He was offered to rule a state institution, 250 employees of which haven’t been paid since January and work one day a week, and his predecessor was fired after a crushing auditors’ report. Why did geologist Andrii Loktiev agreed, and what is he willing to sell to save UkrSGRI ?

Dossier:

  • Name: Andrio Andriyovych Loktev
  • Position: Acting Director of the Ukrainian State Geological Research Institute
  • Appointment date: April 7, 2020.
  • Born: January 22, 1986. City of birth – Stryi, Lviv region
  • School: Stryi Gymnasium named after Andrii Sheptytsky
  • Higher education: IFNTUNG (geology), Hayden High School
  • Academic degree: Candidate (PhD) of Geological Sciences
  • Experience: Stryi Drilling Department, Office of Management, Ukrainian Research Institute of Natural Gases UkrNDIgaz (SC “Ukrgazvydobuvanniia”), “Poltava Gas and Oil Company”, Reform
  • Support Team at the Ministry of Ecology and Natural Resources of Ukraine”, ” Geopower Ukraine “
  • Languages: English – fluent

About the Transcarpathian depression and family geography

NADRA.info: Is that your predecessor’s HD (hinting at the HD lying on the director’s desk)?
Andrii Loktiev: Yes. There was a whole story with it.

not a long appointment, someone took out the hard drive from the director’s computer. HDD returned, but “sediment remained” …

… just in case, I will not touch with my hands, so there were no my fingerprints…
Don’t worry, rhere are mine already (smiles)… On the appointment day, I came to the office, went to turn on my office computer, cause I needed to type some information, use the official e-mail etc., but the system wrote: no hard drive. Someone took it out before I came. After I asked, it was found but I haven’t checked yet if it is that HD for sure.

Let’s start with acquaintance. For many years your main profile was the extraction of hydrocarbons, and as far as I know, you are well known in that area. What about beyond it?
Besides the geological prediction orientation, prospecting and exploration of hydrocarbon deposits – areas where I have been working for the last 12 years, at a certain stage, I was also involved in geothermal energy projects in Transcarpathia.

Has it any prospects?
Yes. It is very interesting from that point of view that it could provide Ukraine with almost free hot water energy. How we could use it – is another question, but it could be useful in many areas from the heat and electricity production, up to the treatment and industrial fish breeding and of course – the extraction of dissolved chemical elements. However, at the present moment there are none active actiones in this direction.
During the Soviet period among Transcarpathia, the experimental installations which produced combined heat and electric power were built also in Crimea. But this topic, like many others in the field of subsurface use, requires good marketing. There are so many areas in Ukraine that represent both geological and commercial interests. At the same time, we need to learn how to show our subsurface to the investment environment in the right way. But now the situation that we have can be described by famous saying: we know how to cook, we do not know how to serve.

Let me clarify: what role did you play in the geothermal business?
I was the project manager in the questions of geology and drilling within the Transcarpathian region. It was a project where a private investor ordered the drilling of 4 geothermal wells to the Hungarian company AquaPlus, which actually developed the Hungarian geothermal industry to its current level.

The Hungarians faced a lot of technical and geological problems because they believed that the geothermal and geological conditions were identical to ours. However, the reality was different. The Transcarpathian Depression is probably the most complex geological unit within the territory of Ukraine. Within the last one there were discovered gas deposits, some oil displays were recorded and also it was established the presence of polymetallic ores and a number of non-metallic minerals, which are not so often combined within one geological unit. Moreover there are manifestations of volcanism and salt tectonics either. From a geological point of view it is a very interesting object, but when the Hungarians faced these difficulties, they began to seek technical assistance from local experts.

At that time I was a PhD studet and it was my area of research, so when I was invited to join the project, I decided to help. As a result, the project was successfully implemented, the customer received a product in the form of a geothermal resource of appropriate quality and quantity that exceeded his expectations, and the contractor was able to optimize the cost of well construction. In my turn, I gained a huge experience and earned friendly relations with György Zoltan, the owner of AquaPlus.

What is geology for you? When did you decide to become a geologist?
It so happened that I am from a dynasty of geologists – people who work and have worked in the oil and gas industry. I am the second generation of geologists. Not only my family but also our close relatives are dealing with geology for a long time. In particular, in the gas industry.

Are there any public personalities among your relatives?
Public – no. But all of them are professionals of high quality.
My father was the first who gave me an introduction into geology. He said – it is very cool and interesting.

In the senior classes of the A. Sheptytsky Stryi Gymnasium, when I had to decide on my future profession, my father (a geologist in the drilling branch of Ukrgazvydobuvannia) said: “You should join Frankivskui university to study geology”.

But for me at that time “geology” was just a word. I didn’t understand any of this. I apprehended geology as a science about the Earth’s structure, and nothing more. And when there was a choice, I wanted to study management, cause it made me fill interest more. I applied and entered both management and geology. Of course, my parents influenced, but at the same time my inner voice also suggested to join the geology club. So i have chosen geology. At the moment, I am completing my second higher education at IFNTUNG in Management, and I have a great opportunity to combine these two areas.

That’s how I got into geology. Somewhere during the 3rd year I began to understand approximately what geology is, and during the 4th year I became really interested in it. And from that time I began to join the research under the guidance of Professor Orlov Doctor of Geological and Mineralogical Sciences, who, is unfortunately, deceased in present. Geology has also become interesting for me from a scientific point of view.

You are a candidate of geological sciences (Phd). What is the topic of your thesis? Where did the defence passed?

Dissertation topic is: “Geological factors of gas bearing in Transcarpathian foredeep”. This is exactly why I got acquainted with geothermal energy. Everything has begun from the studying of the geological structure, features and differences of the Transcarpathian Depression from other oil and gas regions. Analyzing the geological data, I have noticed one special characteristic: very high temperatures. Actually, since then I’ve become interested in geothermal area.

The work was performed under the guidance of Academician M. Pavlyuk at the Institute of Geology and Geochemistry of Combustible Minerals in L’viv, but it was defended at the Institute of Geological Sciences of the National Academy of Sciences of Ukraine in Kyiv. That is, during my scientific career I managed to get acquainted very closely with the scientific community, and at the moment I have warm relationships with a brilliant group of scientists.

Who is your wife? What does Galyna Loktieva do?
My wife is a railway worker. But now she plays a very important role – looking after our children, and is on maternity leave.

How many kids do you have?
My firstborn is 3 years old, junior – only 5 months.

Oh, congratulations! In this room per three men there are seven children.
Wow! Who is this who is so fertile?

Valentine (photographer Valentine Kuzan) has three kids. I have two. Is your family in Kyiv right now?
At the moment no. They ar in L’viv. My wife tells me: «I didn’t marry a military man, but we are moving all the time!». After completing my work in the structure of Ukrgazvydobuvannya (2017), I took a new job in the Poltava Gas and Oil Company, and of course I had to live in Poltava for some time. I thought we would stay there because the conditions were very good, and I was lucky to become a part of an incredibly professional team. But I was oppressed by Poltava itself.

«Я не виходила заміж за військового, а ми постійно переїжджаємо!» – переказує Андрій Локтєв слова дружини Галини. Сьогодні Андрій живе на два міста, родина у Львові, скоро черговий переїзд, до Києва

Why?!
It is so “ Soviet ”… I mean, in some places the elements of the Soviet Union are remained in everyday life, in the environment and in buildings. It is quite provincial. Although, it has its own colouring, no doubt.
Three months later, I received an offer to lead the direction of subsurface use in the Reform Support Team, which was created by the EBRD and the EU with the Ministry of Ecology. And then my wife moved with me to Kyiv. Fortunately, I didn’t take her to Poltava with our son (the only one at that time)…

After that, I worked in the Reform Support Team for a little over a year as a project manager of subsurface use reform. Subsequently, I received an offer to take the position of chief geologist in a company with foreign investments (which owned a Ukrainian company) Long View (Long View Energy Limited, owns 85% of “Geoposhuk LTD”, the main activity of which is providing support services in the field oil and natural gas extraction). These were American investors. They brought superrnodern technological solutions that are actively used in the United States, and which have not been seen before by the native market. The company still operates, but the volume of activity has been critically influenced by low for hydrocarbon prices.

So at one time my family had to move to L’viv. And now again back to Kyiv. My wife supports me in every way, understands everything, and says: “Well, if you have to, you have to. We are always with you.”

About the director’s salary and a crafty “warm bath”

When did you receive an offer to head UkrSGRI?
At the end ofMarch at the begining of April.

How was it?
Roman Opimakh (the Head of the State Service of Geology and Mineral Resources of Ukraine) sent me a message: “Greetings! If you are interested in working in the public sector of geology field, I’m waiting you for an interview. ”

Do you have friendly relations with Roman Opimakh?
(significantly, after a pause due to an unexpected question) We follow the rules of business etiquette during the communication.

Did Roman Opimakh give you some time for contemplations?
I didn’t need it. We had a mutual desire. He needed to solve the personnel issue at the Institute, and I wanted to apply the skills of crisis management in the conditions of the “perfect storm” – which is the best description of the Institute’s situation.

Голова Держгеонадр Роман Опімах запросив Андрія Локтєва на співбесіду через SMS. Часу на роздуми не знадобилося: “бажання було обопільним” – каже Локтєв

Were there any other entrants for this position? Or the head of State Service of Geology and Mineral Resources of Ukraine just didn’t have a choice?
I do not know about other candidates, although I do not except the fact of consideration of other applicants. Our paths with Roman Opimakh have crossed before when I worked as a project manager for subsurface use reform. In general, our industry is very close. Almost everyone knows each other. Therefore, when I received an offer from Roman Opimakh , I did not think for a minute. There are 11 enterprises in the field of management of the State Service of Geology and Mineral Resources of Ukraine, and I am not sure whether I would agree to head any other company, except UKRSGRI, which is very close and clear to me. Because all my previous work was somehow tangent to science.

Okay, let’s go back to that moment when you said, “Yes, I’m ready.” What happened next?
I literally got into my car 2 days later and arrived in Kyiv. During the interview, we got on well with the head of the service, and the following week I took office. And my wife said, “What, again?” (about moving).

Why do you need this?
For sure not because of salaries. At least, salary is not in the first place.

Note the fact, that you said the word “salary” yourself. What is your salary in UKRSGRI?
Let’s not disclose financial details.

But it’s interesting, you should agree! I can’t be in the director’s office and not ask about the salary. Readers will not understand: “Man, you were at the director’s and did not ask what salary he gets?!”
I will say in such way: the salary is less than UAH 30,000 per month.

And if you count the bonuses?
They also must have common sense. Bonuses should be given when the company shows excellent financial and production results. So far without them. Yes, I still have a rise in wages for a scientific degree – 15%, of which taxes are also paided. Therefore, the money is definitely not at the first place. And this salary, which I will get here, is not the highest in the history of my career growth.

How much less is it than you received in private business?
Definitely not in order. But… a few times less. You asked about the awards. What awards could be if at the moment the Institute has salary arrears ?!

For how many months?
Most workers were last paid in January.

Does the Institute have no money?
There are really no funds. The problem is that the Institute existed on account of proceeds from the value of special permits assessment, which was its the monopoly right. At the same time, the State Audit Office has established that this direction is not specific to the Institute and it must be performed by the State Service of Geology and Mineral Resources of Ukraine. But for a long time the Institute was in a “warm bath”: it was its monopoly service. And the other directions did not develop. And when, after an audit by the State Audit Office, this practice was stopped, it turned out that UKRSGRI lost a third of its revenue. And also the fact of a sequestration has influenced on the situation.

Do you mean the audit of the State Audit Office, as a result of which the direction of the State Service of Geology and Mineral Resources of Ukraine was recommended to cancel the contract with your predecessor Serhiy Goshovsky?
Yes. What is the cost of a special permit assessment? UKRSGRI received materials, calculated the cost, and for one subsurface user the service could establish the price over UAH 100,000. Just to be told how much he has to pay! In other words, the functioning of the Institute was carried out on account of an artificial barrier for the subsurface user, which had no added scientific value. To be honest the multiplication of 5 coefficients is not exactly what the activities of the analytical geological center of the state should focus on.

But didn’t the instituti make money on this “warm bath”?
Let’s just say the Institute just existed. It did not develop either institutionally or scientifically. Because everyone was satisfied, there were money, salaries were paid. Yes, there were a certain number of orders for account of the state budget, when the state orders the services it needs. But, at the same time, UKRSGRI did not develop in the field of providing services to subsurface users, did not improve the skills of employees, in particular, in the direction of mastering modern software, did not develop its laboratory capacities.

What is UKRSGRI ? It is a glorious history that lasts from the nineteenth century up to the present day; it is a huge authority, which is formed by scientific and practical research; these are dedicated people. From scientific side, first of all, it is an in-depth analysis of geological data. UKRSGRI is the analytical center that has almost a complete database of geological information: primary and secondary, in other words, analytical. During geological research, industrial enterprises were collecting primary information and sent it here to the Institute, where scientists were analyzing it, and on the basis of scientific analysis offered further directions of new mineral deposits search, efficiency of field development and so on.

But due to the effect of “warm bath” in the Institute had no incentives for any other development. The institute has become critically dependent on government funding and artificial barriers for subsurface users.

На УкрДГРІ чекає перезавантаження. Або зникнення, як інформації зі стенду на сходовому майданчику

Did you know about the financial condition of UKRSGRI when you agreed to head it?
To be honest, a week before my appointment I read the news about the fact that the previous head was fired as a result of an audit. I learned about it from the press. However, when I took office, I was pretty shocked by the financial situation.

I was also surprised that employees were not allowed to go to the grocery store located opposite the Institute during a lunch break. And of course, a one-day work week. It is very difficult to maintain a high morale and require to do their best under such conditions. I have already transferred a significant number of employees and continue to transfer others to a three-day work week. And I really want all employees to be involved in a full-time week in the near future and give them an opportunity to be able to provide for themselves and their families.

“Fresh blood” for UKRSGRI

As follows from the State Service of Geology and Mineral Resources of Ukraine head’s statement, you have a full carte blanche. Can you specify what exactly you plan to do?
Yes, carte blanche is really full. At the present, the priority and essentially the only task for me is to save the institute from extinction without exaggeration. I work without any restrictions to achieve a single goal – to save the institute and “put” it on the path of sustainable development. First thing I feel is a full support of the State Service of Geology and Mineral Resources of Ukraine leadership, and the second one – that I am free in my decisions aimed at bringing the institute out of a deep crisis.

You entered the Institute alone or with a team? If with a team, who is in it?
During the years of working in the field, my paths have crossed, probably with more than a hundred specialized specialists. And I always paid attention to talented and highly qualified ones. Some of them responded and will join the Institute. These are professional, patriotic and honest people, and most of them have academic degrees. They are scientists.

Who, when and for what positions?
We’ll see soon.

What tasks are you planing to give?
It will not be a large number of people, but it will be professionals, each responsible for their important direction.

Which tasks? First of all high-quality performance of analytical scientific cases. That is, they will help in the improvement process of Institute’s products quality. They will liaise with stakeholders to help the Institute grow. These are both young and experienced scientists. In particular, we are negotiating with employees who once worked at UKRSGRI, but who was dismissed more than 10 years ago. After completing their careers at the Institute, they realized themselves as professionals in a free market conditions, and they are ready to help the Institute.

Okay. I believe that there may be specialists who are ready to help the institute for free. I understand that some of them will be inspired to change something in the industry. But earlier you said that you have arrears of wages for 3 months. Specialists who have realized themselves in the private sector in market conditions – know their price. What can you offer them in terms of salary?
Everyone who joins – do it in terms of bare enthusiasm. These are people for whom UKRSGRI is not an empty word, and they are ready to help almost without a salary, because they will see this salary at best conditions in a few months. That is, they really love UKRSGRI , and this is their only motivation. These are people who have deep trust in me and who are ready to work for a socially important goal. After all, the loss of the institution would be a painful loss for the state as a whole.

Андрій Локтєв анонсує “свіжу кров” для УкрДГРІ. Прізвищ не називає, але запевняє: фахівців, які готові рятувати Інститут, не лякають кількамісячні борги з зарплати

Ok, from your words for “fresh blood”, the salary is not the main thing. But still – you have a big cash gap, debts since January. And you have to cover this gap as a manager, you have to find an opportunity to pay off debts. Where do you get money to pay people? Will you take a loan?

First of all, no one lends to the Institute, which is a state institution. Second – for many years in UKRSGRI there was no systematic, purposeful work aimed to enter the foreign market with its services. There are more than one company in Ukraine with annual revenues exceeding UAH 1 billion and engaged in subsurface use. And there was no systematic work with both these ones and smaller companies. Whereas it must be and be, effective.

I see three ways/directions, working on which could save UKRSGRI, pay off wage arrears and give impetus to development in the nearest future.
The first direction is the implementation of works for the state, which will carry scientific and practical values for both – for the Institute and for the state. The management of the State Service of Geology and Mineral Resources of Ukraine is ready to support the Institute with orders aimed to increase the transparency level in the field of subsurface use, and, in particular, to facilitate and simplify an access to geological information obtained at the expense of the state for all stakeholders. We have a full understanding with he State Service of Geology and Mineral Resources of Ukraine, so we are actively working in this area.

The second direction is entering the market providing services to private companies-subsurface users. Today we have a competitive foreign market. If UKRSGRI was a monopolist once, things have changed over time. But the previous direction, unfortunately, did not always keep an eye on the situation. And at some point the Institute was left aside of large orders. We will actively develop this area, we will work to attract orders from subsurface users. And to do this, we have already begun the systematic communication with stakeholders and offer them products that will carry the exact value for both: the Institute and the customer.

What exactly are you planing to do?
We are in contact with a wide range of large subsurface users, including those of oil and gas specialization, and we openly tell them what situation we do have at the Institute. Almost all subsurface users with whom I managed to get in touch agreed to help. The institute offers them its services that they could use. For my part, I guarantee that the Institute will perform it quickly, efficiently and at a reasonable price, and this will allow UKRSGRI to survive. We are going to focus on marketing, because marketing tools were not used at the Institute. Thanks to to it, we will have a good opportunity to tell private companies why we, and not one of the private service providers, can conduct the highest quality and the most valuable research.

And the third direction is cooperation with donors. Analyzing the situation, I can say that this area was completely absent at the Institute. In Ukraineat the moment, there are various technical assistance projects which are underway. They do not finance institutes directly, but are ready to help such organizations as ours, with equipment, training, laboratory complexes and software. But they also want to get some value products instead. And we are ready to offer them this value.

Who are these donors?
There is a large list of them.

Which of the donors is ready to help UKRSGRI today?
We are just entering into the process of analyzing, setting up marketing and communicating with donors. Because donor projects can’t be implemented quickly. That is why it is the 3rd priority, but a very important one. And we will definitely master it. USAID, UKID and GIZ – all of them work in the field of subsurface use and today one of my personal goals is to find common grounds with them.

Unnecessary – for sale, reborn of PhD studies

When do you plan to receive the first income that will help cover salary arrears?
At the moment we are in the middle of an active working process on the first two directions: with subsurface users, and with the state. During the next weeks, I expect the receipt fot both directions. In addition, we’re planing to remove the Institute’s burden. I mean the premises of former branch offices, which are not used and have no value for the UKRSGRI’s profile activity. Once, these branch offices carried out an active scientific and practical doings, were forming the Institute’s authority. But now, the staff is lost, the equipment is morally and technically outdated. But the most important thing that the time was lost, so the activities of some former branch offices cannot be resumed. But we continue to spend a lot of money on their maintenance.

Are you talking about privatization?
There are such plans. Get rid of not everything, but all unnecessary. These are real estate objects: administrative buildings, production sites, garages, which are in the next regions: Dnipro, Poltava, Chernihiv, L’viv. At the same time, we still have a team in Chernihiv, and there is a desire to leave both: the team and the premises. There is a functioning laboratory, which is more convenient to leave at the institute in Chernihiv. We are also considering the staff reinforcement possibility of the team from several people, which miraculously survived in L’viv. However, a number of other facilities does not represent any expediency.

How the privatization of UKRSGRI ‘s facilities will be realized?
We will propose to transfer the objects, in the maintenance of which the direction of UKRSGRI does not see sense to privatization. If the State Service of Geology and Mineral Resources of Ukraine will agree, the State Property Fund will continue to deal with these objects. The institute will not receive funds from privatization, but will be able to free up a significant amount of financial resources.
T

hose objects which are not gonna be privatized, we will optimize and make it work effectively.

In the issue of privatization of property UkrSGRI last word for State Service for Geology and Subsoil of Ukraine, which is the founder of the Institute

For example?
For example, our specialists have developed a heating system of a certain number of rooms with the help of subsurface heat, which is removed by a heat pump. Only 3 batteries were installed, which partially heat the corridor instead of heating the workplaces. So we come to the conclusion that the money was spent inefficiently. If we gonna be able to buy and install some additional equipment worth UAH 70,000, we could partially heat the laboratory building and reduce natural gas consumption. This investment has an estimated payback period of 1.9 years.
We are not planing to sell the UKRSGRI’s central building. Instead, the heating system will be modernized, using the groundworks of the Institute’s specialists.

The Institute also has a printing house. And there is professional equipment, in particular, for large format printing on its balance which, in my deep conviction, is in high demand in foreign markets. We are considering the possibility of it’s updating and further providing of a wide range printing services for the city of Kyiv and the regions. The printing house activity should not be limited only by the publishing of the profile scientific journal “Mineral Resources of Ukraine”, which is published quarterly. The activity of the printing house cannot be unprofitable. We have to earn money purposefully in all specialized areas that are in the Institute.

UkrSGRI does not plan to sell the central building. Instead, they are modernizing the heating system, using the work of the Institute’s specialists

By the way, the audit report refers to the losses of UKRSGRI from hidden rent. What is exactly it about? Who, to whom, who rents? What are these volumes?

As far as I can remember from the audit report, in particular, it is about the placement of mobile antennas. The their location can be interpreted in different ways, but this is not a classic lease, where an office comes and is engaged in a certain type of activity. However, we will assess the legal details and, if necessary, review business relations with counterparties and bring them into strict compliance with the law.

There is another storage agreement in the former branch in L’viv, where, according to the information contained in the report, the auditors were not allowed. I have already managed to visit this former branch office, get acquainted with the team, analyze the state of affairs, including business. From what I saw a warehouse is actually under a storage contract.

Does the institute receive any funds from this?
Some pennies! More money is spent on the remuneration of specialists engaged in concluding contracts and their extension than we receive from all those “rents” in complex. This completely nonspecialized activity of the Institute must be ended once for all. It cannot be that 15% of the Institute’s employees are security guards and guard the unnecessary property.

The last question. Our project meets subsurface users every day, cause we are interested in their successes, difficulties and needs. We hear about the lack of professional staff. For example, a large company has been looking for a chief geologist for 2 years. Can UKRSGRI help subsurface users with the staff?

Yes. But the answer will not be short, and the result won’t be fast. Previously, the Institute had PhD studies. However, the process was ineffective and it’s functioning was ceased. I have already set a task for the scientific secretary: to analyze the state of affairs and ascertain ways of the PhD studies reborn.

Our goal is to reborn the direction of postgraduate training, and, for the first time in the history of its existence, to create a specialized Academic Council for the dissertation’s defense at the institute.

We have a large number of scientists, people who have Ph.D. level. There are alsp doctors of sciences and even an academician. We have a very large human and institutional potential plus geological information and laboratory complexes.

That’s why, for the first time of UKRSGRI’s history existence, we must create a special council to let people to defend their dissertations. And to offer a basis for professional development – to give an opportunity of a scientific and professional growth.

Some time later we will offer a course of practical lectures in certain areas of geology, which will be of interesting also to the general public.

P.S. Інтерв’ю з Андрієм Локтєвим відбулося в день, коли Фонд державного майна України заявив про спробу рейдерського захоплення ДП «Об’єднана гірничо-хімічна компанія» (UMCC). На тлі розмов про цю подію, пан Локтєв про всяк випадок перевіряє, чи на місці печатка УкрДГРІ. І збирається на вихідні до Львова. Домовляємося про наступне інтерв’ю для NADRA.info за два місяці, коли зможемо говорити про перші результати оздоровлення Інституту.

Interview given for the resource NADRA.info, communicated Volodymyr Boiko.
Photo by Valentin Kuzan, The Gate Agency