "clouds."

Among the barriers to the digitalization of the fuel and energy complex, which have an IT nature, one can single out the industry's need for rather complex products, which for many reasons cannot be universal. This feature leads to a decrease in the development and implementation of these solutions, as they are preceded by serious survey and design work.

In 2020, several attempts were made to create universal solutions for the logistics of the fuel and energy complex, but the development of a single platform remains a difficult task, which can be solved only in certain sectors of the industry, - said Dmitry Parshin, director of the development center of Artezio (part of the Lanit Group of Companies).

Another barrier is the lack of an integrated integrated information system at the level of the entire organization.

In practice, we are faced with examples when more than 10 different information systems are used in one business process, the data of which contradict each other. As a result, the risks of making decisions based on irrelevant information increase. Ultimately, this translates into a delay in the construction of fuel and energy complex facilities and their rise in price, "Sergei Ponomarev told TAdviser.

It should be noted that the many IT systems available in industry enterprises can also lead to the emergence of their "unmanaged" population.

Enterprises massively equip equipment with sensors, but there are not many systems on the market that can effectively process these volumes of information and draw effective, well-interpreted conclusions, "said Valery Milykh.

No less acute for the industry is the problem of information security.

If earlier enterprises were actually "black boxes," now, with the introduction of digital technologies, they are becoming a "tidbit" for external penetrations, especially since today the share of imported solutions in the field of fuel and energy complex reaches 80-90%, - notes Valery Milykh.

Oleg Bezgin also drew TAdviser's attention to the decentralization of the systems and processes of Russian energy companies, which takes place despite the common identity of their operating activities.

But recently we have seen more and more steps to create unified solutions, for example, the creation of a single portal of technological connections, the launch of pilot projects for digitalization by Rosseti, the creation of unified (interregional) control centers for distribution electric networks in several regions of Russia. But these are only the first steps on a long path of centralization, so the possibilities of obtaining economies from the scale of the introduction of standardized digital technologies are still very significant here, "Oleg Bezgin said in a conversation with TAdviser.

The lack of maturity of domestic IT solutions is another obstacle for the industry.

Despite the presence of separate solutions that correspond to the world level, for example, the complexes of operational dispatch, technological and situational management "SK-11" and "Kotmi-14," the general level of maturity of Russian technologies is still lagging behind advanced foreign developments, - Oleg Bezgin said in a conversation with TAdviser.

At the same time, in this situation, in his opinion, "it is difficult to blame Russian manufacturers."

World leaders have access to the global market, which is an order of magnitude larger than the Russian one, and in the corporate sector, in the vast majority of cases, solutions are created with the money of the clients themselves. In addition, imported products often went much further along the experience curve than Russian developments, even often with much greater scientific and innovative potential, and significant investments were made in them. So here, in my opinion, we have a typical problem of chicken and eggs - competitive Russian solutions will not appear until Russian clients begin to invest in their development and begin to actively implement them, even on an initiative basis, - concluded Oleg Bezgin.

The barrier to the development of information technologies in the fuel and energy complex is the historical heritage of the industry - the "zoo" of a wide variety of IT systems. They can get along with each other, but there is often no need to talk about the effectiveness of such a symbiosis.

In addition, the industry's lack of understanding of the differences in the specifics of developing individual solutions, which can be diametrically multidirectional in terms of structure, scope of implementation, composition of participants, terms and stages of implementation, plays a negative role. Some companies see digital transformation in one unit of automation or digitalization of a certain segment and do not move on. Others - form requests comprehensively, without developing a phased implementation, and, of course, face execution problems.

In my opinion, coordinating the digital transformation project and involving external co-executors to implement the tasks set, the company needs to work with an experienced contractor to develop an implementation strategy, stage and priority in each area, set clear deadlines, achieve budget consistency for each stage and understand the structure and role composition of the project team. Tatyana Konstantinova, director of the center for solutions for the industrial sector "RDTeX," said in a conversation with TAdviser.

Drivers

One of the key drivers of the development of domestic information technologies in the fuel and energy complex is, of course, the state's import substitution policy, as well as a direct ban on Western vendors from supplying software to Russian enterprises from the sanctions lists. The devaluation of the ruble also plays a role, due to which the cost of Western solutions has increased significantly.

The number of drivers for the digitalization of the fuel and energy complex as a whole should include the need to ensure the operation of equipment previously installed at enterprises of the industry until its full utilization. Smart Wells, Digital Twin Refinery, Intelligent Field allow you to extract the maximum from existing systems and fields with minimal threat to people and the environment.

At the same time, a "seamless" connection of old and new systems, gradually put into operation, is possible, which is achieved by harmonizing heterogeneous data collection and processing systems and control systems using IT solutions. With the use of modern technologies, the issue of ensuring safety and stability of work can also be solved, - said Valery Milykh.

The development of information technologies in the fuel and energy complex is also positively affected by the decline in oil reserves in the world as a whole and the increasingly difficult conditions for its production.

The cost of producing a barrel of oil is constantly growing, and modern technologies can help both in the exploration of new fields and in reducing the cost of developing existing ones, "said Ivan Khovavko, head of the digitalization division of the fuel and energy complex of Force - Development Center (Force Group).

The largest IT suppliers in the fuel and energy complex

According to revenue for 2019, Lanit, I-Teco and Tegrus became the largest IT suppliers in the fuel and energy complex of Russia. They account for more than a third of the total revenue of IT suppliers in the top 30.

A detailed rating is published in a separate article.

Read also

• Digitalization of fuel and energy complex. TAdviser 2021 Review
• Information technologies in the fuel and energy complex. TAdviser 2020 Review
• Russian power Automation Market
• IT in power. TAdviser Overview

Notes