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The Moscow Connection
The Moscow Connection

PIPES, PATRIOTISM AND PROFITS: TWO GENERATIONS OF GEVORKIANS HEAD ONE OF RUSSIA'S LARGEST COMPANIES


by Suren Deheryan & Suren Musayelyan

Senik Gevorkian, 62, has lived in Moscow for 13 years. The Zakneftegazstroy-Prometey (ZNGS-Prometey) company that he headed for nearly two decades was one of the first entities in the former Soviet Union to be privatized in 1990.

ZNGS-Prometey is one of the largest Russian companies in the field of oil and gas pipeline construction, but its foundation has been laid by Armenians. And when the board of directors of this Russian company gathers, discussions are held in Armenian. All of the company’s five-member board are Armenians, as well as 13 of its 17 top managers.

ZNGS-Prometey has been involved in pipeline construction since 1958, participating in major projects for the oil and gas industry both in the territory of the former USSR and abroad. Until 1990, the state-owned company’s main office was based in Armenia and had four branches in the USSR.

Gevorkian, who led the company from 1985, says that Armenians were always distinguished by their high professionalism in the Soviet Union. “Armenian specialists were invited to work in all areas of the Soviet Union with difficult climactic conditions and terrain,” Gevorkian recalls.

In 1992, the company’s Moscow office finally separated from the main office in Armenia and became a separate entity based in Russia.

It was then that Gevorkian left his home in Yerevan to assume duties in Moscow. His son, Vazgen, joined him there in 1994, where he continued his education, receiving a PhD in economics.

Gevorkian says that during the years of its activities the company has laid a total of 6,595 kilometers of pipelines, and during the period from 1995 to 2005 it built a total of 2,903 kilometers of pipelines.

ZNGS-Prometey is among Russian companies that have made sizable investments in the Armenian economy as well. The company has four subsidiaries of which one is its representative office in Yerevan, and three affiliated companies, including Prometey Bank, also in Armenia’s capital.

Using its own facilities, the company constructs up to 2,000 kilometers of pipeline of varying sizes, annually. ZNGS-Prometey also has its own engineering design for gas pipelines.

Prometey’s Quality Management System for maintaining customer confidence in their products is certified by Bureau Veritas Quality International (London, UK), and meets the national quality and standards systems of the UK, Holland, and the United States.

The company employs more than 2,400 workers and Gevorkian, now a member of the board of directors, handed over the presidency in 2003 to his 35-year old son.

Gevorkian senior explains his decision the following way: “I have a Soviet education and mentality, and I look at business from this viewpoint. My son has a capitalist approach to all this, which, I think, will benefit the company.”

He adds: “I think the Soviet Union’s collapse was a mistake. The party that led that system should have collapsed, but the union of the republics should have been preserved and be like the European Union today.”

A professional engineer, Senik Gevorkian acquired considerable experience from working in the former Soviet gas and oil industry for more than 25 years. He was awarded the Order of Labor Banner, the Badge of Honor, and a number of other state and public recognitions. He is a member of the Russian Academy of Technological Sciences and the International Academy of Energy.

Regarding business in Moscow versus business in Yerevan, Gevorkian senior says he sees parallels between running a government and running a business.

“There must be clear and indisputable subordination for the work to be done properly,” he says. And the businessman jokes that if his company were in charge of the Iran-Armenia gas pipeline, the job could be done in a matter of weeks, rather than years.

Like other Armenians in Moscow engaged in international deal making, Gevorkian cites political stability in the region as being crucial to Armenia’s economic growth. Concerning his own involvement, however, he says that Armenia simply does not present a big enough market for his enterprise—stressing again that his limited activities there are for patriotic reasons.

ZNGS-Prometey’s subsidiaries are involved in the construction of the Belarus section of a pipeline to Western Europe from the Yamal Peninsula in northern Siberia, and the Russia-Turkey Blue Stream transcontinental trunk gas pipeline, the latter in a difficult stretch of complicated mountainous terrain in the Krasnodar area of southern Russia.

According to the company’s management, care is taken especially in the qualification and engineering and technical skills of its staff. Gevorkian says that, each year, 100-120 engineers and workers attend special training courses. The management’s attention is further focused on modernizing the equipment and facilities used throughout the company. ZNGS-Prometey owns a plant in Russia that specializes in manufacturing heavy engineering vehicles and tools, including pipe-carriers, trailers, timber-carriers, electric welding, and other equipment.

Candid on other issues, Gevorkian is tight-lipped when asked about his company’s worth, saying only that revenues are “very big”. According to the company’s official website, www.prometev.com.ru, ZNGS-Prometey has assets valued at $780 million.

“The principle of our company is to be engaged in fields where we are specialists. Our company has always occupied leading positions because we work quickly and more cost-effectively than other companies,” says the elder Gevorkian.

But ZNGS-Prometey’s connections with Armenia were much more extensive until a few years ago (when it turned over some of its holdings to the state). The Gevorkians were the founders of a TV channel in 1999 (today’s H2 public channel) that was then set up as a cultural channel and was called Prometey.

“The goal of opening such a channel in Armenia was to strengthen Armenian-Russian relations through culture. We provided the channel with modern equipment and recruited professional staff from Armenia,” says Gevorkian. “Armenia needs to have good relations with Russia, which now is done as a consequence of the direct ties between the two presidents.”

In 2003, the Gevorkians decided to hand the already viable TV channel to the state.

According to Gevorkian, they engaged in activities and made investments in Armenia simply out of patriotism rather than the pursuit of profit. “The field that we represent has a very insignificant market in Armenia,” he explains.

In May 1999, ZNGS-Prometey signed an agreement with the Armenian government to buy Prometey-Chimprom for $1.5 million. Prometey-Chimprom included three enterprises: the Vanadzor Chemical Plant, the Vanadzor Chemical Fiber Plant and the Vanadzor Thermal Power Plant.

The chemical complex has the capacity to produce up to 10,000 tons of melamine, 15,000 tons of calcium carbide, 500 tons of melem, 3,500 tons of acetate ribbon and 20 tons of aluminum oxide.

The program of restoring the complex was meant to take seven years, but all of the works were completed in 2001: the thermal plant has a production capacity of 25 megawatts of electricity a year, and both the Vanadzor Fiber Plant and the main chemical works are back in production after an interruption of 12 years.

ZNGS-Prometey was supposed to invest a total of $60 million into the complex, but in 2002, having invested $20 million, it gave the management rights to another company with a provision to buy the plant after five years.

Ransat, a British-based management firm took control of the plant for a reported $6 million. A year later, however, Ransat ceased its work in Armenia after a dispute with the Armenian government, leaving the future of the chemical complex in limbo.

Senik Gevorkian maintains that, despite the suspension by the management company: “The chemical plant’s products are in demand all over the world. We helped revitalize it and now it is important that the managing company operates it properly.”

While the senior Gevorkian connects his investments in Armenia with patriotism, his son, raised in a more capitalist environment, says profit is his concern.

“I will make investments in Armenia if I see a business interest there,” says the younger Gevorkian.

Originally published in the April 2006 ​issue of AGBU Magazine. Archived content may appear distorted on your screen. end character

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