with Willy Wiyatno, Vice President Director, AMEC Berca
What is the unique role played by this British-Indonesian joint venture in the Indonesian oil and gas construction industry?
The joint-venture (JV) between the global engineering consultancy, AMEC, and the local conglomerate, Berca Group, offers the best of both worlds. Within the JV, the capability and expertise of AMEC’s global operations is combined with an expert knowledge of the local market from the Berca Group. The JV is therefore able to serve the Indonesian market as well as the international markets.
In the Indonesian market, AMEC Berca functions as a subcontractor engineering company for EPC companies that do not have their own engineering capabilities. AMEC Berca performs many engineering projects in the private sector including modifications of oil platforms, developing technological solutions for mature assets, carrying out work on gas pipelines and other types of engineering work for companies such as TOTAL, Premier Oil, Pearl Oil, Conoco Phillips and BP. On the international stage, AMEC Berca engages in work share with AMEC’s global offices. This ability to function in both local and international markets allows AMEC Berca to balance the ups and downs of the market.
AMEC Berca’s core competence lies in oil and gas but we are in the process of branching out into related industries such as metal mining and renewable energies. Despite these representing new fields for the JV in Indonesia, on a global level, AMEC operates in many industries. For example, AMEC in Australia is very strong in metal mining and the bioprocessing/ confined process environment. These represent two business elements which we hope to bring to Indonesia.
The EPC sector in Indonesia is competitive with many well-financed international companies as well as a handful of very successful local companies. How does AMEC Berca position itself within this market?/i>
For local projects, the engineering industry is competitive with internationally affiliated companies like AMEC Berca and pure local engineering companies. Our clients typically choose AMEC Berca on the grounds of our expertise, project execution strategy, and global presence. As an internationally affiliated company, AMEC Berca. has access to resources within AMEC global. We use AMEC standard procedures in how we conduct business and execute projects.
AMEC Berca is also unique among internationally affiliated companies that it is an independent center with its own P&L and its own management. What this means is that AMEC Berca is forced has to be competitive as it does not automatically receive work from AMEC, even though it has preferential information.
I believe that working in the local market is also key to maintaining our competitive edge because the local market is very competitive. It would be possible for AMEC Berca to carry out 100% of its work for AMEC global offices. However this is not what we would do like to as we would lose touch about our competitiveness as an engineering company. Generally speaking the rates are more attractive to get work from outside of Indonesia, but working in the local market allows AMEC Berca to fine tune its operation, makes it more efficient and improves the competitiveness of its offering. Balancing our international and local portfolio is therefore essential to our success and efficiency as a company.
Clients look to AMEC Berca to carry out more complex projects involving effective project management. This ability to execute complex projects constitutes the principal differentiating factor in the local market and we can achieve this because we have the employees who are trained according to international AMEC engineering standards, otherwise known as “One AMEC” or “the AMEC Way”. Naturally, these standards come at a premium but clients can be assured of our standards.
Comparing against its international peers, AMEC Berca is competitive on rates given that the company has localized its talents. The business model relies on local manpower and expats are only used when needed. AMEC mec Berca has reinvested its money and resources in training our local employees.
How are you now developing your core competencies to provide your services?
AMEC Berca’s number one concern is safety. The current program called “Beyond Zero” is designed to implement preventative measures to ensure that accidents can be minimized. On AMEC project in Baku – Azerbaijan, the company is proud of the fact that it has already carried out 8 million work hours without any accidents.
AMEC Berca is working rigorously to standardize its work and project execution. The methodology used when analyzing projects is set depending on the category of project and is used to assess the risk profile of the project and the opportunities. This standardization of methodology and related checks and balances ensure that AMEC Berca functions as it should. This might slow down the process but when we establish long term relationships with clients they come to recognize the high level of professionalism of our work.
The strategic direction of AMEC Berca is therefore to engage in long-term relationships with a few EPC companies so that they recognize the value that AMEC Berca can bring to their projects. We are being highly selective in choosing our partners. This type of long-term relationship is also very beneficial for our EPC partners. As with any relationship, it improves over time and we become better able to complement our partner’s activities. I believe it is better to spend less time in business development and follow the strategic direction of EPC companies.
The Indonesian oil and gas industry is now moving to more complex regions of production. What is your perspective on how this affects the construction industry?/i>
The government is now focused on building the infrastructure to support the needs of the people. The gas industry itself has recognized the strong domestic demand and the infrastructure to supply gas to the domestic market. Indeed, gas has the potential to solve many of the energy issues now affecting Indonesia. This represents an opportunity for the construction industry.
However, oil and gas companies have some major concerns about investing in Indonesian infrastructure relating to the role of the regulators, which some argue have not created an easy process for players to participate. In a sense, our regulator BP MIGAS may not as efficient as one would like, and many projects have been delayed as a result of late approvals. This affects not just the E&P companies but the construction industry as well. BP MIGAS is now under increasing pressure to make itself more efficient. Indeed, oil companies are interested in coming to Indonesia but the regulatory environment does not make it easy to work here.
Given this picture, what are your short term ambitions for AMEC Berca?
AMEC Berca has set itself the target of doubling its core business in oil and gas, in both local and international markets. We are also pursuing diversification outside of our core business into adjacent fields such as metal mining. Many engineering disciplines are essentially the same for mining as those needed for oil and gas. We are therefore able to expand into these adjacent industries. In terms of renewable energy, AMEC Berca is observing growth in geothermal energy, hydroelectricity and solar and we plan to expand our business into these areas.
AMEC Berca will also continue to carry out a large quantity of work for AMEC internationally to support other AMEC offices. Since we are present in a large country with many engineers, AMEC Berca can also function as a recruiting house, supplying AMEC globally with high quality engineers.
What would you say was your largest personal contribution to AMEC Berca in Indonesia?
I grew up in Indonesia and then went to the USA for college, Master degree and a PhD. I then returned and was in a management consultant company Mckinsey and Company where I could engage in many companies across a broad spectrum of industries. This background allowed me to see Indonesian industry from an international and managerial perspective.
One thing that I concluded early on as a management consultant was that all companies are chaotic, it is just a question of the degree of the chaos. When a company rapidly expands, it concentrates on the top line and often it neglects the measures required to drive efficiency. It is very difficult to be aggressive in the market place and fulfill the demands of the back office. I see my role in balancing our focus and using the rhythms of the market to do the right thing for the company at the right time.
Human resources are less sophisticated in Indonesia than in the USA and they constitute the biggest challenge. It is a question of acquiring the right people and motivating them properly. It is like a machine with multiple pistons where everything must move synchronously. There is no magic involved, but rather common sense. My greatest contribution is to bring talents together to move and motivate them in the right directiona. I want my staff to have someone to look to in good times and in bad times: to share good news when it occurs and to seek solutions when there are difficulties, although very often my employees will come up with their own solutions when I sit with them.
What would be your final message to the readers of Oil & Gas Financial Journal?
Indonesia is a very attractive country with many natural and human resources. It is a country where one should pay special attention and international readers should look to Indonesia as an arm of their expansion whether for pure investment, for business development or for seeking human resources, especially engineers.
Indonesian readers should be ready for the influx of international companies looking for human resources and looking to compete in this market. We have to be ready for this phenomenon. Indonesia should be opened to international competition. Companies must stay on their toes to become more efficient and must not be complacent.
In AMEC Berca we are always challenging our perceptions and looking for ways to improve our operations. For a business to be sustainable it must always be on the lookout for how it can improve.