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Abang

Abdul Aziz Mohammed – CEO, IPS Malaysia

25.02.2015 / Energyboardroom

Abang Abdul Aziz, CEO of Integrated Petroleum Services (IPS), shares with EnergyBoardroom IPS’s history as a pioneer in introducing innovative technologies into the Malaysian market. He offers specific insight into the company’s provision of Malaysia’s first lift-boat and IPS’s Malaysian vision for a new subsea water intake & injection system (SWIT) developed by Seabox AS.

Abang Abdul Aziz you became CEO of Integrated Petroleum Services (IPS) in October 2013. Can you tell us more about the mandate you established for yourself upon arrival and the milestones thus far of your tenure?

When I assumed the position of CEO, one of my first priorities was to implement a performance measurement system, as IPS did not yet have a strong vision or strategy to grow the business. I thus implemented a “Balanced Score Card (BSC)”, which is a strategic planning & management system extensively used in business and industry. This is to align business activities to vision & strategy of the organization as well as improving internal & external communication that will move the company forward. IPS has thus defined our vision to be a leading preferred service provider in the region and established five core values to identify our company – integrity, customer focus, inclusivity, passion, and leadership. Our entire staff is this aligned on how we can best serve all stakeholders and global partners.

IPS offers a variety of services across seven disciplines. What is the current split in your portfolio and for which areas do you see most growth potential?

For 2014, our Chartering & Management of Drilling Rigs was the highest contributor in terms of revenues, accounting for approximately 60 percent of our total sales, while Chartering & Management of Offshore Support Vessels represented approximately 32%. Distributor of Solids Control Equipment added another one percent, while the remaining percent was contributed by our Drilling Performance Optimization Services. 2015 will be an extricating year because of the cost cutting measures being adapted by many operators. As such, we see growth potential for the Drilling Performance Optimization Services division, in collaboration with our global partner, the REACH Group.

In fact, in February 2015, IPS experienced a breakthrough in securing our first contract with PETRONAS Carigali for the provision of Operational Performance Improvement Services. This service entails placing a drilling performance coach on the assigned drilling rig, primarily to improve operational efficiency amongst the various service providers on a rig and ultimately, the goal is to reduce “Invisible Lost Time”. The return on investment for our clients using this service is 15 to one, while total effective drilling costs can be reduced by 10-15% depending upon the profile of the well. In Malaysia, this system has already been implemented by Murphy Oil, Talisman and Petrofac.

IPS has historically been a Malaysian pioneer – undertaking the first HPHT drilling program in Malaysia with Stena, introducing the first AHTS to Malaysian waters among others. What innovations are you now looking to introduce to the Malaysian market?

We are very excited by the prospects of a subsea water intake & injection system (SWIT) developed by our partner, Seabox AS of Norway. There are potential applications of the SWIT system in Malaysia for the marginal oilfields and brown fields where operators hope to increase the recovery factor. Traditionally EOR has involved injecting treated water from the topside, while Seabox AS is pioneering a new technology involving a subsea water intake and injection system. This skid mounted unit on the seabed floor treats the water at the sea bed, meaning there is no need to build a new topside structure or strengthen existing topsides. The solution is thus extremely effective in terms of costs thus optimizing reservoir management and field development as no new structures need to be constructed. Seabox AS’s first pilot test was completed in the North Sea two years ago, with a recorded uptime of 98% compared to downtimes of as high as 50-70% for certain fields in offshore Sabah and Sarawak for a water injection systems. Seabox AS is also currently developing a subsea reverse osmosis (RO) membrane water treatment system, which combined with SWIT can produce low sulphate and low salinity water. Having all these water injection systems installed subsea complete with treated water storage tanks will significantly reduce the logistic costs of such EOR/IOR projects. Many oil majors have been involved in this joint industry project, and we have attracted a lot of interest, as well as presenting a paper on the SWIT application at the OTC Asia 2014.

Rig rates have fallen sharply over the past 20 months as oil companies cut capital spending and many new rigs on the market created overcapacity. How has IPS responded to this change in market?

Together with our partner Seadrill, we are engaging with the customer to position ourselves to reflect the current market rates and remain competitive. IPS has the advantage of presenting to the operator the operational efficiency of the Seadrill rigs, which rank in the top three in terms of uptime and hence, low non-productive time (NPT) in Malaysia.

How do you position IPS within Malaysia’s offshore industry, and for which type of vessel do you see the most opportunity for IPS?

IPS has also created a niche for itself for the provision of deepwater and highly sophisticated offshore support vessels (OSVs) where there are few local players. We primarily focus on vessels over 100 tons bollard pull and above. For example, we have been operating Solstad Offshore’s 20,000 bhp AHTS, Normand Ivan, with Murphy for the last ten years. Our strong technical understanding of the industry makes us a reliable partner and has allowed us to be a Malaysian leader in terms of the supply of large AHTS and PSV vessels. In 2013, we also achieved a major milestone in that we introduced the first lift-boat to the Malaysian oil and gas industry for the Baker Hughes/PETRONAS Carigali D18/Temana oil field project.

How does IPS differentiate itself from the competition?

There are many Malaysian service companies, and IPS differentiates ourselves from the typical principle-agent relationship by adding value. The Group’s key management team comprises industry veterans with a combined experience of more than 100 years in the Oil & Gas sector. Their industry knowledge and significant regional experience enables IPS to deliver customized solutions to NOCs and IOCs in the region. IPS’ close working relationships with its customers over the years underpinned with its proven track record allows the business to enjoy multiple repeat contracts with its key customers. In addition, strong relationships and the wide network with industry leading asset owners for the O & G sector allows the Group to source and introduce new technology and effective solutions to its clients.

In addition, IPS possesses a TRACE certification, which is rare for Malaysian companies. This recognizes the Group’s commitment to transparency in international commercial transactions which is a key enabler in forging partnership with global players.

How does IPS contribute to the march towards safer operations in Malaysia?  

Via our global partner, the REACH Group, we provide the services necessary to create a world-class safety culture. For offshore platforms and rigs, IPS has introduced a hybrid system that combines operations performance optimization and the safety component to improve behaviors and create a workplace with an interdependent safety culture. The REACH Group, thanks to its experience in over 35 countries in six continents, presents the safety landscape in a manner that identifies deficiencies and collaborates with the management team to foster an interdependent HSE culture. No matter how well you train one staff member, if the next staff member does not share the same safety culture, issues will arise. As such, interdependent safety culture is essential to prevent injuries and fatalities, even with strong processes and regulations.

Many Malaysian companies “piggy back” on PETRONAS’s successful international operations, while other growing and consolidating players like UMW venture internationally on their own. What could you tell us about your internationalization strategy today, and what geographies are you pursuing?

As a small company, we have to focus our efforts country by country. We are now growing our operation in Indonesia via our 95% Indonesian subsidiary, PT IPS, which uses the same model and template of our services and business portfolio in Malaysia. In 2013, we secured a long term contract for PT IPS with Premier Oil to provide two 8000 bhp AHTS, which is still running today. Having established ourselves locally as a marine OSV player in Indonesia, our 2015 target in Indonesia is to introduce our rig business. In the next five years, we will consolidate our position as a regional player with activities in Brunei’s active offshore industry, as well as in Myanmar.

To date, what project are you the most proud of and best represents IPS at its full capacity?

In 2009, IPS expanded into Turkmenistan to support the offshore gas pipeline installation project in the Caspian Sea for PETRONAS Carigali Turkmenistan. Our scope is to provide the lead contractors, Technip & MMHE, who has been appointed by PETRONAS to undertake the pipe laying work to connect the offshore structures to the Oil & Gas Terminal (OGT), with 7 vessels comprising 3 transportation tugs, 1 SSV, 2 barges and 1 AHTS. The contract lasted for approximately 18 months and we are pleased to contribute to the success of this challenging project especially considering the fact that the Caspian Sea is a landlocked area and bringing required vessels through the Russian Volga Canal is a complex process.

The Economic Transformation Program includes the goal of transforming Malaysia into an oil and gas service hub. How do you see the role of Malaysian pioneer services providers, like IPS in the country’s path to become an oil and gas hub by 2020?

Our role as a niche company will help to support this vision. Malaysia needs not only innovative technologies but also cost effective products to become the regional oil and gas hub. To make an innovative product more cost efficient, some of the components have to be locally manufactured. To give one example of IPS’s contribution, we have a JV with Plexus, a company involved in innovative metal to metal seals for high pressure wellhead system and are poised to manufacture components for their innovative POS-GRIP technology in Malaysia via I Precision, one of our subsidiary companies that possesses state of the art CNC machines. In addition, once the demand for EOR projects increases in Malaysia, components for the Seabox AS, such as skids, can be constructed by IPS locally to reduce costs and consolidate local industry expertise.

To read more articles and interviews from Malaysia, and to download the latest free report on the country, click here.

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