Steven Kantorowicz, Vice President Petrochemicals – Tom Kers, Partner, KBC Advanced Technologies, Singapore
Tom Kers, Partner, and Steven Kantorowicz, Vice President Petrochemicals, Asia, provide insight into KBC’s holistic offer to the oil and gas industry, from their long-established market leading position in the downstream to their more recent foray into upstream. KBC’s Petro-SIM™ 5 software and technical consulting expertise is complemented by a fully integrated approach that provides clients with best practices and knowledge transfer.
Could you please begin by introducing KBC Advanced Technologies and its Singaporean entity?
Tom Kers (TK): KBC Advanced Technologies has traditionally been a technical advisory focused on the energy industry. Over the years, we have successfully diversified our services through a number of acquisitions and the hiring of talent. Steven Kantorowicz, for instance, is an internationally renowned expert in the petrochemicals industry and played an integral role in the development of KBC’s petrochemicals business in Asia.
A key pillar of KBC’s success is the intellectual property (IP) that we have embedded into highly sophisticated software platforms which we offer to our clients. Our Petro-SIM™ 5 software, released in December 2013, simply reinvents process simulation as we know it today by being the only purpose-built rigorous process simulator that combines a rich DNA of process simulation and extensive thermo physical properties. Traditionally this package has been developed for refining based processes but has evolved into the petrochemical and more recently the upstream processes by incorporating added on modules. Today, the Petro-SIM™ 5 Platform includes Petro-SIM™ Refining and Petro-SIM™ Production. In a nutshell, downstream users can optimize plant-wide operations with varying crude feeds and minimize energy intensity across all process units, while in the upstream, users are enabled to maximize facility performance throughout the life cycle of the reservoir and optimize gas production throughput and balance power generation.
KBC is the undisputed market leader for process simulation in the refining market and the downstream market in general. Going forward, we intend to build upon that success and establish KBC as a leading optimization tools provider in the other parts of the value chain, particularly in the upstream.
Steven Kantorowicz (SK): We have a presence from the well-head, all the way through to the refining and petrochemical processing plants. Our software can calculate the thermodynamics of the oil and gas from the well-head and carry that across the value chain to when the finished products are transported away from the refinery/ petrochemical complex. These solutions as integrated packages cover the entire value chain, or as individual tools for the up, mid and downstream segments.
How would you summarize KBC Advanced Technologies value proposition?
TK: To address this, one must consider the IP embedded within our software solutions. Given the complexity of the processes involved in the energy value chain, the knowledge incorporated with our Petro-SIM™ package, the de facto standard for its type of simulations, is arguably immeasurable. This technology combined with the availability of a diverse pool of subject matter experts in various domains, provide for a unique and unbeatable combination in both upstream & downstream industry and constitute the key value we generate for our clients.
SK: In addition, another important consideration is KBC’s ability to consistently enable our clients to reduce operating costs, which goes beyond ensuring the smooth and efficient operation of their facilities. In the petrochemicals area, we have undertaken a number of projects in which we helped our clients significantly increase their bottom line while maintaining and even enhancing their quality levels. Illustratively, in most cases, we have identified and helped implement opportunities that enabled our clients to reduce operating costs of their ethylene production processes by US $10-20 per ton with no/low capital cost. Although this may not seem significant at first, one only has to consider that these clients produce in excess of one million tons of ethylene per annum, amounting to a sizable increase in profits. By leveraging KBC’s IP and in-house expertise, we are able to deliver such results just by simulating the process and optimizing the relevant process parameters!
Another important characteristic of KBC is found in its independence from all and any licensors, contractors and equipment vendors. As an independent third party, we are able to help clients explore potential opportunities in any domain or geographical area in a way that is free of any conflicts of interest.
The benefits of KBC’s software and consultancy services almost sound too good to be true. Why hasn’t everyone jumped on the bandwagon yet?
TK: Our technology and expertise has indeed been applied in most of the world’s refineries. KBC has provided world-class software and consulting services in over 90 countries around the globe. We are the leading technical consultancy for over 575 refineries with a substantial installed software base. With that track record, we have thus far averaged an impressive 20 cents profit increase per barrel of production in the refining business.
Having matured your downstream business, how do you seek to develop your upstream presence?
TK: We have been investing a significant amount of resources into extending our software platform to cover the other parts of the energy value chain. This was done through various acquisitions that were then merged with our existing platforms. With the acquisition of Infochem KBC now provides trusted cutting edge technology across both upstream and downstream. Infochem’s Multiflash™ is the only purpose build Oil and Gas facility simulator, combining a rich DNA of process simulation and fluids with unique life of facility scenarios and database structures.
In addition, we have re-examined our business development approach and tailored it to these new frontiers. For instance, we have recently established a new office in Kuala Lumpur, Malaysia given its positioning as well developed upstream hub in the region. Furthermore, we have also adapted our recruitment strategy to attract the most capable and recognized talents and experts in the upstream field.
KBC is at the thick end of its restructuring efforts brought on by stagnating performance in 2012. Although there are many aspects to the reorganizational process, can you give us an overview of the efforts being made internally in KBC Singapore and externally in relation to your interaction with clients?
TK: Over the years, KBC has acquired and accumulated an increasing number of companies and service offerings. With the restructuring of the organization, we took a step back to look at our own kitchen, so to speak and worked diligently to streamline our business and service offering in a bid to increase our efficiency and minimize our cost structure. As this has been in action for almost two years, I believe that we have been rather successful in our efforts and this is perhaps well reflected in our share price.
Externally, we have also come to the realization that clients tend to seek and prefer a total and fully integrated product and services package. Traditionally, when we are approached by clients, we go ahead and examine the various inputs and metrics and return to the client with our recommendations. However, we have found that although our suggestions would, for instance, ensure our clients a certain level of profitability increase, problems tend to arise in the execution phase of the project. This usually stems from any number of suboptimal organizational structures from the clients side related to accountability or responsibility issues or even equipment and reliability concerns. We therefore intend to extend our presence and service offering to clients to go beyond providing premium advisory services. Doing so will position KBC as an integrated services provider that enables clients to implement and execute the recommendations we provide and effectively realize their benefits. This holistic approach takes into consideration the technical elements of a given project that we are so familiar with and includes aspects of the clients’ equipment, reliability and HSE to ensure operative implementation.
What are some of the trends you’ve identified unique to the Asian markets and what implications do they have for your regional business?
TK: The downstream industry in Asia is typically dominated by the National Oil Companies or NOCs of the region. However, it has traditionally been the major IOCs of the world that have invested tremendous amounts of resources into R&D aimed at developing and enhancing downstream assets and capabilities. By contrast, the relatively young Asian NOCs are newcomers to this field in relation to their international counterparts, and they thus lack that extensive knowledge and experience base in the downstream industry. As such, there is a clear need for these NOCs to find an equivalent technology partner that can provide the capabilities to effectively and efficiently operate their refining assets. In this regard, KBC is perfectly positioned to partner with the Asian NOCs to support and accelerate the development of their downstream capabilities.
In addition, there is a clear demographic trend that has resulted in a talent gap within the entire energy value chain. The wave of experienced industry experts going into retirement exposes all sorts of energy players to talents shortages, posing challenges for the development of any organization and the industry as a whole.
SK: Indeed, there is a significant gap between 60 year old professionals soon to be exiting the workforce and the 25 to 35 year old newcomers to the industry. The population of talents between these two groups is alarmingly minimal, and this zone is where all the knowledge transfer takes place. Seldom is knowledge effectively transferred between a senior and junior professional and that is where KBC comes in.
TK: By leveraging the knowledge and experiences we have accumulated and documented over our history, KBC offers tailored and accelerated capability development training programs intended to provide operators, unit supervisors and engineers with the tools to significantly move individuals along the experience curve in order to meet the ongoing demands of the organization.
As KBC concludes its restructuring program and begins exploring new opportunities in the value chain, what goals in taking the Singaporean affiliate to the next step?
SK: KBC is certainly at an exciting juncture of its evolution. Although we will continue to focus on developing our core competencies, we are exploring new avenues in which they can be applied to generate value for our clients in a wider area of the energy value chain. As a key part of the KBC culture, not only do these efforts reflect our willingness to improve our value proposition, we also aspire to improving ourselves by taking a holistic view of our product and service offering and continuously building upon and improving it. In addition, we also intend to continue expanding our geographical reach in order to position ourselves closer to our customers, particularly in the Middle East.
TK: Across the refining and petrochemical businesses, KBC Advanced Technologies is very much a household name. So far, this is not the case in the upstream sector, and we are well into the process of changing that. Our long term vision is to become as well established in the upstream as we are in the downstream. That journey will see the our Singapore office expanding significantly in terms of manpower, capabilities and expertise.