with Robert Dompeling, Group Chief Executive Officer, PEC Ltd.
To what extent can Singapore’s main player Keppel be compared to NOCs such as Petronas in Malaysia or Pertamina in Indonesia in the sense of the opportunities they offer to the local players and the impact they have on the local economy?
Keppel focuses on a very specialized niche business; hence it may not be appropriate to compare it with other national oil companies. The shipyards industry was expected to decline about 15 to 20 years ago to make way for a more high tech environment. However that did not happen. Many Singapore shipyards have continued to enjoy success by focusing on project management and execution of complicated projects.
Once the government takes a decision in Singapore, it can change the direction of the entire industry especially in a small country like Singapore. What do you believe have been the most impactful decisions or regulations for the oil and gas and its related industries?
We have been fortunate that the Singapore government had already recognized the revenue potential of the petrochemical industry as early as the 1970’s. By the 80’s, rapid industrialization and growing land scarcity on the mainland drove and accelerated the development of Jurong Island, which is now home to many global petrochemical and offshore oil & gas players.
Today PEC is doing a lot of EPC projects and is also involved in maintenance and modification as well as some non-core businesses. How can you explain this business model to our readers and the reason for these operations?
PEC engages in project work and maintenance services as both business activities complement each other. Providing maintenance allows us to develop a close working relationship with our clients on a regular basis, identify their needs and any upcoming projects in the pipeline. This in turn allows our project engineers to propose solutions for their projects and offer cost-competitive solutions that can encompass engineering, construction and maintenance. The maintenance business is very important and labor intensive because it is the backbone of the company and provides revenue stability.
Singapore is the main hub for FPSOs and also wants to be a refining hub. Where do you see most growth potential for PEC?
We see the most growth potential in projects and maintenance services that require more specialized expertise. There has been a notable increase in ethylene-related projects as the government continues to drive its objective to make Singapore a regional offshore oil & gas hub.
In addition we see opportunities in offshore work as we believe that our expertise is transferable. After all, work done in a petrochemical plant on land is not so different from doing work on an offshore platform.
What positions PEC as the partner of choice for the maintenance program in Jurong Island for example?
PEC is one of the largest players in the local industry with a proven track record of handling complicated turnarounds. We are already working with all the key players in the industry, and have won numerous awards from clients and Singapore government bodies for our ability to plan in advance and maintain strict safety and quality control standards at all times.
PEC announced solid results a month ago which is quite unexpected following the economic slowdown in 2009. What were the main factors for these positive figures?
Our strong financial performance can be attributed to increased revenue contributions from both new and existing projects and maintenance services in Singapore, Malaysia and China. We believe that the industry will continue to recover well, with some key players revisiting investment decisions that were delayed due to the economic slowdown, especially in the Middle East and Singapore.
How are you going to maintain your strong cash position and your the backlog in terms of your order book?
We plan to expand internationally by leveraging our existing relationships with customers. For our projects business, we will actively seek opportunities to work with existing MNC customers in new markets, such as the Middle East. For our maintenance business, we will start by offering existing clients smaller services in new locations. As we optimize our operational efficiency in the new markets and build a reputation, we can reach out to new clients and grow our business.
How are you going to translate the great reputation of PEC internationally?
By leveraging our existing client relationships to enter new markets, we have ready endorsers of our strong track record, innovative solutions and strict quality control standards.
In terms of EPC, it is important to be on budget and on time. How does PEC manage these requirements?
Given the multidisciplinary nature of EPC projects, we adopt a hands-on approach and fully utilize the expertise and experience of our team to ensure the success of our projects.
How does PEC manage to retain knowledge in the company while the whole industry is struggling with human resources?
The offshore oil & gas industry is highly competitive and there will always be a demand for people with the relevant skill sets and experience. As larger global players tend to win significantly more projects than their smaller local counterparts, they also have the advantage when it comes to attracting and recruiting new employees. PEC has also been affected by the talent crunch, but fortunately we have a very stable management team and a strong focus on staff training that have enabled us to retain and develop knowledge.
To internationalize you also need to respect high level QHSE standards. What is the difference between Singapore and the rest of the world in terms of these standards?
Singapore has a well-regulated environment with a strong emphasis on QHSE, hence Singapore service providers tend to be as respectful of high level QHSE standards as our peers in Europe or the Americas, but at a lower overall cost level.
In order to remain cost-competitive, PEC has production facilities here as well as in China. As an international business, how do you see the organization of PEC in the future?
We expect to continue to develop on our core strengths, build on our current expertise and business offerings, and grow within our existing business activities and develop stronger ties with our existing partners and customers while creating new ones with potential clients in and beyond Singapore.
PEC was floated on the Singapore Stock Exchange in August 2009. Can you comment on this brave decision in times of economic slowdown and explain how the company gained the trust of its investors?
Preparations for the IPO began before the financial crisis took place, and we revived it at the first sign of improving sentiments. We proceeded with our listing plans as we were confident that our financial and operational performance were stable and strong.
Meanwhile, the oil & gas and petrochemical industries that PEC serves are expected to grow significantly. These are very specialized industries where expertise and commitment to safety and work processes are very important, hence experienced companies like PEC will continue to enjoy business opportunities. Despite new developments in the alternative energy industry, it is unlikely that these new energy sources will replace demand for oil and gas anytime soon, especially given the current rate of growth in energy demand in India and China.
As a well-travelled businessman, where do you see the most opportunities for PEC to grow and what is the strategy to do so?
We are exploring new opportunities in the Middle East where we are already constructing a new fabrication facility. We also plan to continue strengthening our presence in existing markets, such as Singapore, by expanding our on-site capabilities and further developing our EPC and EPCm capabilities through technological investments. We also see opportunities in mature markets such as Rotterdam and Houston, where there will be demand for service providers such as PEC that can offer quality results and high productivity while still adhering to strict safety standards. China will also be another key market that will continue to growth.
With a global push towards greener and more sustainable solutions, how will this affect PEC’s business model and how will its focus change in the coming years?
We are seeing an increased focus among our clients in greener and more sustainable solutions. With our expertise and technology, we believe that we are well-placed to help our clients execute such projects and advise on best practices. Our business model will not change, though the types of projects that we will work on might.
You have been working in different areas of the value chain. Why did you choose for PEC?
Having been involved in the entire value chain, I was able to identify the areas where we could add more value to our clients. I saw an opportunity for PEC to engage in new business activities, especially in the upstream segment, as well as specialized businesses such as tank terminals. Singaporean companies have a competitive advantage in such specialized areas when we enter new markets as we tend to have a deeper level of knowledge compared to many engineering companies outside Singapore.
What is your personal ambition within the company when you celebrate your five or ten years at PEC and what would be your final message to the readers of Oil and Gas Financial Journal?
I would like to see PEC represented in more key hub locations and continuously enhancing our high level of service in the maintenance business. I would also like to deepen our engineering knowledge and develop more innovative engineering solutions for specialized business such as terminals and the process industry. Although the company is growing, PEC will keep delivering on our promise. At PEC, it’s always work in progress, and progress at work.