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Mohd. Shahir Liew, Ph.D., P.E. (Texas), P.Eng, (Mal.)
Head of Civil Department & Offshore Engineering Center, UTP
19th November 2012, Offshore Structures Asia, KL
Transforming Malaysia
into the Asian Oil and
Gas Powerhouse:
Future Fast Forward
Offshore Engineering Center UTP
PRESENTATION OUTLINE
Initiatives & Enablers
Objectives
Current Climate & Opportunities
Conclusion
THE GOVERNMENT VISION
Government’s vision to transform Malaysia into main hub for O&G by 2017
O&G has always been viewed as an important investment sector for both local & foreign entities
Understandably, due to competency gap, resources and expertise, local participation in the O&G is still low
CURRENT CLIMATE & OPPORTUNITIES
PETRONAS & THE O&G AGENDA
Expected slowdown in crude oil demand due to uncertain global economic weather, lowering PETRONAS’ earnings
Huge challenge in oil production despite of major projects in the pipeline
However, upside in oil production will materialize in 2014 when the major projects currently in pipeline contribute their share
CURRENT CLIMATE & OPPORTUNITIES
WHAT IS AFFECTING O&G STABILITY?
CURRENT CLIMATE & OPPORTUNITIES
1. High Oil Prices
2. International
Gas Boom
4. Intensifying
Sustainability
Concerns
3. Geopolitical
Upheaval
WHAT IS AFFECTING O&G STABILITY?
CURRENT CLIMATE & OPPORTUNITIES
CRUDE PRICES HAVE BEEN TRENDING UPWARD SINCE
2008 FINANCIAL CRISIS
TALKING DOLLARS & CENTS
Capex in 2011 was RM30.8billion (62% reinvested locally)
RM300billion is anticipated to be invested from 2011 to 2015 to sustain revenue
RM32 billion over the next five years into asset integrity
It is anticipated that there will be 70 new platforms to be commissioned in the coming 5 years
CURRENT CLIMATE & FUTURE PROSPECTS
Deepwater projects have been pushed to the forefront especially with the recent Gumusut-Kakap field with a 620m boe reserve
Future deepwater projects are in motion up till 2015 with one of the largest fields containing 2701m boe reserve, thus requiring large scale commissioning services
CURRENT CLIMATE & FUTURE PROSPECTS
TALKING DOLLARS & CENTS
O&G DIRECTION
PETRONAS has cited that majority of the Capex includes: aggressive exploration
development of marginal fields
establishment of regasification terminals
in Melaka, Pengerang & Lahad Datu
CURRENT CLIMATE & FUTURE PROSPECTS
CURRENT CLIMATE & FUTURE PROSPECTS
SUSTAINED CAPEX IS LIKELY TO BE FOLLOWED BY HUGE DEMAND FOR O&G EXPERTISE
OVER THE NEXT FEW YEARS
HOW DO MALAYSIAN
STAKEHOLDERS STACK UP?
O&G EPCCs
SapuraKencana has secured commissioning hook-up & IRM deals from PETRONAS RM10billion and RM800million respectively
Marginal fields have also been tendered out at RM3billion
PFCE has won the single largest maintenance contract from PETRONAS (35 PAs)
CURRENT CLIMATE & FUTURE PROSPECTS
FABRICATORS
Steel industry is facing challenging times ahead Due to influx of cheaper imports
(dumping) Lack of import duty is affecting support
for local growth Malaysian is at 22% higher than ASP Slowdown in overall steel demand Procurement is not full-fledged in
Malaysia as very few companies are willing to provide the supply of a single fabrication work
CURRENT CLIMATE & FUTURE PROSPECTS
WHAT ARE THE INHERENT
ISSUES BEING FACED?
LOCAL MANPOWER
Retaining sufficiently skilled manpower has been an issue in Malaysia: Huge gap in skill levels and competencies
due to previous economic downturn
Attrition
Accreditation vs. experience?
Lack of career path direction
Lack of organized skill group classification
CURRENT CLIMATE & FUTURE PROSPECTS
Price Competitiveness of Domestic Production
Domestic supply is not cost-competitive compared to imports
The ‘China Effect’
China being the world largest steel producer (220million MT, 2003) and steel importer (30million MT, 2003)
Procurement
Not full-fledged as very few companies willing to provide a single full-scale fabrication work for EPCCs
STEEL SUPPLY
CURRENT CLIMATE & FUTURE PROSPECTS
CURRENT CLIMATE & FUTURE PROSPECTS
STEEL SUPPLY
CURRENT CLIMATE & FUTURE PROSPECTS
STEEL SUPPLY
With escalating demand for raw materials for new commissioning and maintenance works, parties need to be engaged to complement local production
WHAT CAN
BE DONE?
INITIATIVES & ENABLERS
The effort has to be a multi-partite as it is
interdisciplinary in nature
GOVERNMENTAL (PLATFORM PROVIDER)
INDUSTRY (DRIVER)
INSTITUTION (SUPPORT)
PROFESSIONAL BODIES
(SUPPORT)
INITIATIVES & ENABLERS
GOVERNMENT
ROLE?
Platform / Opportunity
Providers
Provision of Economic Drivers
(NKEA)
Determination of favourable
growth policies
INITIATIVES & ENABLERS
GOVERNMENT
WHO?
CIDB
Technician competency development
Joint training on offshore based courses
pertaining to:
Diploma/ Exec. Diploma Offshore Technology
Diploma/ Exec. Diploma Marine Vessel
Technology
INITIATIVES & ENABLERS
GOVERNMENT
WHO?
Mandated institutions (i.e. UTP) to carry the O&G
banner under NKEA Education EPP9
EPP 1
Rejuvenating
existing fields
through enhanced
oil recovery
EPP 2
Developing small
fields through
innovative solutions
EPP 7
Consolidating the
domestic
fabricators
EPP 9
Improving energy
efficiency
EPP 9
Building an advanced
engineering, science and
innovation discipline
cluster
INITIATIVES & ENABLERS
GOVERNMENT
POLICY CHANGES / TWEAKS?
Recent news that the
government will derive lower
dividends from PETRONAS for
coming fiscal year will boost
liquidity and capacity for more
projects
Indirectly benefits the entire
industry
INITIATIVES & ENABLERS
GOVERNMENT
PLATFORM PROVIDER
Integration & consolidation of
suppliers & offshore contractors to
provide a systematic procurement
platform
Promotion of companies that
comply with added value services
(compliance with international
certifications & standards)
INITIATIVES & ENABLERS
IN VIEW OF GOVERNMENT BEING FACILITATORS, IT BECOMES THE ROLES OF PROFESSIONAL BODIES &
INSTITUTIONS TO BE INITIATIVE DRIVERS
INITIATIVES & ENABLERS
MOGSC
CTWG:
Multi-prong
approach
Achieved by:
Core Competency Training Program
Introduction of API exams (i.e. welding)
To be standard bearers for Malaysia O&G industry
Accreditation & Recognition (a must to be
standard bearers)
How?:
Leverage on industry funds via institution (YUTP)
Leverage on existing gov. & institutional
accreditation
Setup of Malaysia Petroleum Institute (MPI)
INITIATIVES & ENABLERS
MSSA:
Transformation
Initiative
Achieved by:
Engaging active steel consultancies
Seeking accreditation (BEM, CIDB)
Transformation of onshore competencies for
offshore application
Leverage on Government
Training Infrastructure
Funding
Contractor database
Leverage on institution
Technical expertise
DEVELOPING HUMAN CAPITAL
Offshore Engineering Center UTP
Centers of Excellence
Corrosion Center
Enhance Oil Recovery MOR
CO2
NGOs
MSSA
• P33 Transformation
Program
O&G Organizations
MOGSC CTWG
• Industrially-aligned
training modules
Governmental
CIDB
• Develop Diploma
Courses
BEM
• Accreditation
International
S.Korea
• Exec. Diploma Marine Technology
• Exec. Diploma Offshore
Technology
High-end Offshore Research
Industrial
To provide M.Sc. Offshore Eng.
Developed with Industrial
panelists
INSTITUTION
There is a huge demand in the O&G
industry for local industry to tap
Local industry must be geared towards
undertaking local O&G ventures
To address that, focus is needed on:
Core competency
Paradigm Shift on Manpower Evaluation
Supportive Policy
Widespread Awareness
Leveraging on collaborative synergies
CONCLUSION