As the second largest oil exporter after Saudi Arabia, Russia is a hive for supermajors like Rosneft, Lukoil and Gazprom. Being one of the largest producers of crude oil, and home to the world's largest natural gas reserves, the state holds massive opportunity for the oil and gas sector. These opportunities also mean that many international oil and gas players open subsidiaries in the country. However, there may be a steep mountain to climb before reaping the benefits, especially when it comes to workforce challenges.
You would be forgiven for assuming that setting up a subsidiary is where these challenges begin, however it is not as complex as one may think. Registering a branch office in Russia tends to take eight weeks to complete, and it can be a 100% foreign owned entity. This means it can invoice local customers, sign local sales contracts and receive income from local customers without any problems. The challenges lie deeper than this.
One of these challenges is Russia’s strict data protection laws. Similar to the EU’s General Data Protection Regulation (GDPR), Russia’s equivalent is known to be just as complex and just as stringent. In many cases, international companies must fulfil the requirements of both the GDPR and local laws, even though in some instances they may contradict each other. In addition, these strict laws require all data to be kept on Russian servers, making it even more difficult for international companies. These may seem like tricky steps to navigate, however with the right experience in implementing these data procedures, and a proactive approach to ensuring the right systems and processes are in place, it is possible.
The recruitment industry faces the challenge of the contracted workforce ban. The new law was introduced in 2016 to rectify the lack of specific outsourcing regulation in Russia and has made it complicated to use a contracted workforce. In fact, contracted work is prohibited, but personnel provision as a service has obtained its legal form, and is still subject to certain legislative conditions and exceptions.
?ne of these exceptions is to employ personnel through private employment agencies. This is essentially a Russian legal entity that has passed a special accreditation for the right to perform personnel provision. It is crucial to ensure the agency has relevant expertise in recruitment and HR processes, in order to guarantee that personnel arrive safely and compliantly on-site when needed.
Regardless of contracting issues, attracting the right talent can be tricky. On the whole, a large part of setting up a Russian entity is hiring the right talent. And with some parts of the industry (such as LNG) experiencing a skill shortage, this can prove a challenge. For example, one of the world’s largest and most intricate LNG plants is located in Yamal. As it is the only LNG project in the Arctic Circle, it is rare to find people who have the right experience for these conditions and who would choose to work in them. With the temperature dropping to an inhospitable -30°C, many candidates opt to take comparable roles in warmer climes.
However, Russia is currently planning to raise its annual production of seaborne LNG to as much as 120 million t by 2035. Due to advancements in technology, a resurging oil price, and as other fields around the world become older, more Russian fields in extreme conditions may become more desirable and realistic to develop.
There is an assumption that some of this skills shortage stems from complex migration policies, but this is not the case. Russia’s policies are actually quite lenient compared with many other countries. This obviously depends on the individual and the reason for migration, but on the whole the process is easy to complete, especially if it is for a highly qualified specialist (HQS). However, at any stage of the process, if a deadline is not met it can often lead to the application being failed.
As such, careful management of the process is vital. This process can be designed specifically to trigger alerts that inform the applicant on deadlines. This helps to guarantee important deadlines are not missed. Specialised processes and the right experience to implement them will allow operators to save costs while ensuring compliant immigration services.
Russia may well have its challenges, especially when setting up a local business. But it is worth every application passed and time spent, as the country is booming with opportunities. As discussed, there are many important and complex parts to this process, which if completed compliantly, will help contribute to a smooth and successful journey. The trick lies in using an integrated approach where all functions are under one roof, simplifying the process while keeping risks and costs down.