OE15: Malaysia eyes UK opportunities

September 2, 2015

The UK Continental Shelf (UKCS) is a mature market with significant technical opportunities for Malaysian oil field service providers, says CEO of Malaysia External Trade Development Corp. (MATRADE), YBhg Dato’ Dzulkifli Mahmud.

YBhg Dato’ Dzulkifli Mahmud. Image from MATRADE.

This year MATRADE is bringing 10 Malaysian companies to SPE Offshore Europe 2015 held in Aberdeen. With the event less than a week away, Audrey Raj spoke to Dzulkifli to find out more.

Can you introduce MATRADE and its activities in Asia and beyond?

MATRADE is Malaysia’s national trade promotion agency, which is responsible for promoting Malaysian exporters to foreign markets. We assist overseas buyers establish relationships with Malaysian suppliers, plus help Malaysian companies form their presence in overseas markets.

Our services include business-matching programs for Malaysian firms and foreign importers; providing information on Malaysian products and services; handling business enquires on Malaysian exports; and advisory in doing business with Malaysia.

In addition, MATRADE helps Malaysian companies raise their profiles in foreign markets via different promotional drives including participation in trade missions, specialized marketing activities and international trade fairs.

Through our 46 overseas offices, we also help Malaysian companies access foreign markets by providing consultations to equip them with the right market knowledge.

How does MATRADE promote Malaysian expertise to international markets?

MATRADE as has always been devoted to accelerating national exports. This year our role is even more critical, as the nation braces through a modest economic growth.

Therefore, we have planned a set of high impact initiatives to accelerate growth with an aim to enhance access into high value markets and greenfield projects.

About 116 promotional programs are planned by MATRADE for 2015, with 76 activities held in Asia. Out of the total, approximately 50.5% is catered to the product sector and 49.5% to the service industry.

We anticipate that these programs will open doors for local firms keen to enter overseas markets. MATRADE also arranges visits to relevant oil and gas authorities and companies in various countries, plus organizes business meetings for Malaysian companies.

What kind of opportunities does MATRADE see in the UK?

Europe is the world’s fourth largest oil and gas producer and the North Sea contains Europe’s largest hydrocarbon reservoirs. The UKCS is considered a mature market, with technically driven opportunities, such as enhanced oil recovery (EOR).

Based on the Oil & Gas UK report, it is forecasted that there will be significant rising demand, both onshore and offshore, with large increase in deepwater expenditure.

Future domestic demand is expected to be predominantly driven by brownfield and greenfield developments. The new tax reforms and allowances could support new projects over the coming years as well.

So, there will be potential need for products and services in the engineering, operations, maintenance, decommissioning, drilling and well equipment design and manufacturing sectors.

What does your presence in SPE Offshore Europe 2015 mean for your business?

Offshore Europe is one of UK's largest exploration and production event dedicated solely to the oil and gas industry. The 10 Malaysian companies joining us in Aberdeen will promote their products and services.

These firms include Asian Offshore Services Sdn Bhd, Bumi Armada Berhad, E.V. Oilfield Supply & Services Sdn Bhd, Fji Lead Sdn Bhd, Mecip Global Engineers Sdn Bhd, Muhibbah Engineering (M) Bhd, Plc International Sdn Bhd, Signlab Sdn Bhd, Solid Point Precision Manufacturing Sdn Bhd, and Uni Tube Group Sdn Bhd.

MATRADE hopes this participation can help create better connections between Malaysian firms and foreign companies in the UK, as well as in the greater Europe. We also hope our involvement will enhance the image of MATRADE and Malaysia particularly in the oil and gas sector.

What is Malaysia’s expertise?

As Malaysia’s oil and gas industry progresses, local companies have become prominent service providers in the areas of exploration and production in Malaysia, and are also capable of providing oil field services globally.

Malaysian oil and gas companies are competent in providing multi-disciplinary services, including process design, mechanical and piping design, structural and civil design, electrical and instrumentation, oil rigs engineering and fabrication, welding and pipe threading, environmental management and more.

We also offer a range of oil field products, such as wellhead equipment, Christmas tree, pipes, tubes, casing, turbines, valves and fittings, gaskets, mechanical seals, drilling fluid and lubricants.

Which Malaysian companies have expanded into overseas markets?

Malaysia has a number of oil field suppliers that have successfully expanded into the overseas markets.

Integrated oil and gas solutions provider SapuraKencana’s global presence can be seen in over 20 countries, including China, Australia, Brazil, the US, West Africa and the Middle East.

The firm’s full spectrum of capabilities covers the entire value chain of exploration, development, production, rejuvenation, decommissioning and abandonment. The group has a multinational workforce comprising 51 nationalities with approximately 13,000 people.

Bumi Armada, an offshore oil field service provider has presence in over 18 countries across five continents. The company serves clients in Southeast Asia, South Asia, Central Africa, Central and South America, Australia and the Caspian Sea.

Expanding in emerging markets of Brazil, India, the Gulf States and China, Scomi through its international arm, Scomi International is accelerating continued growth as a manufacturer of transportation solutions, especially in monorail systems.

Furthermore, we also have Muhibbah Engineering, another oil field supplier that has expanded business in foreign markets, such as the UK, US, Singapore, Cambodia, Philippines, Qatar, Abu Dhabi, Australia, Denmark and Germany.

Specializing in mechanical and electrical works for oil and gas refineries, petrochemical plants and general buildings is Solar Alert. From servicing government and private agencies to oil companies in Malaysia, the group has now spread its wings to South East Asia, the Middle East, Central Asia and Africa.

Malaysia also has a number of small medium enterprises that have made their mark in international markets supplying mechanical seals, valve, gaskets, non-destructive testing, intelligent pigs and pigging products.

What is the current trend in the Malaysian oil and gas sector?

Malaysia is one of the world's largest producers of liquefied natural gas (LNG). While Malaysia’s oil reserves are of the highest quality, its crude is one of the most expensive in the world.

Weaker incentives to raise production from existing fields in a weak oil price environment will see oil output decrease in 2015-16. Moreover, the rising cost of projects in Malaysia, as directions move towards difficult developments, such as deepwater exploration and enhanced oil recovery (EOR), will see investments in the longer term to be hit by low oil prices too.

A loose LNG market will hit short-term gas production and there will be a flat growth from 2017-21. However, it is projected that a better market outlook will take place in 2022, as gas reserves grow and contribute to production.

Malaysia's refining capacity and refined oil production will fall between 2015-19. This will offset the impact that the start-up of Petronas' RAPID project in the next decade will have on Malaysia's total refined production.

We will see modest oil consumption growth of about 1.7% per annum between 2015-24. While a reduction in domestic crude demand would temporarily lift Malaysian exports, in the long term a downtrend is expected.

Malaysia’s export market share could also be threatened by competition. We will continue to be a net gas exporter and an important supplier of LNG to the Asia Pacific region. However, strong competition could affect its market position.

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