- Tech Gems On The Rise In Malaysia's OGSE Industry
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Tech Gems On The Rise In Malaysia's OGSE Industry

Last update: 29/12/2017
By Mohd Khairi Idham Amran

KUALA LUMPUR (Bernama) -- The oil and gas (O&G) industry is home to some of the most complex technology innovations owing to the challenging environments in which projects are carried out.

Whilst it has primarily been a space populated by the 'big boys' of the industry, especially multinational companies (MNCs) and larger local players, small and medium enterprises (SMEs) from the Malaysian oil and gas services and equipment (OGSE) industry are increasingly catching up.

Among the emerging local OGSE is MTC Engineering Sdn Bhd (MTCE), which co-designed the winning solution for the maiden Petronas Technology Challenge on Monetisation of Associated Gas from Offshore Flares, enabling them a collaboration with the national oil company on maturing and commercialising the technology.

MTCE also owns the registered trademark for its Humming Bird Offshore solutions for marginal and late life fields.

MTCE's CEO/Executive Director Ir Mohd Fauzi Ya'akob said the company's decision to shift from consultant to turnkey contractor providing cost-effective solutions for O&G floaters bore fruit when Petronas commissioned the Humming Bird Nautica Muar to the Kayu Manis South East field, offshore Sarawak for six months, followed by a nearby oilfield, Anjung Kecil, for another three years.


"Leveraging on a business model that provides full-cycle services of engineering, procurement, construction, installation, commissioning, operation and maintenance (EPCICOM) has enabled us to offer services at lower costs," he added.

In 2017, the company expanded its business to Indonesia, securing a US$400 million contract for turnkey EPCICOM services and a 10-year Floating Production Unit lease at Madura field, Indonesia.

Another OGSE player which provided niche mechanical seal technology, ProEight Technology Sdn Bhd, leveraged on in-house research and development (R&D) to produce best in class mechanical seals, cyclone separators and related components that are cost-effective.

Managing Director Ir Azhar Zainal Abidin said the company's success came from its perseverance and enduring commitment towards excellent R&D, precision manufacturing and quality control.

"When I initially bought computerised numerical control machines, people thought I was crazy, but the point is, the industry will never buy your idea until you have something solid to show. I knew I had to spend money first before the returns came in," he said.


To date, he said the company has captured 90 percent of the very niche mechanical seal market in Malaysia and secured the highly recognised API Specification Q1 certification by American Petroleum Institute (API).

The company's clients profile consisted of upstream players including Petronas Carigali, ExxonMobil and Shell, downstream players such as Petronas Penapisan Melaka and Petronas Chemicals Group, power sector clients such as Tenaga Nasional Bhd and independent power producers as well as customers in Thailand and Saudi Arabia.

He said ProEight Technology also promoted ?Championing Failure? mind-set where employees are given incentives to report failure so the company's process improvement team can identify weaknesses and fix them.

"With this, we created an efficient manufacturing system that produces mechanical seals within 24 hours compared to the 10 to 12 weeks required by other original equipment manufacturers."

Azhar also credited Petronas for their openness to new technologies and willingness to work with local companies.


Moving forward, Azhar said ProEight is headed for a listing on Bursa Malaysia's LEAP Market next year to fund expansion beyond the O&G industry and entry into overseas markets (2019).

R&D and process technology solutions provider, NGLTech Sdn Bhd, on the other hand, pinned its success to the company's ability to identify 'pain points' and quickly develop and commercialise solutions.

"We focus on good to great solutions that solve multiple problems. This requires a highly capable and flexible team with experience and technical competence," Managing Director Ir Arul Jothy said.

He said since its incorporation in 2009, NGLTech has successfully implemented and commercialised most of its 12 patented and patent pending home-grown technologies.


The company also secured a Focused Recognition Certificate from Petronas' Malaysian Petroleum Management for introducing a breakthrough technology that significantly reduced carbon dioxide emissions while creating additional value from flare gas at Petronas' Anjung Kecil field.

Arul said the current low oil price environment has created a level-playing field for smaller players such as NGLTech to compete with the ?big boys'.

"Most of the currently available technologies were developed for a price level of US$100 per barrel. Many of these technologies are obsolete and the downturn has been a blessing in disguise for agile companies that can innovate and take the product to market quickly," he said.

Acknowledging that financing tends to be challenging for technology companies, he advised SMEs to explore opportunities within the ecosystem.

"In the early years, NGLTech co-developed solutions with Petronas and this paved the way for quicker commercialisation," he said.


He said Malaysia Petroleum Resources Corporation (MPRC), a government agency responsible for the OGSE industry's development, also supported companies through its Oil and Gas Innovation and Technology Collaboration (OGITeC) platform.

He added that building on NGLTech's success, the company has expanded overseas with an office in Perth, Australia and a joint-venture in Indonesia in addition to exporting to India and Vietnam.

Meanwhile, another R&D company, MIT Innovation Sdn Bhd, is reaping the reward of a 'mindset of abundance'.

Chief Executive Officer Ahmed Tahoun said the company started R&D in 2010 driven by an ambition to develop technology that addressed a particular issue in the most challenging O&G environments.

"If we could achieve that, the client will drive demand, providing for a strong business case that would fuel continuous growth for our company," he said.


He said MIT Technologies' management also developed the company from ground up with experienced leaders coaching fresh graduates into curious problem-solvers while at the same time pursuing research collaborations with universities.

After overcoming various challenges, he said the company commercialised the Intelligent Circulation While Drilling tool (iCWD) in 2015, saving expensive rig time through the deployment of smart electronics and sensors.

He said the company also achieved profitability in the same year and became the first Malaysian company to win the Spotlight on New Technologies Award at the Offshore Technology Conference, OTC Asia 2016.

It also bagged the Overall Best Achievement Award, presented by the Prime Minister Datuk Seri Mohd Najib Tun Razak, during the Malaysia Commercialisation Year 2016 Awards and was conferred highest technology readiness level according to API standard 17.

Since 2015, he said the company has filed over 40 patent applications and many have been granted in the USA, Malaysia and Australia, with others pending in Europe and Canada.


He said support from Petronas was also pivotal for the company to accelerate development and qualify the technology by reducing risk and achieving cost savings.

"With their feedback, our R&D team was able to cover a wide range of operational environments and confidently hit the global market," he said.

Apart from Petronas, he said the company also received financial support from SME Corp, Ministry Of Science Technology & Innovation, Malaysian Investment Development Authority, Malaysian Technology Development Corporation and incubation support from the Technology Park Malaysia.

Eyeing further global expansion, he said the company will leverage on MPRC and Malaysia External Trade Development Corporation led missions to key international O&G trade shows.

"At the moment, we have equipment in the USA, Algeria and Saudi Arabia and plan to expand to other active markets," Tahoun added.

MPRC's Senior Vice President Syed Azlan Syed Ibrahim said local players need to explore new approaches to improve productivity and long-term resilience as adjustment occurred across the global O&G industry.

Taking example from MTCE, ProEight Technology, NGLTech and MIT Technologies, he said these companies have leveraged on available opportunities to develop niche capabilities and chart their respective growth journeys regardless of market conditions

"Having developed their competitive strengths, these companies are already exporting their services and we hope more will follow," he said.

He added that this is positive for the industry in terms of positioning Malaysia as the top Asia Pacific OGSE hub.



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