Kurdistan Region of Iraq: Interview with Mr. Yuri Pervak

Mr. Yuri Pervak

CEO (KurdNeft)

Mr. Yuri Pervak

The Kurdistan Region of Iraq has been facing security challenges for the past two years. However, on his speech, last 1st of May, Prime Minister Barzani said that the Region has embarked on a new era, the post-ISIS era. How do you think this new era will transform the Kurdistan Region?

Kurdistan is now a stable region, which means that all the foreign oil companies that pulled out due to security reasons are going to come back and invest again. The big companies tend to minimize risks; they are already successful and there is no need for them to take on challenges that may result in a negative image back home.

However, the security issues of the last years were an opportunity for risk takers like us. Now the big companies will be back again and are ready to invest big quantities of money, which will make business more difficult to small players, but for the Kurdistan itself will be very beneficial. Investment will increase consume, job opportunities and therefore the growth of the region’s GDP, not just in the oil sector, but in all of them.

President Masoud Barzani has recently announced that the referendum on independence is due to take place on September 25th. As Minister Falah mentioned in our meeting, it is a crucial step towards the creation of a new independent state. What would be the implications of an eventual independence for the Kurdistan Region?

The biggest pro is that Kurdistan finally has the opportunity to build its own economy and they have everything to succeed. It is a small country rich in oil and gas.

The pros are that everyone wants an independent Kurdistan. They have gone through hard times with Sadam, and then the ISIS came worsening the relation with Baghdad in terms of budget. Independence gives the opportunity to Kurdistan, which is an oil and gas rich country, to build its own economy. There is a huge potential. If everything is well organise, the potential is amazing and the region has the possibility to become richer if the organization and the partnerships are properly built.

Another particularity is that the lack of access to the sea, which means that everything that comes in have to be imported. There is a lack of local production. Basra used to be the main port of entrance of products, but it will remain within Iraq. Kurdistan will depend on its relation whit the neighbouring countries, Iran, Iraq and Turkey, who can close the borders in case of crisis. This will be the biggest change in terms of partnership.

The international crude oil market has been characterized in the last two years for its low prices, fluctuating around 45 USD a barrel since the big drop of prices in 2015. What is the evolution of the market that you expect? and how did you adapt KurdNeft’s performances to this particular situation of the market?

The market will probably stay in this margin of 55 to 60 dollars in the next few years. However, my business does not depend on the price of the barrel, as we will adjust our prices to the prices fluctuation in order keep the margin.

For Kurdistan, as oil dependent economy is more problematic, but it is necessary to be humble and accept that we will live with this circumstance in the coming years.

Kurdistan has to follow on renewable energy. We are going to open another gas station fully supplied by solar panels. This is the next thing that Kurdistan has to follow on, oil is not going to last for ever, and despite there is gas here, renewable energy is the future.

Mr. Yuri, you are natural from Russia and coursed your education in business administration in Geneva. Why have you decided to come to the Kurdistan Region to run a business such as KurdNeft?

In 2012, I was doing charity work at the end of high school and an opportunity to do it in Kurdistan, where the Syrian refugees were starting to come, appeared. We decided to organise a football tournament for the refugees. We did one tournament in 2012 and a second one in 2013, something that we combined with another little works at the refugee camp.

After one year at university, I realised that it is very boring and I wanted to come back to Kurdistan and start a business. I had previous knowledge about gas station and I thought that this business here was still to be developed, everything had to be introduce.

We built a brand filling the vacuum of a brand with which the people can identify themselves. Kurdistan needed a company that they could be proud of and say, “That is our gas station”. We started with one gas station in 2015, and no we have 9, a tenth one to be open soon and we are moving to a second city, with four gas stations in Duhok. We have grown from two to employees to 120.

Erbil, as the capital city of the Kurdistan Region, is the communication hub of the Region and presents significant levels of traffic. What is the profile of your clients?

When we started this business there was not good fuel in Erbil and cars were breaking down. At the beginning we had only one type of fuel, the 95 octane, the most expensive and with the highest quality, therefore we were targeting the richest customers with the best cars.

Later on, we started to produce normal fuel too, which is still the best quality for Erbil’s standards. Despite high prices of the gas, the value of our company is that people trust KurdNeft and we expanded significantly our range of clients, from international and government organizations to taxi drivers. They spend more in gas while saving in car reparations, where are the most expensive, but the most reliable. We have our own laboratories to control the high quality standards.

KurdNeft provide unique services in Erbil, like membership card and cashless payment, so our clients can take advantage of monthly billing and discounts.

KurdNeft is very present on the Internet and the social media, where you publish a blog with driving tips and post the latest news about the company. How do you interact with your clients?

Other companies in Erbil outsource they marketing. We never wanted to do it. The marketing department and the people who interact with the clients have to be next to us to convey directly our message. With our campaigns we encourage the people to try the better quality fuel and see the difference. We have noticed that the people who try the super fuel, they never go down to the lower quality. The clients feel the difference. We want to be in touch with all our clients, and the have direct line for the clients that want to contact us. We have to focus on our clients, without them we are nothing. Our response rate in Facebook, for example, is 100%.

The core values of HBR are technology and innovation, along with education. Can you tell us the innovation programs of KurdNeft?

Right now there is just one gas station fully run by renewable energy and we are going to establish the second one. The power supply in Kurdistan is not constant, so you need a very expensive generator to back up the public supply. We decided to install solar panels, invertors and batteries and we do not need a generator any more. In addition, when our batteries are full we are able to give energy back to the government. It is an exciting project as we are going to be the first gas station in Kurdistan and the second in the world to fully operate with sun. Solar energy is the future and we may do some more projects related to it in the future. The technology has reached the break-even point and it starts to be profitable to operate in this sector. Innovation is in the gens of KurdNeft, everything we have done so far has been innovation; automotive systems into gas stations, cashless payment with membership cards, online private cabinet for our clients to check their refuel statistics… The next step is solar energy and definitely we will carry out more innovations to benefit the people in Kurdistan and beyond.

HBR Readers include the top decision makers and business leaders around the world. As a conclusion to this interview, what is the final message that you would like to our readers?

KurdNeft aim is to be a company that people can be proud of; people who trust our fuel and that can be sure of our company and, like in other countries, they can be proud of. We will increase the gas stations and give back to the society. Our goal is reputation and the best services.