Tech Gems On The Rise In Malaysia's OGSE Industry

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 emerging local OGSE companies 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 to collaborate 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.

Its 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," Fauzi added.

Riding on cost-competitive capabilities, the company expanded its business to Indonesia in 2017, 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 provides niche mechanical seal technology, ProEight Technology Sdn Bhd (ProEight) 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, its Managing Director Ir Azhar Zainal Abidin said.

Similarly promoting cost-efficiencies through technological prowess, NGLTech Sdn Bhd 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, its Managing Director Ir Arul Jothy said. The company has also implemented and commercialised most of its 12 patented and patent pending home-grown technologies since its incorporation in 2009.


Arul pinned the company’s success to its 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."

Likewise, MIT Innovation Sdn Bhd, is reaping the rewards of a 'mindset of abundance'. Its Chief Executive Officer Ahmed Tahoun said the company ventured into R&D in 2010 driven by an ambition to develop technology that addresses 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 to fuel continuous growth for our company," he said.

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

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.


Sharing MIT Technologies’ growth journey, Tahoun said that the company’s management 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.

Upon commercialising the iCWD in 2015, it achieved profitability that same year and became the first Malaysian company to win the Spotlight on New Technologies Award at the Offshore Technology Conference, OTC Asia 2016. The company 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, achieved highest technology readiness level according to API standard 17.

Meanwhile, ProEight’s Azhar said that the company's ability to develop niche capabilities comes from 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).

Its clients profile consists 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.


According to Azhar, 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."

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).


Acknowledging that financing tends to be challenging for technology companies, Arul 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.

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

Echoing a similar experience, Tahoun said Petronas’ support was pivotal for MIT Technologies to accelerate development and qualify its 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.

Also eyeing global expansion, Tahoun said MIT Technologies will leverage on MPRC and Malaysia External Trade Development Corporation led missions to key international O&G trade shows, as it eyes further global expansion.

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


Arul believes 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.

Developing world class capabilities, NGL Tech has expanded overseas with an office in Perth, Australia and a joint-venture in Indonesia, and exports to India and Vietnam, Arul 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 occurs across the global O&G industry.

Hailing MTCE, ProEight Technology, NGLTech and MIT Technologies exemplary, he said these companies have leveraged on available opportunities to develop niche strengths and chart their respective growth journeys regardless of market conditions.

"These companies are already exporting their services and we hope more Malaysian companies will follow.”

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