Sarawak sets sail for O&G push

Sarawakians are highly sought-after for offshore O&G upstream activities.

Among several of Petronas offshore platforms.

Dayang Topaz boat used by Dayang Enterprise Marine Services.

Anuar, who heads the Sarawak Oil-Malaysian Assets Development and Production (Upstream) of Petronas Carigali, hails from Samarahan.

Datuk James Ling Suk Kion

AS Sarawak ushers in Malaysia Day, it is a crucial to remember its first milestone in the oil and gas (O&G) industry, which started in Miri 107 years ago.

The fi rst Sarawak Oil Mining Lease was signed by Rajah Charles Brooke in London in 1909, followed by the send-off by Shell of its senior geologist Dr Josef Theodor Erb and former Baram Division Resident Dr Charles Hose to Miri in 1910.

The first exploratory well was drilled on Aug 10, 1910 using an oil rig engineered by a Canadian named McAlpine – the factor contributing to the place being named ‘Canada Hill’.

Oil flowed out two months later.

Sarawak Oilfield Ltd – a subsidiary of the Shell/Royal Dutch Group – was established to run the operations from Lutong. It was renamed Sarawak Shell Oilfield Ltd and later, Sarawak Shell Bhd – marking the company’s long association with Sarawak.

Shell ran the show in Malaysia until national oil corporation Petronas was formed in 1974; subsequently, Petronas Carigali Sdn Bhd came into the picture later in the 1980s.

State-owned corporation Fast forward to 2017, Sarawak now has its own O&G company Petroleum Sarawak Bhd (Petros), with an assembly of professionals on its board of directors.

Petros was the Chief Minister Datuk Patinggi Abang Johari Tun Openg’s answer to the state’s aspiration for a bigger piece of the O&G pie.

Abang Johari – whose father Tun Abang Openg Abang Sapiee was the first Yang di-Pertua Negeri of Sarawak – is seen as continuing the struggles of his predecessor, Pehin Sri Adenan Satem, the state’s fifth chief minister who passed away on Jan 11 this year.

Petros would work with Petronas, and be involved in upstream O&G exploration and extraction within Sarawak waters.

It is said that this is a more pragmatic and forward-looking approach towards greater participation and revenue, instead waiting for the results of the long drawn negotiations on raising the oil royalty from five to 20 per cent for Sarawak – subject to the vagaries of fluctuating oil prices.

Petros chairman Tan Sri Datuk Amar Dr Hamid Bugo is the former state secretary for Sarawak, but his background speaks volumes of his experience in O&G.

He held board directorships in several public-listed companies, going as far back as when Sapura Energy Bhd – one of the world’s largest O&G companies – was still known as SapuraCrest Petroleum Bhd. He had been on the board of Sime Darby Bhd, which remains one of Malaysia’s giant conglomerates.

The credentials of others on the Petros board line-up are just as impressive — Bintulu Port Holdings Bhd chief executive Dato Mohammad Medan Abdullah, Sarawak Energy Bhd group chief executive Sharbini Suhaili, Public Works Department Sarawak director Shell Gas and Power Malaysia managing director Heng Hock Cheng.

Success from scratch Another key figure in Sarawak’s O&G story is Datuk James Ling Suk Kiong, the founder and executive deputy chairman of Dayang Enterprise Holdings Bhd.

Having been a veteran in the field, he is all thumbs-up to the setting up of Petros and its board of directors.

“These are good people on board (Petros) – those with good experience and knowledge in the O&G industry,” he says.

Ling founded Dayang Enterprise in 1980, with a staff of only four but over the years, he has turned it into a public listed, multiple award-winning company.

The group is engaged in provision of integrated services including topside structural maintenance (TSM), hook-up and commissioning (HUC), engineering procurement construction and commissioning (EPCC) and offshore support vessels (OSV) – all drawing lucrative jobs from Shell, Petronas and other public sharing contracts (PSCs).

“It’s not been easy – the O&G industry is very challenging with very high entry standards and expectations. Still, our company manages to cope with the turbulences, emerging stronger and more ready for more business every time over the past three decades,” says Ling.

Dayang Enterprise employed over 3,000 workers during its peak. It now takes pride in having trained and provided employment opportunities to not less than 5,000 Sarawakians since 1980 – many of whom became highly sought-after by other companies and headed elsewhere for better remuneration.

The group now has a balance order book of RM2.3 billion in TSM/HUC/EPCC contracts and OSV charters slated for the remainder of this year and up until 2019. It is currently awaiting the results of some job tenders worth RM4 billion.

Looking ahead

Meanwhile as Shell footprints become increasingly smaller in Sarawak, those of Petronas and Petronas Carigali grow bigger.

With 60 O&G-producing offshore wells in the state and RM140 billion already invested so far, going forward is the only way.

In coping with the situation, Petronas Carigali Sarawak operations are split into two entities — namely Sarawak Oil Operations based in Miri, and Sarawak Gas Operations in Bintulu.

A Sarawakian from Samarahan, Anuar Ismail, heads the Petronas Carigali Sarawak Oil-Malaysian Assets Development and Production (Upstream).

The Miri side of the operations currently has a workforce of about 1,500 – 76 per cent of whom are Sarawakians – and this ‘employ-locals’ emphasis would continue.

In comparison, Petronas currently employs 5,000 Sarawakians in the state and around the world.

“We are aware of the state government aspirations and we will respect and honour this commitment,” assures Anuar.

Petronas and Shell Sarawak have undertaken the development of BARDEGG 2 and Baronia enhanced oil recovery (EOR) project, and Integrated Bokor Phase 3 EOR and Betty Redevelopment projects offshore Miri – worth in excess of RM10 billion in investment paced up to 2020 .

This is the much-needed ‘shot-in-the-arm’ for upstream oil operation and its spin-offs in Miri, as the business community and workers in the industry have been struggling with the downward spiral of oil prices over the past two years.

Petronas, towards greater participation of local players, has already registered 420 local companies under its vendor programme – translating into what could be an unprecedented number of Sarawakians ‘bidding for some action’ in the O&G industry.