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Interview

with Rozali Ahmad, President, MOGEC: Association of Malaysian Oil & Gas Engineers

17.03.2010 / Energyboardroom

MOGEC was created in 1999 by PETRONAS’ five umbrella contractors. Could you come back on the creation of MOGEC and why at the time it was important?

Before the creation of MOGEC, engineering companies had been involved in the industry cost reduction initiative called CORAL. MOGEC stands for Malaysian Oil & Gas Engineering consultants, and we officially started our activities in 1999 when six engineering consultancies involved in the upstream Oil & Gas industry put their efforts together. Our founding members were Ranhill Worley Parsons, Aker Engineering, MMC Oil & Gas Engineering, Protek Engineers, Sime Engineering and Technip. It was following the commitment of PETRONAS to develop local content in the Petroleum industry as a whole. Moreover, when the umbrella contract system was introduced, it became mandatory for all design work to be performed locally by PETRONAS licensed contractors. In practice, companies must first apply for a license, once they get it they must have a tender. Over the past 10 years multidisciplinary consultants and specialist have taken the opportunity to develop their activities through this licensing.

The needs of the industry changed, how did MOGEC evolve and adapt to this new environment?

The industry has indeed changed, but MOGEC has also changed. The membership of MOGEC is still growing, and in Malaysia there are today more than 6000 engineers in the Oil & Gas industry. It is today a mature industry, and the capabilities of local engineers are now recognized and respected in not only regionally but also in Western countries. Malaysia is in a position to compete with Singapore, Indonesia, Vietnam etc, and MOGEC wants to promote the Malaysian capabilities. We want to show that our country is an attractive place to work in, and support the initiative – together with PETRONAS – to establish Kuala Lumpur as an engineering excellence center, with cost effective solutions. Before the creation of MOGEC, each company would go and discuss with the tenants individually. By establishing the association, we created one voice to talk to PETRONAS, and we have made the industry realize that our members can help in their aspirations to transform Malaysia into a deepwater center. For example we played an important role in the Kikeh project. Over the years the recognition of MOGEC has increased, and we are now solicited by the government to give feedbacks on projects. We cooperate closely with the Economic Planning Unit to give them input on their master plan for the Malaysian economy.

Who sets the new trends in the industry: MOGEC’s members with R&D initiatives, the government by putting into place support schemes or PETRONAS?

The Malaysian Oil & Gas industry is highly reliable on PETRONAS, and before launching any initiative, MOGEC’s members need to know what direction PETRONAS is taking. They will then develop new technologies and solutions to support the NOC’s ambitions. Today the trend is to position Malaysia as an engineering excellence center, and every tender tries as much as possible to perform design work in Malaysia. At the same time, the Malaysian Oil & Gas industry is around thirty years old, and already representing a mature market, which is why we should start exporting our business and go outside our country. To do so, we need the support of PETRONAS, as well as government agencies such as MATRADE or MITI, with whom we do road shows outside the country.

What other initiatives has MOGEC taken over the past years to promote its members and support the development of the Malaysian Oil & Gas industry internationally?

MOGEC’s objectives are to provide a forum of discussion on issues of common interest, promote cooperation among members, promote the use and development of local resources in the oil, gas and petrochemical industry, collaborate with local research centers and institutions to stimulate skills development in Malaysia, and promote the development of graduate engineers. In this context we have been strongly involved in Qatar, Dubai, and Oman to promote Malaysian capabilities. In that sense, every Malaysian Engineering contractor whose ambitions are to develop its activities should get in contact with MOGEC, as we can help them find joint venture partners for example. Our latest initiative to support the international development of our members is to create company profiles that can be passed around when MOGEC is going abroad, hence creating a global networking platform for our members.

How would you describe MOGEC’s relationship with government agencies that may not be as aware as you are on the needs for the industry?

The Malaysian government has realized that there are many opportunities for Malaysia to start exporting its expertise. That is why MARTRADE and MITI have launched several marketing initiatives outside the country, and MOGEC collaborates closely with these agencies to merge parts of the budgets in order to subsidies companies wanting to go abroad, and to promote the Malaysian Oil & Gas industry in targeted countries. As far as EPU is concerned – the government body that puts together the plans for the next 5 years – MOGEC provides an input on the Oil and Gas industry, and what countries represent the most opportunities for Malaysian companies. Accenture has been appointed as a consultant for EPU, and they identified a few industries – services being one of them- where Malaysia can start exporting. Oil & Gas in one of the segment where they feel we can export. Accenture cooperates with MOGEC to prepare a plan that will be submitted to EPU, and that will be our roadmap for the next five years or so.

Malaysia is the 2nd LNG exporter in the world, it has the most extensive pipeline network in Asia, what has been the contribution of MOGEC members to support the development of the Malaysian industry?

In Malaysia, we have two types of work: upstream and downstream. As far as downstream (LNG, refineries etc) is concerned, we do not have this kind of capabilities yet, and PETRONAS works mainly with international partners for their design work. However PETRONAS has required that the foreigners work with Malaysian partners. But Malaysian companies have more capabilities for upstream, especially shallow waters. Obviously in terms of deepwater it will be different, and Malaysian companies have to collaborate with foreign partners to find complementarities between our capabilities and theirs.

MOGEC is a platform of discussion between its members; what are the hot topics discussed today?

Deepwater is the most exciting area, and companies like Technip or Aker Solutions feel that it is where they can make a difference and develop new solutions. Malaysian companies have already developed expertise in shallow water, so the place where new competitive edge can be developed in the new ten years is definitely deepwater.

What project would you highlight to represent the capabilities of Malaysian engineering contractors?

Naming only one project would be impossible. Malaysia has a strong base of engineering contractors who have been involved in Kikeh or Gumusut for example. However for many of these projects international groups, especially Technip, where chosen to prepare the detailed design phase. But PETRONAS is slowly pushing operators to use as much as they can Malaysian companies from the design phase to the end of the project lifecycle. In the next ten years, we will see at least ten new fields developed and I hope to see more Malaysian engineering contractors involved in these projects.

Malaysia wants to become an engineering hub for Asia. What is MOGEC doing to concentrate engineering contractors’ capabilities in Malaysia?

Many companies already use Kuala Lumpur as an engineering hub. Taking the example of the Liwan 3-1 area in South East China, the project has been awarded to Worley Parsons, and will be executed from Kuala Lumpur. Regionally, Malaysia is already on its way to become a regional engineering center. Many companies with operations in Vietnam, Indonesia or China head their activities in KL and collaborate with local resource centers to stimulate Malaysia.

Human resources are a crucial factor to establish Malaysia as a hub, and the industry is facing challenges to retain workforce in Malaysia. What are the concrete actions that MOGEC has undertaken to retain the workforce in Malaysia?

In the past Oil & Gas companies used a lot of Singaporeans or Australians as consultants, but today we see many Malaysians working for companies in the Middle East for example. It is not a bad thing as it demonstrates the Malaysian skills internationally. But as you say Malaysian companies now have troubles retaining their qualified engineers. Obviously we encourage companies to train their engineers and help them become more mature. This will push the entire economy forward and developed a more knowledge based Malaysia. Our members should also give their employees incentives to remain in the company. That is why we do salary surveys, where we assess the trend and extract the industry rate, for our members to be more competitive. They all have to cooperate together and never be afraid to compare their models with the ones of companies abroad. MOGEC also publishes a newsletter every two months, to explain what the association is doing and to let members know what the undergoing projects are. We want to educate people and give them knowledge on the industry. One of the latest initiatives, that received a grant from MIDA, is our e-learning course program, aiming at refreshing the knowledge of engineers. What is important to note is that MOGEC not only promotes the capabilities of Malaysian engineers abroad, but also strives to attract foreign engineers in Malaysia.

What are the main issues to be addressed during your mandate?

I want to support the cooperation between associations, and work more with MGA, MOGSC, OSFAM or VDP. We try to organize networking sessions or sports events to get members and employees together. The main challenge is to involve people in our activities in a different way, people like to attend events but do not like to organize them. Last but not least, MOGEC knows how to highlight the issues to PETRONAS, but we have now to work on how to follow up and make sure that those changes to happen.

If you had to promote MOGEC and its members to the international Oil & Gas community, what would you tell them?

The Oil & Gas industry in Malaysia is almost 30 years old and now mature. We have a strong expertise and many companies have track records of excellence both locally and internationally; moreover we have experienced and high skilled engineers. Our members have experience on similar projects and countries. So what I would say to the international community is: Be confident in Malaysia’s capabilities. There is no need to establish operations in Singapore instead of Kuala Lumpur as there used to be decades ago. Today we can serve every client, at very reasonable price. And on a more social not, KL is a happening city, people are delighted to have projects in Malaysia as it is safe, and there is a nice environment to work in.

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