11.Prof. Dr. Shahir (Utp) - Transforming Malaysia Into the Asian Oil and Gas Powerhouse, Future Fast...

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


WHAT IS AFFECTING O&G STABILITY?


1. High Oil Prices

2. International

Gas Boom

4. Intensifying

Sustainability

Concerns

3. Geopolitical

Upheaval

WHAT IS AFFECTING O&G STABILITY?


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


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



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)


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


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


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



STEEL SUPPLY


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)


GOVERNMENT

ROLE?

Platform / Opportunity

Providers

Provision of Economic Drivers

(NKEA)

Determination of favourable

growth policies


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


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


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


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)


IN VIEW OF GOVERNMENT BEING FACILITATORS, IT BECOMES THE ROLES OF PROFESSIONAL BODIES &

INSTITUTIONS TO BE INITIATIVE DRIVERS


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)


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

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11.Prof. Dr. Shahir (Utp) - Transforming Malaysia Into the Asian Oil and Gas Powerhouse, Future Fast...

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