by Chee Yew Cheang, APAC Editor
What a difference a year makes! It would have been unthinkable last July, when global oil prices were trading above $100 a barrel, to imagine that the oil and gas industry in Asia would turn to non-traditional means to shore up their revenue.
Fast forward to July this year and the absurdity of such thoughts have turned into a reality, particularly after the oil prices have tumbled by a massive 40 to 50 percent from a year ago. Thailand’s largest energy firm PTT Public Company Ltd. – which owns the upstream unit PTT Exploration and Production Company Ltd. (PTTEP) – signed a franchise deal with U.S.-based fast food and biscuit chain Texas Chicken to boost its revenue from non-oil business amid low crude oil prices.
The Thai firm intends to invest $44.2 million (THB 1.5 billion) to set up no fewer than 70 Texas Chicken branches over the next five years, Buranin Rattanasombat, PTT executive vice-president for retail marketing, said, as reported by Reuters July 10, with the first restaurant to open for business in November.
The franchise deal with Texas Chicken represents PTT’s first major investment into Thailand’s $884 million (THB 30 billion) fast food market and the energy firm planned more food franchise deals as it seeks to boost revenue from non-oil businesses to around half of its total profit over the next five years, compared to just 20 percent currently, PTT Chief Operating Officer Sarun Rungkasiri indicated, as quoted by Reuters.
PTT appears serious about the target set for its non-oil business as the company is already operating coffee shops under the Cafe Amazon and Daddy Dough local brands.
Like PTT, oil and gas services provider Malaysian Marine and Heavy Engineering Holdings Berhad (MHB) – which is indirectly linked to Malaysia’s national oil company Petroliam Nasional Berhad (PETRONAS) – is seeking alternative revenue streams as oil prices have shown little signs of recovering.
With independent and national oil and gas firms cutting capital expenditure in response in the current industry downturn, services companies such as MHB have seen fewer orders.
“The big jobs are getting lesser and the smaller jobs are overcrowded,” MHB Chairman Nasarudddin Md Idris told reporters after the company annual general meeting, as quoted in local daily The Star May 26.
With large scale projects such as Malaysia’s first tension leg platform structure for the Malikai deepwater project and the Sarawak’s SK316 engineering, procurement, construction, installation and hook-up/commissioning contract nearing completion, MHB’s fully owned unit MMHE Sdn Bhd is under intense pressure to build its order book.
“Regionally, for big jobs we are fighting in the main league with heavyweights like Keppel from Singapore,” Nasaruddin said, adding that the firm is stepping up its marketing activities overseas to keep its two yards, which are only around 50 percent utilized, busy.
Given the challenging operating environment, MHB is looking beyond its core businesses in upstream offshore fabrication to the onshore and downstream sectors, where opportunities appear greater as PETRONAS is building a $27 billion Refinery and Petrochemical Integrated Development (RAPID) complex in Pengerang, Johor, Malaysia.
In these difficult market conditions, MMHE hopes to receive subcontract work from companies such as France’s Technip in the RAPID project.
“Since we have the capabilities, we are also going to focus on the downstream and onshore segments … There is a sizeable job market in Malaysia, even onshore,” MMHE Managing Director and CEO Abu Fitri Abd Jalil told Bernama news agency May 25.
Abu Fitri said although there would be more competition in the downstream segment, MMHE is in an advantageous position as downstream players are generally much smaller compared to upstream ones.
“It’s not that significant, but will do its part in covering our overheads … [which is] quite high with 3,800 employees,” Nasuruddin explained.
Keeping operations humming at MMB’s yards remains a priority, even if it requires the Malaysian company to stray from their core businesses. A RHB analyst told Rigzone that MHB “is trying to keep its yards busy”, otherwise the company may have to lay off more than the 200 workers it did over the past year.