with Bambang Gyat, Director, Enerkon Indonesia
Since our last interview with you in 2007, how would you describe the changes in the Indonesian engineering market and the picture in 2012?
2012 promises to be a big year for the energy-related construction industry as all the stakeholders from Government to private companies now recognize that energy infrastructure is the key priority for both the development of Indonesia and increasing production. One can observe this push particularly in relation to Indonesian gas infrastructure. In the past, despite Indonesia’s huge gas reserves, the country has been unable to deliver this as energy to the domestic market because of a lack of infrastructure. As a company of engineering and project management consultants, Enerkon sees a lot of opportunity in the market and we have a focus on gas infrastructure within our portfolio. As such, Enerkon is working with clients who are today the main players in gas infrastructure such as state-owned company PGN, and Pertamina Gas who specialize in gas transmission. Enerkon carries out project management, consultancy and engineering services and we are one of the main players in this sector.
Back in 2007 when I met your colleagues we were in the middle of work on the South Sumatra-West Java pipeline project and in 2012 we are now involved in the extension and upgrading of this project. Indeed, Enerkon has just signed a contract with PGN for the Project Management Consultancy (PMC) of a booster compressor station in the middle of the transmission pipeline in order to extend the capacity of the pipeline taking into account future demand in Java and increasing gas supply.
How ready are domestic companies to execute these new infrastructure projects?
Currently local EPC contractors or indeed local engineering consultans and project management companies cannot fulfill the new projects being offered by the market. Naturally we have to choose a field to focus on because the company cannot do everything and this has provided an opening for foreign EPC contractors to increase their presence in the Indonesian market.
There is not really a very tight competition in Indonesia among local companies; this is because the cake is sufficiently large in 2012 to provide space for all companies to have a share of the workload. The main challenge we face is how to persuade our clients that local company, such as Enerkon, has the capabilities to meet those of international engineering and EPC contractors’ requirements.
Currently, the field of gas infrastructure and enhanced oil recovery (EOR) are Enerkon’s two major directions and it is fortunate that in 2012, these are both priorities of the Government. There are only few other companies in Indonesia aside Enerkon who can work in this field. Starting in the 1990s Caltex, now Chevron, began performing secondary recovery by applying water-flood and steam-flood EOR in their fileds at Sumatera and Enerkon was chosen as the Indonesian engineering contractor to assist them in this operation through our cooperation with the US based company, US-Filter. This was a pioneering stage in Indonesia’s upstream industry and in 2012 we can see that many other companies are looking forward to begin this type of operation. I believe that given our experience, Enerkon will be the ideal partner for many of these new works. Pertamina is now running some water-flood EOR, while other companies like Chevron and Medco, are starting piloting tertiary recovery using chemical flooding. Indeed Enerkon is involved in one of these pilot projects that is held by Medco E&P Indonesia in one of their potential field, Kaji – South Sumatera. In this project, Enerkon is working very closely with one internationally recognized producer of these advanced chemicals, a China based company named Beijing Hengju Chemicals.
I see that the large market for this activity given these technologies is not expensive – compared to initiating new drilling operations that carry significant geological risk and are very capital intensive. Companies will spend 1 – 2 years in research to find the suitable chemicals for their fields, then blend the chemicals (polymer only or mixed with surfactant and alkaline) with water in such a way that the product is homogeneous enough to withstand 6 months underground at high temperatures and pressures without degrading.
What Enerkon does, in cooperation with Beijing Hengju Chemicals, is providing the engineering design and project management for chemical blending and injecting facilities. Having familiar with international Oil & Gas standards, Enerkon is supporting Beijing Hengju Chemicals in designing the entire plant and converting their equipment specifications into international Oil & Gas standards in order to fit with the design of the plant and to meet Medco standard requirement. Ultimately, this is a service that we can duplicate easily for many other EOR operations in Oil & Gas companies around the world.
Through our partnership with Beijing Hengju Chemicals in Medco’s project, Enerkon were also invited to their EOR project in Oman. Currently Beijing Hengju Chemicals is running one pilot polymer injection project for Petroleum Development Oman (PDO). Enerkon has a great role in the project by performing the front end engineering design (FEED) for the plant and the detailed design (DD) for the blending and injection equipment.
In this field, Enerkon has the potential to work around the world because of well-established standards in the oil and gas industry and applied equally in every international operator such as Total, Shell, Exxon, BP, Chevron, Petrochina and many others.
You once mentioned that some clients were skeptical of Indonesian engineering capabilities. To what extent are perceptions changing?
This is a general opinion of Indonesian engineers working in foreign countries many years in the past. But nowadays, Indonesian engineers working in Malaysia, Brunei, the Middle East and other oil producer countries are gaining a strong international reputation and can now be placed on the same level with other Asian engineers. The handicap of Indonesian engineers would be our ability to quickly adjust to work in other cultures and to use other languages. However, it is also a fact that Indonesians do not like to travel outside far from his/her family for a certain period of time. Persuading and assigning the best project managers and project control engineers to work abroad is not always easy. It will be different if they work for foreign operators in a long period where they can bring their family.
Indonesia is adjusting more and more to international operations and fortunately, I see that today this engineering culture is changing and Indonesian engineers are becoming more adventurous. And on the other side, you can see that more and more international engineering companies working in Indonesia or having their engineering base in Indonesia where they employ mostly Indonesian engineers. This is a good indication that Indonesian engineering capabilities are being recognized in this oil & gas industry.
Clearly Enerkon is in demand internationally but there are also many opportunities now in Indonesia. How do you balance your work?
Enerkon is not focusing its attention on working overseas, but rather it seeks to maintain its relationship with our foreign partners, such as Beijing Hengju, wherever this may take us. This company has a huge opportunity worldwide because of global EOR markets all over the world. They are happy with Enerkon as a partner for their international markets and for Enerkon it just a question of keeping up with the global demand for EOR services. Even in Indonesia at current crude prices, EOR is becoming a huge market and BP MIGAS has recently made it an obligation for all upstream companies to invest in EOR activity.
When we come back to Indonesia in 5 years where will we see Enerkon?
Nowadays, you see Enerkon as engineering and project management company that has moved toward a full EPC – supported internally by construction company as partner. Indeed at the moment, 3 of our current projects are EPC type of projects where we have to work with a partner for construction element .
Enerkon’s development will be therefore turning full circle. We will grow towards EPC and into a market where there are many well-established international players. Within this field, Enerkon will exist in niches with our EOR facility experiences and development with only few competitors. By growing and keeping our core competency in engineering, in the next 5 years you will find that Enerkon will be consisted of two companies: one is an engineering consultant company and the other is an EPC contractor.
What would be your final message to our readers?
Indonesian engineers are fully capable of taking part in the global construction business and can be trusted in this work. Indonesia is a great proving ground for our engineers as engineering companies here have a great deal of experience working with international oil and gas companies and so have great potential to work internationally. Eventhough it was a daunting process it was an invaluable experience in my personal development in terms of working with and understanding foreign clients. Indonesian engineers are therefore well versed in meeting the demands of international clients.