April 29, 2019 37 CITy of opportunity McDermott rides O&G recovery boom from Greater KL base

umours of the oil and gas (O&G) a key supporting ingredient in McDer- industry’s imminent demise are, mott APAC’s push into digitisation and despite the great swings in the innovation. One successful example is its Brent crude oil price in the past GeminiXD platform, a single “source of 12 months, exaggerated. truth” for design, procurement, fabrica- RThat is certainly the case for O&G ser- tion and construction. vice providers like McDermott International Listed on the New York Stock Exchange, Inc, whose -based Asia-Pa- McDermott International comprises five cific operations are thriving, according to core business segments that include McDer- Ian Prescott, the US O&G giant’s senior mott APAC. The others are North, Central vice-president for Asia-Pacific (APAC). and South America; Europe, Africa, Russia “Our pipeline is at the highest it has and the Caspian; Middle East and North ever been,” says Prescott. “So far we have Africa; and Technology. won more than US$6.5 billion worth of It is worth noting that in May 2018, jobs in the first quarter of 2019 alone.” McDermott International completed a The job wins include two Malay- The organisation combination with Chicago Bridge and Iron sian contracts, one in partnership with Co NV (CB&I), which resulted in a new Mc- Sarawak Shell Bhd and the other with made the decision three Dermott, a premier, fully integrated provider Sapura Exploration and Production. Mc- years ago to relocate of technology, engineering and construction Dermott will provide transport and in- the engineering centre solutions for the energy industry. stallation of offshore structures, pipelines from to Kuala For McDermott APAC, the completion and pre-commissioning work for the Pan of the combination offers its operations Malaysia field development off Sarawak. Lumpur, and there in the region additional offerings that are That the year is going so well for a were many drivers becoming a key competitive advantage. multinational O&G firm like McDermott for that. In terms of According to McDermott International’s in Asia-Pacific may surprise industry out- Kuala Lumpur and with latest annual report, Asia-Pacific is its sec- siders. After all, the Brent crude oil price ond largest segment outside of the US by has not exactly been stable in the past 12 InvestKL’s assistance, revenue contribution in 2018, contributing months — in October it broke past US$80 it’s an easy place to do US$411 million. Prescott expects that to rise per barrel for the first time since 2014 but business,” — Prescott to US$700 million to US$1 billion in 2019 then slumped back to just above US$50. if the current pace is sustained. Despite that, upstream players are becoming “It was a good strategy to combine, more active in , with more regional bases in Greater Kuala Lumpur. and in the region it most definitely allows capital expenditure and drilling plans for InvestKL acts as the reference point and us to provide much broader services for our 2019, which means more contracts for facilitator for MNCs such as McDermott to clients,” says Prescott. “McDermott APAC support services. adjust to the local landscape and hit the is well positioned to support the global Of course, upstream is not the only ground running. growth of McDermott International and segment bustling with activity. And that “The organisation made the decision we are seeing a lot of global activity, we means the entire industry is in uncharted three years ago to relocate the engineering are seeing many clients invest.” waters, says Prescott. “It is unprecedented centre from Singapore to Kuala Lumpur. that both the upstream and downstream Kuala Lumpur is an easy place to do busi- segments are both active right now.” His- ness,” Prescott reflects, adding that InvestKL’s torically, they run counter-cyclically to each facilitation and assistance throughout the other depending on the prevailing crude process has helped tremendously. oil price trend, he adds. “KL has a very well-educated workforce Why Malaysia is the place to be for O&G MNCs That is good news for McDermott APAC, and a large O&G workforce. We opened the which provides engineering, procurement office here three years ago with 90 people Oil and gas (O&G) is on the rise again, accommodative government policies. and construction (EPC) expertise to both and now we have over 700, most of whom and not just for multinational corpo- “From Kuala Lumpur, MNCs can segments of the industry. Prescott expects are Malaysian,” he adds. rations (MNCs) like McDermott Inter- take advantage of one of the strong- McDermott APAC to sustain the current That strong talent supply is thanks to a national Inc. The entire local sector is est O&G ecosystems in the region. We pace of job wins barring a seismic shift in particularly well-developed O&G industry poised to shine this year as the new have a strong pool of industry-ready the landscape. “I like to think of McDer- with an established track record, driven by government commits to drive further and multilingual talent and excellent mott APAC as the best kept engineering Petroliam Nasional Bhd. growth and activity in the sector after connectivity across the region. MNCs secret in the region. We have 4 Centres of Adding to Greater Kuala Lumpur’s allure some troubled years since the crude can form smart industry partnerships Engineering Excellence in the region. Our is its central location in the region, which oil price slump started in late 2014. with local SME service providers and Centre of Excellence in Kuala Lumpur has Prescott says has helped McDermott man- In a February statement, Deputy vendors,” says InvestKL CEO Datuk over 700 employees who are experts in age its regional presence across key markets International Trade and Industry Min- Zainal Amanshah. their field. This means we can offer clients in as well as . ister Dr Ong Kian Ming said the current From Kuala Lumpur, In addition to the well-developed the expertise with our technology patents “We have a large base in India, we are crude oil price of US$60 to US$70 MNCs can take advantage O&G landscape, expertise and talent and a true turn-key EPC experience.” the largest offshore O&G player there and per barrel is sufficient to revive some of one of the strongest pool, the country is a cost-efficient our offices in Chennai and Delhi are very of the exploration and production O&G ecosystems in the destination when it comes to doing ‘Easy to do business’ easy to reach from Kuala Lumpur.” (E&P) activities that may have been region. We have a strong business. Malaysia ranked 15th in terms The company’s excellent start to the year With the combination of an excellent deferred or stopped due to the low pool of industry-ready of ease of doing business by the World is supported by its base of operations in talent supply chain and geographical prox- oil price of below US$40 per barrel. Bank’s Doing Business 2019 report. Kuala Lumpur, which has been its regional imity to major clients and key markets from He said the oil and gas industry will and multilingual talent Meanwhile, Kuala Lumpur is known headquarters since 2016. Its regional base Kuala Lumpur, it is no surprise that the city rebound and activity will increase. The and excellent connectivity as a vibrant and liveable city, offering was previously in Singapore, though Mc- houses one of the four McDermott Centres ministry is always open to discussions across the region. MNCs high quality living for expats and locals Dermott’s operations in the region stretch of Excellence. with companies on production sharing can form smart industry alike, placing 10th in the rankings for back almost a century. “It is easy to do business in Malaysia contracts (PSCs) to improve economic partnerships with local quality of life in Asia by Mercer in 2019. Since it relocated to Kuala Lumpur, Mc- and it is easy to do business from Malay- production this year. SME service providers and As such, companies like McDermott, Dermott APAC’s head office headcount has sia,” says Prescott. “And if McDermott gets For InvestKL — the federal agen- which have already made the move vendors” — Zainal more than doubled to about 700, mostly a project anywhere in the world, the Centre cy tasked with attracting large global to Kuala Lumpur, are now reaping Malaysians. The outsize Malaysian presence of Excellence is right here.” MNCs to set up regional services hubs in the rewards. in its workforce is also true for McDermott’s Greater Kuala Lumpur — the national natural gas discoveries in 2010 to 2012, The brightening outlook for the 119ha fabrication yard in Batam, the firm’s More growth ahead priority placed on O&G is a validation according to a recent report by Russian Malaysian O&G sector, as well as biggest globally, which has been up and And McDermott APAC is only beginning, of its stringent MNC selection criteria, O&G MNC, PJSC Lukoil, titled Global regionally, bodes well for other O&G running since 1970. It has three fabrication he adds. The firm has already run out of which zoomed in on global O&G player Trends in Oil & Gas Markets to 2025. MNCs thinking of following in McDer- yards in APAC, with others located in available office space for its short-term -ex McDermott several years ago. Since relocating to Greater Kuala mott’s footsteps. and . pansion needs. “This (current operations) is Asia remains the centre of gravity Lumpur, McDermott has grown from “MNCs that tap Kuala Lumpur’s It is an outstanding success story for not the ceiling, we have more plans to invest for global growth. And Malaysia is the strength to strength with the support of strong proposition to establish a region- InvestKL, the agency tasked with attracting in Kuala Lumpur and grow even bigger.” obvious choice for O&G players in the the KL ecosystem, which includes easy al hub will obtain a strategic competi- global multinational companies to set up The local talent pool is fast becoming region, given that it saw the largest access to highly skilled O&G talent and tive advantage in Asean,” says Zainal.