Localise Indonesia’s drilling sector

Indonesia

Irene Tien, president director of PRA Group, talks to TOGY about the pressure faced by local drilling companies in a low oil price environment. Founded in 2007, local drilling services company PRA Group provides land drilling rigs to clients such as state-owned Pertamina and US oilfield services company Halliburton.

How can small and medium-sized drilling companies stay competitive in the market?
Bidding on oil and gas projects has become a bit of a beauty contest. The contest is not just about the rigs but also the whole package. The successful bidder must have the best equipment, management system, safety record and employees. They really have to stand out in the fierce competition.
Drilling companies need an integrated management system. The rigs need to be the best. Employees need to be trained to meet international standards and to be able to offer support for the whole project. Local content regulations provide a competitive advantage for local companies because international oilfield services companies such as Halliburton and Schlumberger have to subcontract to local drilling companies.

Is there a market for domestically produced rigs in Indonesia?
US-made rigs are largely preferred by oil companies due to their quality and reliability. Chinese companies also put out a good product, but Indonesian rigs don’t quite meet international standards yet. The Indonesian government has a long-term plan to manufacture rigs in the country. There is a facility to manufacture rigs in Batam and one in Jakarta. They are improving, but the oil and gas industry largely prefers US-made rigs.

How do local drilling companies maintain a well-trained and competitive workforce?
Keeping trained, qualified Indonesian workers in the country has been difficult for years. Engineers, certified technicians, electricians and drill superintendents earned much more money working in the Middle East, North America or Australia. Indonesia wasn’t competitive salary-wise, and the industry could not keep local talent at home, especially if they were already trained.
With the downturn in oil prices and the layoffs at companies across the world, lots of Indonesian workers are coming back home. Local companies can recruit highly qualified and skilled workers who have overseas training and experience. Once we recruit them, we need to keep them at home even when the oil prices go up. Local companies need to stay competitive with training, and also offer competitive salary and benefits compared to international standards.

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