with Steve Abbiss, District Manager Malaysia, Brunei, India & Indo-China ; Drilling & Production Systems, Cameron Malaysia
Cameron finalized the acquisition of NATCO at the end of last year. Taking into account the joint venture between Scomi & NATCO for EOR & CO2 mgmt, how will this impact your competitive landscape and Cameron’s daily activities in Malaysia?
Steve Abbiss: NACTO is established in Malaysia in a different way to the rest of the world, and we still have many decisions to take on how NACTO will be incorporated into the Cameron organization here. However, the part that was operating under Scomi is a different part of the business and we still will operate under different divisions, as if we were separate companies. This acquisition will not have any impact on our activities on a daily basis. NACTO is just a new member of the Cameron family.
Jerome Cociella: This acquisition is not going to affect us at all. The only impact is that we are now able to present and promote Cameron as one supplier of a wider range of products.
How is Cameron in Malaysia organized?
S.A.: Within Cameron International we have three groups: Drilling and Production Systems (DPS), Valves and Measurement (V&M), and Compression Systems. The two groups represented in Malaysia are DPS and V&M. We both work for Drilling and Production Systems, where the focus is on surface and subsea product lines, whilst Valve and Measurement is more focused in downstream. Cameron International has three groups, and each group has different divisions.
J.C.: DPS as a group has five divisions: surface, subsea, drilling, flow control and process system – where part of NATCO belongs. Each division or group is run individually, in a completely separate way from the others. Another part of NACTO will be spread among the rest of Cameron.
What is the story of Cameron in Malaysia?
S.A.: The company first became active in the late eighties early nineties, and the first development of Cameron in Malaysia came with the acquisition of Ingram Cactus[in 1997. With this acquisition Cameron inherited manufacturing facilities in Malaysia. It was the start of Cameron being involved in manufacturing equipment for the local market and holding a PETRONAS license. We have infrastructure in Peninsular Malaysia, Sabah, Sarawak and the island of Labuan to support our local activities. However over this time PETRONAS started to expand internationally and became what we could call a global player, and in parallel Cameron was looking for an opportunity to make investments in subsea manufacturing capacity. PETRONAS was promoting its position as a deepwater hub, and we followed their ambitions. Today our facilities also export to PETRONAS overseas, and to Brunei. In the recent years we have made significant investment in a new subsea facility in Johor – of hundred and twenty million US dollar – in the last three years. Although it is in Malaysia and part of our PETRONAS restricted license, the size of our facility is much bigger than supporting only Malaysia.
J.C.: PETRONAS had indeed this huge ambition to make of Malaysia a regional deepwater hub, thus attracting potential investors such as Aker Solutions and FMC in addition to Cameron. From this facility we support North Africa, Gulf of Mexico and the rest of the world.
Aker invested in Port Klang, FMC makes a global event of the delivery of their first Christmas tree for the Gumusut-Kakap project, and as you said Cameron is constantly investing in it facilities in Johor. Do you believe that Malaysia has what it takes to be a deepwater hub?
S.A.: There is no local market in Malaysia to fit the investments that we are making. However the decision we make in Malaysia is not only to support the local market, but the region and PETRONAS. Cameron has facilities in Brazil to support Latin America and Petrobras, in Brewick, Louisianna to support the Gulf of Mexico, Leeds, UK that supports the North Sea and North Africa, and we needed to strengthen our presence in the region to support the growing demand in this area of the world. Our plans fell in line with PETRONAS looking for investors to bring the country to the level of a regional hub. The subsea manufacturing capacity in Malaysia is much in excess of what Malaysia requires. However making the investment in the country gives us the opportunity to be playing in this significant market, when investing in another country for example would have restricted our market access.
J.C.: Cameron is not the only company that has followed PETRONAS in this direction: Aker Solutions has important facilities in Port Klang, and they use it to support Malaysia but also India for example. FMC has also invested in Johor Barhu. We cannot afford to have so many leading manufacturing centers around the world to support each and every market; we have to centralize our activities somewhere and Malaysia is a great location to do so!
As expatriates having worked in many different parts of the world, how do you assess the working environment in Malaysia?
S.A.: The legal framework, set of laws, economy and political environment is generally stable so it makes sense to invest in this country. In terms of living environment it is a great country to live in and expats generally love Malaysia and are attracted by the country.
J.C.: That is why many companies chose Malaysia to support their regional activities. For example Shell supports the Philippines and Australia among many other places around the world from Kuala Lumpur.
Cameron acquired Geographe – an Australian company – to enhance its aftermarket capabilities. To what extend does this demonstrate Cameron’s determination to enhance its presence in the aftermarket?
S.A.: Geographe has specifically purchased for our Valve and Measurement group, has they have some specific product and services that tie in perfectly into this division and complete Cameron’s offer. They are using it to extend the aftermarket reach of V&M. This strategy fits with Camreon’s overall strategy to the aftermarket, where the company does not only want to be seen as an equipment provider but more of a cradle to grave supporter of products, thus bringing more value to the customer. On a business side, it brings the company a revenue stream throughout the life of the products – that can be used for twenty five year – adding services, spare parts etc. Geographe fits into that business model and complements our existing operations. The company was already supplying Cameron at different level, so the acquisition was only a natural step to take.
DPS has been globally responsible for seventy percent of the year to year growth of the company, what about in Malaysia? And what is the importance of Malaysia to Cameron in general?
S.A.: For surface, we do more business directly in Malaysia than the subsea division does. DPS is the biggest contributor to the growth of Cameron’s revenue in general, but Malaysia does not represent such an important part of it. The reason behind this is that significant revenues of the DPS division come from big subsea projects in West Africa, and Offshore South America. If these big subsea developments start to appear in the region, following PETRONAS’ intent, that percentage will start to go up. Until this happens Malaysia will represent a small revenue compared to all the big project.
What is the competitive edge of Cameron in Malaysia?
J.C.: We are in a restricted category, and our competitive landscape is restricted to those having manufacturing capabilities in the country.
S.A.: You have to be prepared to make the investment to play in this market, and it is a value decision to make. While Malaysia is a relative small dollar value, most companies are not ready to make such an investment. If the market and the environment changes with big subsea projects, people may look at it. However, some of us have taken the view of making of Malaysia a long term investment, using the country as an Asian or a global hub.
Given that PETRONAS is shifting from being a NOC to becoming a MNC, how can Cameron benefit from the increasing global presence of the company?
J.C.: PETRONAS would not necessary always have this behavior, but when they are in countries where we can support them, they would look forward to have their local partners, if you can call Cameron that way.
How do you translate Cameron’s global success in Malaysia?
S.A.: The people involved in the Malaysian oil & gas industry know who the global players are, and who the global players present in Malaysia are. The advantage for Cameron is to have a global brand and recognition, and the industry knows that we are able to use this global expertise in Malaysia as we have made the investment in the country and have a license from PETRONAS.
J.C.: If you take the Low Cost Country example, where they have national suppliers for the same equipment as Cameron, we supply the high end of the market when local competitors supply the low end.
S.A.: It does not happen that much in subsea, but in surface there is a company seen as being much more local, not playing on the international stage. This company only has PETRONAS’ business in the country, and operates a little outside of Malaysia with the NOC as well. Obviously for subsea there are only a few players able to compete with Cameron, so it is not so much of an issue.
What do you believe are the keys to Cameron’s success in Malaysia?
J.C.: Cameron has managed to establish strong relationships with the government and PETRONAS, and through the time we managed to negotiate tax exemptions because of our investment, and got grants to train Malaysians. At some point the government backed us up with one ringgit for each ringgit spent on training a Malaysia, sending them in Brazil or the UK to learn on certain types of machines for example.
S.A.: Cameron is the expert, the manufacturer. Wherever we form joint venture we want to maintain our expertise within Cameron, and the company should always remain the responsible party for the engineering, the quality and the manufacturing. Cameron makes joint ventures to establish Cameron run facilities.
Dave Hutchinson was telling us that he expected a Malaysian to head Aker Solutions in the country in the coming five to ten years. How is the “malaysianisation” program in Cameron?
J.C.: We also have a Malaysianisation program within Cameron, and have continuous training and competency program for all employees, promoting technology and expertise transfer.
S.A.: From a manufacturing point of view, we already have ninety percent of Malaysians. The majority of our expats are placed in sales roles, not only focused on Malaysia. I am responsible for Malaysia, Brunei, India and a large part of South East Asia. Everyone who reports to me is Malaysian, except for a few expats working for India or Brunei. At the end of the day Cameron is a Malaysian company, staffed almost entirely by Malaysians.
J.C.: Out of four hundred people working in Johor Bahru only ten of our employees are expats. The only reason why we are not hundred percent Malaysian is because the market place for hiring is quite competitive. There are limited availabilities on employees, and Cameron has to invest tremendously in training as well as offer competitive packages. We do road shows in universities on a regular basis.
S.A.: We go to University Technology PETRONAS, hire fresh graduates and put them in different positions of the company for them to get trained. Cameron’s plan is to localize the operations in Malaysia. Jerome and I are products of the Cameron localization philosophy of doing business. We both would not have jobs if Cameron had not invested in the UK or France back in the 50’s. We are now expats in Malaysia following the trend of investing at the time in Europe, today in Asia and in the coming years you will see Malaysians taking the role of expats in new locations. We would not have jobs if Cameron did not have a strong localization philosophy.
What are the most exciting developments that you foresee in the Malaysian oil & gas industry?
S.A.: From a surface perspective, PETRONAS is pushing to have a deepwater project execution strategy. Shell will develop the Maliki field with a TLP strategy, and the big thing happening will be the development of deepwater blocks. The industry will demonstrate that Malaysia is capable of doing this kind of project. HPHT drilling and developemt will also be new for Malaysia.
J.C.: Murphy has lots of plans for deepwater development that will influence our subsea operations. In the coming years we also expect plans from PETRONAS for deepwater development.
Taking into account these developments, where do you want to bring Cameron Malaysia in the coming years?
J.C.: We want to remain the leader in the market which is always tough. Once you are the leader it is hard to keep your market share and remain at the top.
What would be your final message to oil & gas financial journal readers about Cameron Malaysia?
S.A.: Cameron has seen the benefits of establishing itself and becoming a PETRONAS licensed category holder. We can today use our capabilities to support the globe instead of only supporting the local market. What we are doing is perceived as the right thing as Cameron is looking forward to making more investment in Johor Bahru and in Malaysia in general.