Omar Bin Khalid, Tanjung Offshore
Release Date: 0000-00-00
To introduce Malaysia to our readers, what could you tell them about the investment climate in the country and where Tanjung Offshore stands in the industry?Malaysia is still a favorable country for investment, in particular in the oil & gas industry. PETRONAS has been encouraging the industry, giving strong directions and at the forefront of promoting and developing the overall growth of the industry both upstream and downstream. Against this backdrop, Tanjung Offshore has been able to enhance its products and services through various business segments within the industry: provision of engineering equipment, maintenance services, offshore support vessels services and drilling and production platform services. Various initiatives have been undertaken by PETRONAS, in collaboration with global oil majors, which open many doors to further develop and enhance the oil & gas production of the country. As an integrated service provider, we hope to penetrate niche markets within the industry in delivering products with the latest technology, in the most effective and efficient way possible.
You were an auditor by training, and have entered the oil & gas industry through the recommendation of a friend pushing you to learn from a Norwegian company. What opportunities did you see in the oil & gas industry, and what pushed you to create Tanjung Offshore?
I did not believe that I could make any money by being an employee. Looking at my friend I could see the changes in his life since he started in the industry, which is why I joined the oil & gas. Of course one has to learn about petroleum but also about running a business choosing the right persons, and a lot more! One thing I strongly believe is that god gave us a brain and the opportunities to use it. It is then up to us to take the opportunities and develop them into something fruitful. Being an auditor I checked many accounts and saw many problems, especially in collection, and this in many industries. I saw that in the oil & gas as long as you do your job properly and deliver the product as per your contract you will always be paid and successful. I grabbed the opportunities when someone was willing to teach and guide me, and give me the right push to achieve something positive.
Foreigners coming to Malaysia in the oil & gas industry are not different from Malaysians. If you give us the opportunity to learn, we will be able to do the same job. At the end of the day a mechanical engineer is a mechanical engineer, whatever his nationality may be. Looking at our personnel in Tanjung Offshore, you will see that we are able to do the work; the only question is whether or not a company is willing to go through the entire learning curve again. I think that making locals learn about the activities in the oil & gas has made of them what they are today, and I like to take advantage of what is available and learn as much as I can!
When interviewing Ernst & Young, their partners highlighted that the added value of the Malaysian workforce relies – among others – in its offering the same skills as the rest of the world but for much cheaper. Why do you think the Malaysian workforce is so demanded?
I do not think that Malaysians are that cheap anymore! Especially once they have learnt about the industry and acquired their expertise, as then they would go to another company or country where salaries are higher. Malaysians are now willing to go elsewhere, especially to the Middle East, to do their job. I believe that it is good for Malaysia to export its human resources to a certain extend; the problem is that we invest in training and other countries get a fully trained person. Initially our human resources are cheap, but after five years of experience they are not anymore. The good thing in Malaysia is that we train so many highly skilled graduates, and we have the possibility to give them all a job plus send some of them abroad!
I think that the industry cannot absorb all graduates out of university, and the only challenge for them is to put their mind into it and be serious about joining the oil & gas. For a graduate who starts to work in the general industry, the main challenge will be to adapt to the pace at which things change in the Malaysian oil & gas industry, and learn how to adapt quickly to new situations and tasks. On the contrary any graduate who starts in the oil & gas industry and then shifts to the general industry will have a tendency to get bored after the first three to six months of activities, given the slower pace in this environment. I don’t think that Malaysia has difficulties in getting fresh graduates, and we manage very well to make them understand what the industry is, from upstream to downstream.
How has Tanjung Offshore moved up from being a Malaysian company to a regional player and soon entering the international arena?
It is about raising the bar of our output, as well as increasing the competency level of our staff. We have sent our personnel overseas - to our suppliers’ offices for example – for them to learn about the manufacturing process, and vice versa. Whenever they come back we would make them work in Malaysia and in the region. It is important to share human resources internationally when dealing on one same product, and it will push us towards becoming a global player. Very experience expatriates are working with us in Malaysia, sharing their knowledge with our new recruits and helping them on their first “hands on” job. Tanjung Offshore also needs the right opportunities to be able to develop on the international scene and determine how aggressive we can be.
We have also invested in state of the art facilities to ensure that our people are not only trained, but especially able to deliver services possible, using the best technology available. We have moved up the value chain to add value to our products through manufacturing, packaging, commissioning and delivery of equipment. We are moving away from being just another “agency business” into a full fledged solutions provider to the oil majors. It has been challenging but it is a worthwhile effort. Tanjung Offshore would need to move up and raise the technological competency bar to remain relevant and competitive within the industry in the long term.
PETRONAS and MOGSC are pushing to make of Malaysia a regional hub, how is Tanjung Offshore supporting this initiative?
If we are not able to do it, we do not want to put our company’s name at stake, and therefore we concentrate our activities on the region. That is why you can consider that Tanjung Offshore is perfectly in line with this strategy of making of Malaysia a regional hub. As far as Malaysia’s ambitions to become a regional hub are concerned, it all depends on what you consider regional and what you consider international. Is the Middle East part of the region for Malaysia? Or is it already the international market? What about India? Tanjung Offshore tries to follow PETRONAS and MOGEC, and go in the countries where they are in order to test the waters, see where we are the most successful and can deliver. That will help us strengthen our regional leadership and acquire a global recognition from the industry.
What projects would you highlight as the ones representing the most Tanjung Offshore’s capabilities?
There are many projects I could highlight. The first one is our well testing vessels, which is quite unique in the world. We are one of the only companies which have such a vessel in the region, and around the world only Schlumberger and a company in the Middle East have it. To Tanjung Offshore, this vessel is a jewel in a crown. She started working in Thailand, and as the client is willing to use the vessel. Today we are coming back to our country and proposing it to PETRONAS and its PSCs. This vessel is Malaysian, owned by Malaysians etc. In the coming days we should get an answer on whether or not she will get a job by PETRONAS, which would become my proudest day!
A second achievement would be regarding our marine vessels. Within a span of five years where we started our marine operations, fully owned and managed by Malaysians, we grew from two to sixteen vessels. I hope that in the next couple of years I will have five to six more vessels. As a Malaysian company, starting from nothing, I am extremely proud of our achievements.
Are you surprised of what Tanjung Offshore has achieved so far?
I think I have been extremely lucky and god blessed us! But I am very proud of Tanjung Offshore; today we have sixteen offshore support vessels. In the maintenance division, we have expanded to five complete maintenance workshops in Terengganu, Labuan and Sarawak, equipped with the latest facilities and trained engineers. As for the engineering equipment division, we have we have also enhanced our product offerings with technical collaboration and distributorship with foreign OEMS such as ABB, Severn Glocon, Proserv and other reputable principals. In the drilling and production platform division, we currently co-own a Mobile Offshore Production Unit (MOPU) which has been chartered on a long term. We also have an exclusive tie-up with Hercules Offshore in providing drilling rig services in this region.
Given that Malaysia is moving towards offshore and deep waters, where can Tanjung Offshore make a difference in the development of the local industry?
We have vessels that can work in the deepwater, that none of the other Malaysian companies have available. PETRONAS started with Murphy in Kikeh, now developing Gumusut etc. If foreign companies can do it, we can do it as well! I strongly believe that Malaysians can handle it, as long as they understand the need of such vessels, with more use of new technology and computerization.
You were awarded a long-term charter contracts worth RM150million contract by PETRONAS. What makes of you the partner of choice for this kind of contracts?
Timing is the key! And also the fact that we understand the requirement of PETRONAS at a very early stage, to understand their requirements and be able to deliver a vessel fitting exactly their technical specifications. When we went in for the bid we knew exactly what we were doing, and were able to deliver right on time! Obviously active networking and by continuously seeking to meet or exceed the oil’s majors’ requirements, Tanjung is able to remain relevant and continue to register significant growth.
In an industry where delays are quite common, how does Tanjung Offshore manage to deliver on time, with the right requirements?
At the time the industry was at a peak and there was a strong demand for engines. We had to start working a long time ahead. We work very hard to understand the requirements, fit in the bidding schedule and work closely with the yard. We have developed trust in our working relationship with the yards, and both sides are honoring what has been agreed upon. Without having a written contract we all know that once we agree on something, it means we are determined to make it happen and we will not accept to contradict our own words.
How easy is it in Malaysia to find capital in order to nurture your growth?
Because of the capital intensive nature of the industry, we have chosen to raise capital through IPOs. Since we started this process in 2005, we have managed to tap both on equity and debt capital markets to fuel our capital expansion especially in the offshore support vessel division. In 2008 and 2009 it was much harder to issue bonds, but since then the market has recovered making this process easier for Tanjung Offshore. We have now managed to fix all our borrowings in Malaysian Ringgits to avoid currency fluctuations. Moreover in order to fix our interest rate upfront, we issued bonds with Islamic financing. This way of financing our growth is especially interesting since Malaysia is a leader in Islamic financing, and is trying to develop it in the region, therefore giving us preferential conditions and tax incentives.
In a context of financial slowdown, how did you manage to increase your revenues compared to 2008, and what are you looking at for 2010?
In order to achieve our vision to become the preferred integrated oil & gas service provider in the region, we have streamlined our operations and this since the early 2000s. It enabled us to remain focus and capitalize on our strengths in our four core business divisions. We have managed to secure strong revenues in 2009 because of the long term contracts that we were awarded for vessels, rigs and equipment contracts. Of course during this time cost of material and of financing has gone up and we have had to face these challenges, and will have to be stronger in order to grow again in 2010.
Among your three divisions, where do you see more potential for growth in the coming years?
As everyone, I cannot control the price of oil. Depending on the oil price our growth will be different. If the price is to remain at eighty dollars per barrel, Tanjung Offshore will have a lot of growth. For example since the price started increasing, we have gotten many more inquiries for the products offered by our subsidiary in the UK. For us the amount of enquiries is the direct demonstration of the market environment. If there are no enquiries there are no bidding activities, therefore no job at the end of the day. The question of whether or not we get the job is different, because it lays in the pricing. But if there is no enquiry for your product, there is nothing you can do to grow! Moreover as an investor I am especially concerned in the economic situation in Europe. Depending on what will happen to the PIGS countries (Portugal, Italy, Greece, and Spain), the euro and the pound will be weakening, thus causing troubles in our company’s accounting system. That is why I cannot tell you where I foresee the most growth.
What is sure is that we will remain focused on our four core activities and we have plans to further strengthen these divisions individually.
What type of growth are you expecting to feed your international ambitions: organic, acquisitions, joint ventures?
We have an international presence via two subsidiaries that we have acquired: Citech Energy Recovery Systems UK, and Gas Generators Malaysia. Through these companies, we are able to penetrate the international market and ASEAN, using their latest product offerings.
In the future, I would like organic growth to be predominant. By choosing M&A, there is always a problem of integrating the culture of the other company, causing troubles in the operations and taking a really long time. If we have outsiders joining us they would have to adapt to our way of thinking. Growth will be slow, but it will be there!
If we look at the coming three to five years, how do you see Tanjung Offshore evolve?
At the rate we are doing things, expanding and going forward, I am convinced that we can expand our business in India and the Middle East. Obviously it will depend on the support from the financial world, but we are determined to make things happen! It will be a challenge to manage a bigger company compared to ten years ago, with our different geographical and cultural backgrounds, as well as adapting to the changing requirements of the industry. However we are continuously seeking new niche markets, thus expanding product offerings and services. We are looking forward to the future!
What last message would you like to send to oil & gas financial journal readers?
I am worried that they are not willing to do business with me, as whenever I learn something I make sure that afterwards I should be able to do it myself! Without joking, I would say foreign investors are welcome to come to Malaysia and talk with Tanjung Offshore. In terms of technical skills and knowledge base, our country is very competitive and efficient, and we are continuously increasing our competitiveness.
| Company: | Tanjung Offshore |
| Country: | 马来西亚 |