Highlight: Petronas clears air on VDP

-A +A

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas), which has come under fire from Malay groups for supposedly not doing enough to nurture bumiputeras in the oil and gas sector, announced the appointment of three new bumiputera companies to its vendor development programme (VDP).

The national oil company, which appointed the first vendor under the VDP in 1994, said 79 companies have been appointed to date. “Collectively, they have been awarded contracts worth more than RM7.5 billion,” it said in a statement yesterday.

The programme has the primary objective of creating resilient and competitive bumiputera entrepreneurs in oil and gas (O&G)-related manufacturing and technical services of medium and high technology, with an import-substitution end-goal.

Generally, the VDP is only for bumiputera companies already in the O&G. Under the programme, the companies compete among themselves for the provision of goods and services to Petronas.

After five years or more, the companies are expected to graduate and bid for jobs on their own. However, some do not make the grade and were omitted from the programme.

The Malay Economic Action Council (MTEM), a group that alleges that Petronas has not done enough for bumi firms, recently claimed that the number of companies under the VDP has been trimmed from 77 to 11.

MTEM wants Petronas to boost its VDP and help ensure that more bumiputera companies and entrepreneurs enter the O&G industry.

“It’s a good effort on Petronas’ part to appoint these new vendors. However, from having more than 70 bumiputera vendors to 11, an addition of these three is still marginal,” said MTEM CEO Mohd Nizam Mahshar, in response to Petronas’ appointment of the three new vendors.

Petronas CEO and president Tan Sri Shamsul Azhar Abbas says Petronas has done its fair share of developing and assisting bumiputera companies and entrepreneurs since it was established in 1974

“And besides, I don’t know whether this is to develop the vendors to help them graduate to regional-quality players or whether Petronas is awarding these vendors simply to add up to the numbers,” he said.

The three companies appointed to the VDP are Petroclamp Sdn Bhd, OMNI Oil Technologies (M) Sdn Bhd and Eastern Energy Services Sdn Bhd. Their appointments were made in May, September and November this year.

Petroclamp’s work scope is to manufacture and supply all cast steel protectors for control lines and cables of O&G wells. The company was set up in 2008, and its first design of dual protector for cables and control lines was patented in 2011. Petroclamp started to supply its own protectors in February 2012.

OMNI Oil Technologies was appointed to manufacture and supply solid type (carbon steel) and bow spring type centralisers. Petronas said this will be for the use in “well casings during well drilling and cementing work”, adding that the equipment is currently supplied by foreign manufacturers.

OMNI Oil Technologies was incorporated in 2007 as a 70:30 joint venture with a UK-based partner to supply drilling products. It progressed to manufacture enhanced and niche drilling downhole products such as reamers and stabilisers. In 2012, it started designing its own products, starting with carbon steel and bow spring type centralisers.

Eastern Energy Services, meanwhile, was appointed to manufacture, supply and service gas lift valves (GLV) and side pocket mandrels (SPM) used in offshore drilling and well operation activities.

The company started as an agent in 1989, and has since 2007 focused on artificial lift system engineering and maintenance services for Petronas while working towards realising its aspiration of becoming a GLV and SPM manufacturer.

“The appointment will result in the local manufacturing of these currently imported products,” said Petronas.  Eastern Energy Services currently has GLV refurbishment and assembly workshops in Labuan and Kemaman, Terengganu. It is also establishing a facility in Shah Alam in Selangor.

In a recent interview with The Edge, Petronas CEO and president Tan Sri Shamsul Azhar Abbas stressed that Petronas had done its fair share of developing and assisting bumiputera companies and entrepreneurs since it was established in 1974.

Last year alone, it gave out RM52.48 billion worth of contracts to companies majority owned by bumiputeras, almost double the RM29.35 billion awarded in 2011. In 2010, the total was RM25.97 billion.

This exceeded the government’s target of requiring Petronas to provide bumiputera companies with contracts worth RM20 billion a year in the upstream and downstream sectors.

Last week, Petronas also awarded one of its largest service contracts worth RM10 billion to six companies. The 13-package offshore hook-up, commissioning and maintenance services contract is for a period of five years starting from 2013.

Companies that clinched the job were Kencana HL Sdn Bhd, Dayang Enterprise Sdn Bhd, Petra Resources Sdn Bhd, PBJV Sdn Bhd, Carimin Engineering Services Sdn Bhd and Sigur Ros Sdn Bhd.

This article first appeared in The Edge Financial Daily, on November 21, 2013.