What role does Malaysia Petroleum Resources Corporation (MPRC) play in Malaysia’s energy sector?
MADROS: MPRC plays the role of facilitator of growing the oil and gas services and manufacturing sector. We help promote the industry and we help grow the industry; be it from human capital, technology, finance, and anything else that helps to grow the services contribution to the economy.
How does MPRC plan to implement growth in Malaysia’s oil and gas industry?
MADROS: There are a couple of areas to look at in terms of making Malaysia a hub. There is the perception of when Malaysia becomes a hub and the next thing you have to ask is how do you measure Malaysia being a hub. In terms of perceptions, Malaysia needs to be seen as a place where oil and gas business is being done. Malaysia needs to be seen as a place where you have all of the fundamentals and where you have all of the industry coming in and investing. So those perceptions are something that we are managing and completing all kinds of initiatives to ensure that Malaysia is seen as the place to be. In terms of investment, we are looking at measurable investment coming in as well as joint ventures, and opportunities for companies going from Malaysia and then servicing the region.
What are MPRC’s focus pillars?
MADROS: There are four pillars that MPRC looks at in terms of pushing Malaysia to become a hub. The first part is looking at investment coming in as well as investment from within Malaysia. As investment grows, it gives an indication as to how fast we are moving and becoming a hub. The second one is to look at human capital and finance. Human capital needs to grow in tandem in order for us to become a hub. Easy access to finance is needed to grow the industry to make sure that they have access to finance. The third pillar is to look at promotion and growth, promotion in the sense that we are constantly working and promoting Kuala Lumpur as a center of activities. So we are helping to promote Kuala Lumpur and recently we have managed to do that by bringing OTC (Offshore Technology Conference) into Kuala Lumpur. On the growth side, we are looking at linking Malaysia to all the neighboring countries so there is now more opportunities from the region that can be serviced from Malaysia. The final pillar is to look at industry and market enablers. What we mean by that is to look at the policies and regulations that are in the industry and making sure that they are coherent and that they help grow the industry.
Where do you see further opportunity for FDI in Malaysia’s energy sector?
MADROS: There are numerous opportunities for investment in Malaysia. Broadly, you can look at it from the upstream sector as well as the downstream sector. In the upstream sector, Petronas has committed to sustaining production and to do that they have looked at three separate areas. One is advanced oil recovery, number two is marginal field development, and the third is to look at deep-water development. In all those areas there will be technology and requirements to support those activities. In the downstream sector, we have a lot of initiatives as well. In Pengerang, south of Johor, you have a huge integrated petroleum complex that has been built. That is the single biggest investment that is part of the Economic Transformation Programme in Malaysia. On top of Pengerang, you also have the Sipitang Oil & Gas Industrial Park, which is in Sabah. We have a lot more of those on-shore oil and gas facilities that have been put in place that require a lot of investment and opportunities for works.
Who are you targeting for investment opportunities?
MADROS: Many of these projects involve a different kind of technology than Malaysia is used to. When you look at enhanced oil recovery that is really using a new type of technology that we have not utilized in the past. So a technology company that has specific technological expertise will be sought after; enhanced oil recovery in a market challenging environment of deep water and marginal fields. Technology will play a big role in terms of our ability to cater for those kinds of requirements. Similarly, on the onshore sector, there is huge capital and huge levels of technology involved as well. Again, companies that have big capacity that can offer competitive and technological advantages will be our focus area.
20% of the GDP of Malaysia comes from oil and gas. However, the majority of that comes from E&P, exploration and production. Less than 5% comes from services.
What are MPRC’s energy services expansion goals?
MADROS: It is without a doubt that Malaysia is very dependent on its oil and gas sector’s contribution to its economy. 20% of the GDP of Malaysia comes from oil and gas. However, the majority of that comes from E&P, exploration and production. Less than 5% comes from services. Our goal is to grow that services sector towards 2020, where we have a more significant contribution from the services sector. Currently, we are looking at services providing around 5% and we are looking at growing that to 15% - 20% by 2020.
How does MPRC facilitate JVs between Malaysian companies and multinational corporations?
MADROS: We go through a number of initiatives where we can lead towards encouraging JVs between either local-to-local companies or local-to-foreign companies. MPRC is very involved in actively promoting Malaysia and Malaysian industry abroad by participating in the Offshore Technology Conference (OTC) in Houston, Offshore Europe in Aberdeen, as well as Offshore North Sea. In all of these initiatives, we actually meet with industry players and we facilitate those industries that are interested in expanding their businesses in Asia by linking them to our database of companies that we have in Malaysia.
What are Malaysia’s human capital restraints with regard to the energy sector and what is being done to address these shortages?
MADROS: Human capital is one of the key factors for Malaysia to succeed as a regional hub. To do that, we have put in a lot of initiatives to ensure that we have quality human capital to support the industry. The challenge that Malaysia has is this, we have the numbers in terms of graduates and human capital to supply the industry, but much of this human capital goes into the industry by accident and not by design. What MPRC has done is to actively pursue all of the public universities and private institutions in Malaysia, linking them to the industry within Malaysia as well as abroad. So we are encouraging more students to get into the industry at the same time as linking the industry to the university to create more awareness for the quality students we want in the industry.
How would you describe the appetite for energy related project finance in Malaysia today?
MADROS: I think you will see that in the Malaysian Bourse in Kuala Lumpur, there is a lot of appetite for financial instruments to go into the sector. What we have seen over the last 3 years is a lot of companies acquiring assets, big assets and expensive assets, and that requires a lot of funding. Human capital development is key, but it needs to supplement access to funds. What we have seen is that many companies have gone out to seek loans, equity, as well as incentives available to fund their initiatives. So the appetite is very big here.