KUALA LUMPUR: Local small and medium enterprises (SMEs) from the oil and gas services and equipment (OGSE) industry are increasingly catching up in a playing field dominated by the major players of the industry, especially multinational companies (MNC) and larger scale players.
This is the case of four local companies, NGLTech Sdn Bhd and ProEight Technology Sdn Bhd, MIT Technologies Sdn Bhd and MTC Engineering Sdn Bhd, all showing promising value add in par with bigger players, both domestic and international.
NGLTech, a research and development (R&D) and process technology solutions provider, has successfully implemented and commercialised most of its 12 patented and patent pending home-grown technologies since its incorporation in 2009.
NGLTech managing director Arul Jothy pinned its success to the company’s ability to identify 'pain points' and quickly develop and commercialise solutions.
“We focus on good to great solutions that solve multiple problems. This requires a highly capable and flexible team with experience and technical competence,” he said.
Arul also believes that the low oil price environment has created a level-playing field for smaller players such as NGLTech to compete with the big boys.
“Most of the currently available technologies were developed for a price level of US$100 per barrel. Many of these technologies are obsolete and the downturn has been a blessing in disguise for agile companies that can innovate and take the product to market quickly,” he said.
The company has also secured a Focused Recognition Certificate from Malaysian Petroleum Management (MPM) for introducing a breakthrough technology that significantly reduced CO2 emissions while creating additional value from flare gas at Petronas' Anjung Kecil field.
Similarly, by leverages on in-house R&D to produce best in class mechanical seals, cyclone separators and related components that are cost-effective, ProEight has been serving top notch upstream clients such as Petronas Carigali, ExxonMobil, Shell among others, ProEight also serves downstream players like Petronas Penapisan Melaka and PETRONAS Chemicals Group.
Its managing director Ir Azhar Zainal Abidin said the company has captured 90 percent of the very niche mechanical seal market in Malaysia and secured the highly recognised API Specification Q1 certification by American Petroleum Institute (API).
Tenaga Nasional Bhd (TNB) and independent power producers count as some of its power sector clients.
ProEight has also expanded to Thailand and Saudi Arabia.
The company’s success comes from Azhar’s perseverance and enduring commitment towards excellent R&D, precision manufacturing and quality control.
“When I initially bought computerised numerical control machines, people thought I was crazy, but the point is, the industry will never buy your idea until you have something solid to show. I knew I had to spend money first before the returns came in,” he said.
Another SME player, MIT Technologies, is reaping the rewards of a ‘mindset of abundance’.
Its CEO Ahmed Tahoun said MIT Technologies started R&D in 2010 on a TRL0 (technology readiness level zero) driven by an ambition to develop technology that addresses a particular issue in the most challenging O&G environments.
“If we could achieve that, the client will drive demand, providing for a strong business case that would fuel continuous growth for our company,” he explained.
MIT Technologies’ management developed the company from ground up, with experienced leaders coached fresh graduates into curious problem-solvers and the company also pursued research collaborations with universities.
“When an operator gives us the opportunity to run a tool in a US$50 million well, we better be in a position of certainty that the tool will work, at least to the best of our knowledge and abilities. This means a lot of tests and verification need to be done upfront, while it is in the eyes of the client, a ‘trial run’,” Tahoun said.
In 2015, it commercialised the Intelligent Circulation While Drilling tool (iCWD), which enables the driller to treat losses, place cement plugs while drilling or improve hole cleaning without withdrawing, saving expensive rig time through the deployment of smart electronics and sensors.
After achieving profitability in 2015, MIT Technologies became the first Malaysian company to win the Spotlight on New Technologies Award at the Offshore Technology Conference, OTC Asia 2016.
It also bagged the Overall Best Achievement Award from the Prime Minister, Datuk Seri Mohd Najib Tun Razak, during the Malaysia Commercialisation Year 2016 Awards.
Further, with its focus on delivering economically-proven solutions, MTC Engineering co-designed the winning solution for the first Petronas Technology Challenge on Monetisation of Associated Gas from Offshore Flares.
MTCE also owns the registered trade mark for its Humming Bird Offshore solutions for marginal and late life fields.
MTCE’s CEO/executive director Mohd Fauzi Ya’akob said the company’s decision to shift from consultant to turnkey contractor providing cost-effective solutions for O&G floaters bore fruit when Petronas commissioned the Humming Bird Nautica Muar to the Kayu Manis South East field for 6 months, followed by Anjung Kecil for another 3 years.
The vessel, which is now undergoing refurbishment for the Bentara field in Sarawak, demonstrates that the solution can be mobilised from field to field, making it suitable for marginal fields.
“Leveraging on a business model that provides full-cycle services of engineering, procurement, construction, installation, commissioning, operation and maintenance (EPCICOM) enabled us to offer services at lower costs,” he added.
MTCE has also achieved the fastest floating production storage and offloading (FPSO) conversion for its latest Humming Bird MTC Ledang in less than 6 months, subsequently reaching first oil in October 2017.
In 2017, the company expanded its business to Indonesia, securing a US$400 million contract for turnkey EPCICOM services and a 10-year Floating Production Unit lease at Madura field, Indonesia.
Mohd Fauzi acknowledges that financing was tough but due to its track record of delivering market driven solutions, MTCE has been able to secure funding from one of the local development banks.