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Interview

with Ziyad Elias, Group Executive Chairman, Orogenic

25.03.2010 / Energyboardroom

The first discoveries in the Malaysian Oil & Gas have been done a hundred years ago, and Norwegians have been active for only 30 years, however Malaysia has not advanced as much as Norway; How do you think Malaysia can contribute to the international oil & gas industry?

If you look at Norway and Malaysia, they are the two youngest oil & gas industries internationally, but in terms of technological contribution, expertise and development of a service base, they are way above other countries. Yes the Malaysian Oil & Gas industry dates a hundred years back, but it has really been active for approximately half of this time. The Petroleum Act dates from 1974, the first PSCs 1976 and this should be considered at the taking off point of the Malaysian Oil & Gas industry. PETRONAS and the Malaysian government have done a lot for the industry, helping to develop the local industry, but they need to do more to follow the path of Norway that has a much smaller population than Malaysia, but that has developed highest expertise. I think that Malaysian companies should be given more opportunities not only in Malaysia but also to export their expertise. Traditionally Malaysian service providers are focused on servicing PETRONAS and remaining locally, in a close environment where they are given means to start. But some Malaysian companies have developed world competitive services and PETRONAS should give them the opportunity to follow them everywhere in the world. PETRONAS is considered as one of the new seven sisters, and in a way they control the use of technologies and services, and they should give more opportunities to Malaysian companies to become like any global company. Take the example of CNPC in China, which is moving at a slower pace than PETRONAS but giving much more power to its national companies. We are fortunate enough to have Oil & Gas but the industry today has to move one step further and go into deepwater. Our industry is going to be as vibrant during the next fifteen years.

How long will it take for Malaysia to learn?

As usual Malaysia will always start by learning. Deepwater expertise isn’t located here, but it will give us the opportunity to walk through the process and walk with PETRONAS to support its way to become a successful deepwater exploration company, and maybe one day becoming the leader. PETRONAS gives us the avenue but local companies are quite vibrant and learn fast, we are a small country which is not in OPEC, which gives us an advantage. You have everything at reach. Malaysia is lucky to have oil resources but it is not big enough to cater for the entire industry. We have to go out and be successful compared to our neighbors.

How receptive are Malaysian to innovation?

In certain sectors of the Oil & Gas industry, Malaysian companies could be leaders since they have the technological expertise, but there are some areas where they have troubles penetrating the market, not only internationally but also in Malaysia. If we cannot get acceptance from our local market, it will be extremely hard to prove our value internationally. In that context Malaysian companies are too often followers, and we have to give them opportunities to innovate and prove themselves, then they will show to the world what they are capable of. If you have no chance to prove it at home, what are the chances to develop internationally?

What is your competitive advantage compared to other countries in the region?

Of course the population which is well educated and masters the English language. Moreover Malaysia is a business friendly country with energy resources on site, compared to Singapore which has the technology but no resources. Indonesia has the resources but its business environment is not as promising as in Malaysia. Regional offices are moving to Malaysia because of that competitive advantage.

The first discoveries in the Malaysian Oil & Gas have been done a hundred years ago, and Norwegians have been active for only 30 years, however Malaysia has not advanced as much as Norway; How do you think Malaysia can contribute to the international oil & gas industry?

If you look at Norway and Malaysia, they are the two youngest oil & gas industries internationally, but in terms of technological contribution, expertise and development of a service base, they are way above other countries. Yes the Malaysian Oil & Gas industry dates a hundred years back, but it has really been active for approximately half of this time. The Petroleum Act dates from 1974, the first PSCs 1976 and this should be considered at the taking off point of the Malaysian Oil & Gas industry. PETRONAS and the Malaysian government have done a lot for the industry, helping to develop the local industry, but they need to do more to follow the path of Norway that has a much smaller population than Malaysia, but that has developed highest expertise. I think that Malaysian companies should be given more opportunities not only in Malaysia but also to export their expertise. Traditionally Malaysian service providers are focused on servicing PETRONAS and remaining locally, in a close environment where they are given means to start. But some Malaysian companies have developed world competitive services and PETRONAS should give them the opportunity to follow them everywhere in the world. PETRONAS is considered as one of the new seven sisters, and in a way they control the use of technologies and services, and they should give more opportunities to Malaysian companies to become like any global company. Take the example of CNPC in China, which is moving at a slower pace than PETRONAS but giving much more power to its national companies. We are fortunate enough to have Oil & Gas but the industry today has to move one step further and go into deepwater. Our industry is going to be as vibrant during the next fifteen years.

How long will it take for Malaysia to learn?

As usual Malaysia will always start by learning. Deepwater expertise isn’t located here, but it will give us the opportunity to walk through the process and walk with PETRONAS to support its way to become a successful deepwater exploration company, and maybe one day becoming the leader. PETRONAS gives us the avenue but local companies are quite vibrant and learn fast, we are a small country which is not in OPEC, which gives us an advantage. You have everything at reach. Malaysia is lucky to have oil resources but it is not big enough to cater for the entire industry. We have to go out and be successful compared to our neighbors.

How receptive are Malaysian to innovation?

In certain sectors of the Oil & Gas industry, Malaysian companies could be leaders since they have the technological expertise, but there are some areas where they have troubles penetrating the market, not only internationally but also in Malaysia. If we cannot get acceptance from our local market, it will be extremely hard to prove our value internationally. In that context Malaysian companies are too often followers, and we have to give them opportunities to innovate and prove themselves, then they will show to the world what they are capable of. If you have no chance to prove it at home, what are the chances to develop internationally?

What is your competitive advantage compared to other countries in the region?

Of course the population which is well educated and masters the English language. Moreover Malaysia is a business friendly country with energy resources on site, compared to Singapore which has the technology but no resources. Indonesia has the resources but its business environment is not as promising as in Malaysia. Regional offices are moving to Malaysia because of that competitive advantage.

Human resources are a big challenge for Malaysia. How can Malaysian companies retain better their workforce?

As in any business environment there is always competition at the end of the day. We need to retain the resources and be competitive. Still it is positive if our workers want to move and develop their capabilities with international experience, plus they also enhance Malaysia’s reputation in Houston or the Middle East. We have to work harder and train even better human resources, retain good workers and become more competitive to be equal with what they could get in the Middle East for example. TO be more competitive we have to do more business and work more, so give our clients better solutions.

You worked for Schlumberger and Shell among other multinationals, what did you learn there that helped you when setting up your own company?

These international companies believe in your capabilities and you have to prove yourself in order to move up the ladder. One has to be extremely innovative, pro-active, able to work under pressure and be able to deliver good product. With this I started my business with the idea that we have to give our clients the best and believe we have to strive for excellence.

What are you the most proud of in Orogenic’s achievements so far?

We have exported our services up to the North Sea and are working closely with a UK company to provide our design, as well as some personnel to work there. We are exporting our capabilities overseas, and work in places as diverse as Mexico, former CIS, Sakhalin and are evaluated on international standards, competing with international counterparts on technical and commercial aspects. We are not only local boys, but competing with huge international guys, so there must be something Orogenic is doing right!

What are the synergies between your subsidiaries?

We are a service company, so we know how to serve people. We do not manufacture anything but know what is expected from a service company. All our services are within the subsurface, geological, geotechnical etc. The client base is the same for all our subsidiaries, and we understand very well what are our clients expectations in terms of delivery time, flexibility etc.

Where do you foresee the most opportunities for Orogenic’s growth?

We are a Malaysian based company that develops its expertise within Malaysia. Some of our services are at par or better than international counterparts. We see potential for regional expansion, and have already build a strong recognition for Orogenic in South East Asia. We are only starting to venture ourselves in other regions, such as the Middle East or North Africa, as well as India. We see potential based on our strong expertise to expand geographically and have bigger resources to build our position within the market. Today more than fifty percent of our resources come from overseas activities.

How are you going to build this position?

We are working with partners in the Middle East and North Africa, and are looking for joint venture partners there as in today’s world wherever you want to go, you have to find a local partner. To expand our reach we need more financial resources, in that regard we can either expand organically or bring in strong joint venture partners. These partners have to contribute in terms of technical knowledge or bring capital to the alliance. Our capabilities are already acknowledge by multinationals. In Malaysia we are fully recognized, we have built a strong image in Asia Pacific and Asia in general and are now competing with international companies. The only limitations for us to work in other places are financial and human resources as you need money to expand. To operate a robust growth, we need other financial injections than the conventional system. As of today it is quite difficult to obtain capital but Orogenic’s situation is still good.

How important is Orogenic’s relationship with PETRONAS?

The relationship with PETRONAs is crucial for Orogenic in a sense that it is a stamp of approval for our company, we could be a hero out there, if PETRONAS does not recognize us we won’t be able to work in our home market. We surely need to cooperate with them. On the one hand we love to work closely with them, they are a very important client for us and it is interesting for us to work with them. But on the other hand we have to be resourceful and find other clients. PETRONAS also likes to see us work with multinationals like ExxonMobil or Shell and go outside Malaysia. It is a win-win situation.

You were a geophysist who became an entrepreneur and successfully brought his business internationally; what is your next challenge?

In the old days when I was working with foreign multinationals doing services in Malaysia I saw that most of it could be performed by locals. Today I own vessels, I used to work in these boats doing engineering tasks, and I can perform most of what we do. That is why I think there is nowhere Malaysians cannot compete. What motivates me is that I can build a well respected company. The company image is the biggest priority for me as a failure for the company feels like a slap on my face. I want a company that is well respected in terms of quality, service, technical capabilities and that can grow as one of the world players. And I think that we are moving in that direction.

To be a successful entrepreneur, do you have to be more a business man, engineer or a politician?

You have to be lucky! All these three have to be in you to do business in Malaysia. But at the end of the day the three have to be balanced. Some people have very good business acumen, others have a political background. I believe in my technical capabilities but one can be successful thanks to political or business knowledge depending on which door they plan on entering trough.
If we were to come back in 5 years, where will you be sitting?

I foresee a real international presence, something less sporadic, and we will be a significant player in the Middle East, West Africa and North Africa. We will have operational offices in these places, strategically positioned to work around quite easily. Today we are based in Malaysia and Singapore but from there we can easily operate in Brunei, Taiwan, Korea and India. We will then be a real international company instead of a regionally-international company, with services in the UK, Mexico, Kazakhstan and the Middle East. We will even hire people internationally, from Europe, the Middle East etc.

What would be your final message to Oil & Gas financial journal readers on Malaysia’s potential in terms of Oil & Gas, and what Malaysia can bring to the world?

In terms of Oil & Gas we have the ingredients but we have to get the vision to be more like Norwegians in terms of being innovative and internationally driven. Nothing can retain Malaysia from being a world class competitor. PETRONAS has to give us a stable platform to grow from, but on the other hand we cannot be too dependent on them otherwise we would only rely on them and serve our own country. We have to be more aggressive internationally and soon Malaysia will be all around the world!

As in any business environment there is always competition at the end of the day. We need to retain the resources and be competitive. Still it is positive if our workers want to move and develop their capabilities with international experience, plus they also enhance Malaysia’s reputation in Houston or the Middle East. We have to work harder and train even better human resources, retain good workers and become more competitive to be equal with what they could get in the Middle East for example. TO be more competitive we have to do more business and work more, so give our clients better solutions.

You worked for Schlumberger and Shell among other multinationals, what did you learn there that helped you when setting up your own company?

These international companies believe in your capabilities and you have to prove yourself in order to move up the ladder. One has to be extremely innovative, pro-active, able to work under pressure and be able to deliver good product. With this I started my business with the idea that we have to give our clients the best and believe we have to strive for excellence.

What are you the most proud of in Orogenic’s achievements so far?

We have exported our services up to the North Sea and are working closely with a UK company to provide our design, as well as some personnel to work there. We are exporting our capabilities overseas, and work in places as diverse as Mexico, former CIS, Sakhalin and are evaluated on international standards, competing with international counterparts on technical and commercial aspects. We are not only local boys, but competing with huge international guys, so there must be something Orogenic is doing right!

What are the synergies between your subsidiaries?

We are a service company, so we know how to serve people. We do not manufacture anything but know what is expected from a service company. All our services are within the subsurface, geological, geotechnical etc. The client base is the same for all our subsidiaries, and we understand very well what are our clients expectations in terms of delivery time, flexibility etc.

Where do you foresee the most opportunities for Orogenic’s growth?

We are a Malaysian based company that develops its expertise within Malaysia. Some of our services are at par or better than international counterparts. We see potential for regional expansion, and have already build a strong recognition for Orogenic in South East Asia. We are only starting to venture ourselves in other regions, such as the Middle East or North Africa, as well as India. We see potential based on our strong expertise to expand geographically and have bigger resources to build our position within the market. Today more than fifty percent of our resources come from overseas activities.

How are you going to build this position?

We are working with partners in the Middle East and North Africa, and are looking for joint venture partners there as in today’s world wherever you want to go, you have to find a local partner. To expand our reach we need more financial resources, in that regard we can either expand organically or bring in strong joint venture partners. These partners have to contribute in terms of technical knowledge or bring capital to the alliance. Our capabilities are already acknowledge by multinationals. In Malaysia we are fully recognized, we have built a strong image in Asia Pacific and Asia in general and are now competing with international companies. The only limitations for us to work in other places are financial and human resources as you need money to expand. To operate a robust growth, we need other financial injections than the conventional system. As of today it is quite difficult to obtain capital but Orogenic’s situation is still good.

How important is Orogenic’s relationship with PETRONAS?

The relationship with PETRONAs is crucial for Orogenic in a sense that it is a stamp of approval for our company, we could be a hero out there, if PETRONAS does not recognize us we won’t be able to work in our home market. We surely need to cooperate with them. On the one hand we love to work closely with them, they are a very important client for us and it is interesting for us to work with them. But on the other hand we have to be resourceful and find other clients. PETRONAS also likes to see us work with multinationals like ExxonMobil or Shell and go outside Malaysia. It is a win-win situation.

You were a geophysist who became an entrepreneur and successfully brought his business internationally; what is your next challenge?

In the old days when I was working with foreign multinationals doing services in Malaysia I saw that most of it could be performed by locals. Today I own vessels, I used to work in these boats doing engineering tasks, and I can perform most of what we do. That is why I think there is nowhere Malaysians cannot compete. What motivates me is that I can build a well respected company. The company image is the biggest priority for me as a failure for the company feels like a slap on my face. I want a company that is well respected in terms of quality, service, technical capabilities and that can grow as one of the world players. And I think that we are moving in that direction.

To be a successful entrepreneur, do you have to be more a business man, engineer or a politician?

You have to be lucky! All these three have to be in you to do business in Malaysia. But at the end of the day the three have to be balanced. Some people have very good business acumen, others have a political background. I believe in my technical capabilities but one can be successful thanks to political or business knowledge depending on which door they plan on entering trough.
If we were to come back in 5 years, where will you be sitting?

I foresee a real international presence, something less sporadic, and we will be a significant player in the Middle East, West Africa and North Africa. We will have operational offices in these places, strategically positioned to work around quite easily. Today we are based in Malaysia and Singapore but from there we can easily operate in Brunei, Taiwan, Korea and India. We will then be a real international company instead of a regionally-international company, with services in the UK, Mexico, Kazakhstan and the Middle East. We will even hire people internationally, from Europe, the Middle East etc.

What would be your final message to Oil & Gas financial journal readers on Malaysia’s potential in terms of Oil & Gas, and what Malaysia can bring to the world?

In terms of Oil & Gas we have the ingredients but we have to get the vision to be more like Norwegians in terms of being innovative and internationally driven. Nothing can retain Malaysia from being a world class competitor. PETRONAS has to give us a stable platform to grow from, but on the other hand we cannot be too dependent on them otherwise we would only rely on them and serve our own country. We have to be more aggressive internationally and soon Malaysia will be all around the world!

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