Real Offshore Installation making strides into oil and gas business
Real Offshore Installation Co Sdn Bhd’s partnership with Sime Darby Engineering Sdn Bhd is a stepping stone for the former to move into the oil and gas business.
Real Offshore managing director Koh Meng Guan said the company was set up in 2006 and formed a joint-venture company with Sime Darby Engineering called ROIC Sdn Bhd to bid for oil and gas projects in the Middle East.
“We won a contract worth RM1bil to do engineering, fabrication, procurement, offshore construction and commissioning in Doha, Qatar,” he told StarBiz.
Real Offshore was in charge of project management operations and offshore manpower supply.
Koh Meng Guan
Koh said the financial support from Sime Darby Engineering was crucial when bidding for jobs.
“The advantage that our company has is a team of experts who have more than 20 years experience in this industry,” he said.
In February, Sime Darby Engineering entered into transportation and installation services for the oil and gas industry via its joint venture with two partners that included ROIC.
They formed a company called Sime Darby Transportation and Installation Sdn Bhd in which Sime Darby Engineering has 51% stake while ROIC owns 24.5%. The remainder is held by MDL Energy Pvt Ltd, an India-based oil and gas company.
Koh said Sime Darby Engineering entered into the transport and installation market because it needed in-house capability to undertake huge engineering, procurement, installation and commissioning projects.
Offshore construction was very unpredictable and volatile in terms of cost, especially in the last two years.
“Jobs are normally awarded nine to 12 months after the bidding period.
“By then, with the fluctuation of fuel price and higher demand for support vessels and crew boats in the last two to three years, the tender rates may not be as high as what the market seeks,” he said.
As an example, he said the anchor handling tugs were originally priced at US$2 per horsepower but, after 12 months, it could increase to US$3 to US$3.50 per horsepower, causing an instant major cost overrun.
If companies have in-house capabilities, they would not be exposed much to higher cost risks as they would not have to subcontract work to third parties.
This year, Real Offshore – which has 85 employees – was awarded a contract worth RM80mil by Petronas Carigali-PTTEPI Operating Co to install a pipeline offshore Kelantan near the Thailand border.
On the outlook for the oil and gas industry, Koh said it would remain positive next year as most of the big players were committed to their capital expenditure, given that demand was still high in countries like China and India.
“Petronas, for example, would embark on deep-water exploration for oil as the current shallow and medium-depth water wouldn’t pump much oil,” he said.
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