The Fund was created at the initiative of Gazprom Neft in form of an investment partnership. Among its partners — Gazprom Neft, Gazprombank, RVC and VEB Ventures. Each partner is a financial investor that brings his knowledge, experience and expertise to the project.

The deliberations took more than a year and all necessary arrangements were finalized in April 2019. The Fund’s team consists of 10 specialists with experience in the oil and gas industry, development institutes, venture and direct investment, M&A and corporate finance.

Besides rendering financial assistance to the projects, we believe that the goal of the Fund is to find talented teams, help them critically reflect on their project and contribute to its implementation.

We did not anticipate such a high level of interest. We’ve received more than 200 applications and we’re still receiving more and more. Such interest coming from the market, of course, is encouraging.

The office of Fund is located at the Moscow State University Science Park, where we are integrated into the innovation and scientific environment. This gives us the opportunity to attract university students as interns and young specialists.

In order for it to be approved by the Fund, the project must meet a number of conditions. First and foremost, it should be consistent with the investment focus of the Fund. It is important that the team should be the driving force behind a project, and that the proposed technology be tested and have obvious advantages over analogues within the next 3-5 years. In this sense we are talking about projects at an advanced stage of implementation, when the product already passed laboratory or experimental-industrial trials. One more condition — investment attractiveness. Besides solving the industry’s problems, the Fund is also looking to ensure a return on its investments.

It is crucially important that behind every project stands a strong team of individuals. The project will fail if the people behind a brilliant idea are not determined to bring it to life.

We have a special scale where we consider team experience in terms of individual parameters. We have developed special formulas. I would say that our approach is quite technical, for every type of activity we have matrices and structures.

If a team receives red or yellow flags as a result of an assessment, then there is a potential to step into a «danger zone». Such projects are either put on hold until the time comes to consider the risks or they’re taken off the table altogether. We evaluate not only the innovativeness and value of the product for the industry, but also its profitability, so the selection process is very rigorous.

Many initial stage projects that were proposed to us had to be put on hold since the Fund’s mandate does not allow to finance them at this point in time. Of course, this does not mean that we won’t be taking them into consideration. We continue communication and observe as they develop.

Outcomes of the year

In the first year, we created a platform for effective work, we assembled a team and set up the assessment process. The Fund has a strategy and a portfolio of projects it’s working on.

There are 16 promising projects in elaboration. Almost half of them are related to the digitalization of the industry, a lot of them have to do with introducing elements of Industry 4.0 (such as robotization, automation, AI). There are interesting projects in such areas as chemistry, drilling equipment, work on the shelf, ecology and safety at work.

A variety of projects allows us to be more aware about forming a portfolio within which projects can complement each other. We are counting on a synergy effect from parallel development.

Our first investment is with «ADL Completions». The company helps to significantly reduce costs during well construction by organizing multi-barrel and multi-hole completion solutions. Even though there has been a considerable decline in hydrocarbon prices, the demand for the company’s services has increased. We see that there’s an interest both in the domestic and in the Middle East market. There is a good team behind this project. The guys clearly found their calling, we received positive expert reviews from service companies and subsoil users about the technology and the company. Moreover, we’ve determined that within 4–5 years together with our colleagues we will be able to achieve a multiple increase in the company’s capitalization.

One of the projects that we will submit to the Fund’s Investment Committee in the near future is the creation of a downhole tractor by Russian developers from the city of Tver. The project is of very high interest.

Over the next three years, we will continue to invest in technology and participate in the management of portfolio companies.

We expect that our projects will be of interest to the majority of Russian and international hydrocarbon production and processing companies, as well as construction, service and logistics companies.