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Interview

with Sofiyan Yahya, President, Malaysian Oil & Gas Services Council (MOGSC)

19.03.2010 / Energyboardroom

MOGSC finds its roots in an initiative of PETRONAS named CORAL that aimed at reducing costs for the E&P companies. What is today the aim of MOGSC?

Our main aim is to promote the service providers from the Malaysian Oil & Gas industry. A key initiative is to make Malaysia a center of excellence for the range of Oil & Gas related services and resources, from engineering services to manufacturing products.
MOGSC was created in 2003, which is quite late for this industry, especially compared to IPA in Indonesia that has 30years of activity. What was in place before MOGSC to represent service providers and why was this structure only created in 2003?
Before 2003 and MOGSC, there was CORAL. It served as a platform for common initiatives driven by the Oil & Gas players, including Oil & Gas operators and service providers. From CORAL came the realization that there was a need for a new organization to be formed and driven solely by the industry. And so MOGSC was born.

Indeed MOGSC is a platform for discussion, and you even describe it as Malaysia’s leading business forum in the oil & gas industry. What where the main milestones and achievements in reaching such a position?

In a very short time frame we have managed to accelerate our presence and become recognized as a reliable partner in the Malaysian Oil & Gas industry. Today MOGSC is engaged with the Malaysian Oil & Gas industry stakeholders including PETRONAS, the government, Oil & Gas operators, the service providers and other sectors of the industry. MOGSC prefers to work collaboratively and this has contributed significantly to MOGSC’s early establishment and recognition in the industry.

You are a former member of the staff of PETRONAS, how did this former position help you in building credibility, understanding both E&P and Service provider side of the business, and now creating this strong network that you need to operate in MOGSC?

I began my career in the Oil & Gas industry in 1979. It is my 30 years exposure and experience in this industry that has given me the opportunity to better understand the industry. Also the network of colleagues and friends from the industry played a key role in supporting what MOGSC needs to do to create its own identity and be of value to its members and the industry.

Indeed we have seen the tremendous growth of the number of members in your association.

It was not fast enough! Could be faster.

Still quite impressive compared to other associations! Today you count both international and local companies among them. How do you balance between the interests of your international and local members?

Whether they are foreign or Malaysian, they are both interested in being in Malaysia. Both Malaysian and international players are here to get more contracts and expand their businesses in Malaysia. As a result they are affected by the same key issues. Both need to qualify to win jobs, from licensing with PETRONAS to tendering against the competition. Initiatives such as making Malaysia a hub for services affects and bring potential work to both parties and will need the participation of both Malaysian and foreign players. The foreigners will be looking for partners or will have engagements with local Malaysian players, and Malaysian companies are looking for valued partners. It is an environment where everyone will work together to pursue common interests and to ensure the Malaysian Oil & Gas industry remains active and vibrant. MOGSC has also formed various working groups that are focused on various sectors of the industry. And both foreign and Malaysian companies are involved, but the platform is purely technical and industry strategic, and it needs to be especially when there can be a number of competitors sated across the table facing each other to share common values.

Obviously to transform Malaysia into a hub, the country would need a strong base of service providers. How does the process of creating new companies go: are most of the companies spin offs from PETRONAS, individuals who saw an opportunity, or multinationals setting up operations in Malaysia?

The entire industry has to thank PETRONAS for the excellent leadership that has created the opportunities found in the Malaysian Oil & Gas industry. PETRONAS has also created the healthy environment for Malaysian business to grow and establish their capabilities and experience in the Oil & Gas industry. Malaysian businesses on their part, have risen to the challenge, and from just purely representing foreign companies in the beginning, to developing joint ventures with foreign partners, and now we see many Malaysian companies with their own capabilities and experience which they can even export other Oil & Gas regions around the world.

PETRONAS is indeed creating the environment in which companies operate. But how is the dynamic working in terms of engineering innovations: is PETRONAS setting the trends and then bringing in its tail all its contractors, or are MOGSC members undergoing continuous development to support the needs of the industry?

Innovation is a partnership. PETRONAS creates the opportunities for Malaysian service providers to take up the challenge and offer innovative solutions to successfully complete their projects. PETRONAS has now entered the deepwater arena, and the extreme challenges involved in deepwater will require more innovation from Malaysian service providers to participate.

Talking about Malaysia going into deepwater. We have seen many Norwegian companies coming to help Malaysia build its capabilities. How is going to be the learning curve of Malaysian companies?

Over the years, Malaysian companies have proven that they are able to take on the challenges of shallow waters. As long as there are opportunities in deepwater, Malaysian companies will similarly take up the challenge and develop their capabilities to be able to provide services for the deepwater sector. I believe that Malaysia has already proven its leadership in delivering up to the expectations, and deepwater won’t be any exception. The growth may start with engagement with foreign expertise in joint ventures or partnerships, and some may develop their own home grown expertise and technology. The only question will be how fast the transition will happen for Malaysians to make the technology leap, and that depends on the level of activity as promoted by PETRONAS to develop deepwater fields.

Another development for Malaysia is to become a “service provider hub”, but we know it will not happen overnight. In which niche do you see Malaysia build its competitive advantage?

Some Malaysian companies have already established their competitive edge and with more opportunities and experience, more Malaysian companies will become global players, thus enabling Malaysia to become a “service provider hub” for the region and other parts of the world. Companies such as KNM and SCOMI are already very active beyond Malaysia’s shores.
Malaysia has a valuable resource, the Malaysians themselves, who are involved in the industry as employees or creating business opportunities. Malaysians are generally resourceful, professional, speak English well, and are disciplined, which makes them attractive as employees in regions such as the Middle East. It is with this human resource that Malaysia will build its competitive edge.

How would you position Malaysia’s service providers industry compared to your neighbors in Singapore or Indonesia for example?

Comparing with the neighbours will not truly reflect the development of the Malaysian service providers as the business environments are different. In Malaysia we have an active Oil & Gas industry, and PETRONAS has done an excellent job creating opportunities for Malaysians to establish themselves in the Oil & Gas industry. Therefore Malaysians have a unique opportunity to enter the Oil & Gas industry and make a career or a business from this environment.

You have mentioned a few companies when talking about the Malaysian expertise, among them KNM and SCOMI. Which company or project would you name to represent Malaysian capabilities?

It is impossible to name only one company or project that represents Malaysian capabilities. The Oil & Gas industry is among the more challenging industry often requiring the integration of a wide range of skills and capabilities to successfully complete projects, and the fact that Malaysian service providers are exporting their capabilities and experience, probably best demonstrates how far Malaysian service providers have journeyed. Their success is an excellent showcase for the Malaysian Oil & Gas industry.

What does the competitive framework looks like in Malaysia?

Business in the Malaysian Oil & Gas industry has always been based on competition, which is healthy, and a company capable of competing in Malaysia successful, can surely compete anywhere else in the world.

Malaysia is now the 2nd LNG exporter in the world, what is the contribution that MOGSC members have made to support the country’s path towards this position?

MOGSC members are service providers and therefore would be involved in LNG projects and also other projects available in the Malaysian Oil & Gas industry. It is in MOGSC members’ interest to continue to be involved in such projects and help contribute to nation building.

The industry is going international and PETRONAS was one of the 1st NOC to go international, and is now acting as an ambassador of the country & industry abroad. How does MOGSC promotes its members abroad?

We go overseas on trade missions and participate in exhibitions to represent Malaysian companies, showcase to the world what is available in Malaysia. We have been to Europe, Middle East, North and South Americas, to promote Malaysian capability and resources.

What is your outlook on Malaysia in the next 3-5 years, and what would we find here if we were to come back?

If you were to come back I wouldn’t be here to talk to you! But I think the outlook is great, and there are lots of opportunities in the industry. There are constant changes, nothing is stagnant, which is very interesting for the industry; people may say that fields are small and that we will run out of oil soon, but we keep finding new opportunities. Also the scope of the Malaysian Oil & Gas industry is widening. Moreover our homegrown capabilities are now recognized internationally, and many Malaysian companies are going global. They can develop their skills in Malaysia, and then treat the world as the market. As the specifications and technology in the Oil & Gas are usually higher than other industries, Malaysians businesses operating in the Malaysian Oil & Gas industry, can offer their services anywhere in the world. Malaysians have proven that given the opportunity, Malaysians can hold their own in the global arena. My own company has projects in the Middle East, the ASEAN region and even in Turkmenistan. So as a summarized response to the question: the future looks great!

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