The fall in the price of crude has had a significant impact in Malaysia since a large portion of the country’s GDP is contributed by crude oil from Petronas. The company can make money at almost any price, but stabilisation is necessary if we are to make reasonable long-term plans.

Steven ESHELMAN General Manager Asia Pacific HONEYWELL UOP

Practical processes

January 30, 2017

TOGY talks to Steven Eshelman, Honeywell UOP’s general manager for the Asia Pacific region, about the company’s technological innovations, the reasons Malaysia is being used as a regional hub and shifts in the country’s oil and gas market. Honeywell UOP Malaysia provides process technologies and performance materials for oil and gas players.

UOP, part of Honeywell’s performance materials and technologies business unit, has more than 3,000 active patents that are mainly concentrated on oil and gas production, chemical and petrochemicals manufacturing as well as combustion processes of coal. In addition to process solutions and chemical supplies, UOP provides technical services and support for plant operations, asset management, tactical support, troubleshooting and engineering services.

• On Malaysia as a strategic location:
“Malaysia is a friendly place to do business and the stability of the government is also a business factor.”

• On the impact of low oil prices: “The fall in the price of crude has had a significant impact in Malaysia since a large portion of the country’s GDP is contributed by crude oil from Petronas. The company can make money at almost any price, but stabilisation is necessary if we are to make reasonable long-term plans.”

• On the upstream sector in Malaysia:
“The upstream sector in this region is less optimistic because the oil tends to be more expensive to pull out of the ground. Things are not improving uniformly. If you are drilling offshore, conditions have not yet improved.”

• On expected investment: “If you look at Malaysia and the rest of the region, the investment in this part of the world is going to be in the tens of billions of dollars. I think investment in Malaysia over the next five years could be USD 10 billion–30 billion per year on average.”

TOGY goes in depth about new technological practices with Honeywell UOP, in particular alkylation and water treatment processes, and changes to the oil and gas industry through the implementation of Euro standards. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Steven Eshelman underneath.

What is the scope of the company’s activities in Malaysia?
About a year ago we created a hub organisation, headquartered in Malaysia. Here we conduct business throughout the region. We have a full team, which includes sales, marketing, technical support, technical service, finance and legal departments.
In setting up our hub, we worked closely with the Malaysian Investment Development Authority [MIDA], which helped us to understand their interests. Honeywell has a big commitment to Malaysia, and UOP is a big part of that commitment. The goal is to offer each of UOP’s business lines in Malaysia.
What we work on at any given time depends upon the business available. We have offered technology to Petronas for each of its sites. We offer technology and information to companies in the downstream sector, as well as engineering design. The company follows our plans to build its facilities. We then sell products, such as catalysts, and equipment to those facilities.
We manufacture membranes at a facility in Penang, which we then deliver to the rest of the world. The facility is our sole manufacturing site for that technology.

What new technology is Honeywell bringing to Malaysia?

A lot of our development takes place in the USA. We have a new technology for alkylation, called AlkiMax. Our new alkylation process will take hydrofluoric or sulphuric acid out of the alkylation, providing a much safer system.
Hydrofluoric alkylation or sulphuric acid alkylation makes a fantastic petrol blending component. A butylene stream is taken from the refinery and alkylated into a petrol product. We are working with some partners, looking into abandoning hydrofluoric alkylation at the refinery. The problem with hydrofluoric alkylation is the associated environmental risk.

Could you describe advances in water treatment technology?
Water is a new area for UOP, though we do have a new processing solution. The technology, Exceed, has been around for a while, but we have applied it for our oil and gas customers. It allows us to deal with water that is fairly contaminated. Certain environmental regulations are coming in, and we’ve been able to put together a very effective water treatment technology for refineries and petrochemicals complexes. It can also be used in other industries, and we have already identified certain clients in Malaysia.

 

Could you describe further innovations you’ve brought to the market?
We have developed a new offering called CPS, connected performance services. It is a way for our customers to access our technology in the cloud, to better run their facilities. We have been in the business more than 100 years, so we have a lot of technology to access.
Our goal is to have the best products, the best yield, the best performance, services and access to things such as our IT.

How do you keep your equipment and products competitive?
We have a fairly extensive R&D programme, and we’re working on many developments at the same time. One thing that Honeywell has brought to UOP is an increased emphasis on the introduction of new products. An excess of 20% of our revenue is derived from products developed in the past five years. We want to make our own products obsolete, rather than leave it to our competitors. Each of our activities fits into this goal.

Which companies are your closest competitors in Malaysia?
Ours is a global business, and there are not many competitors. UOP offers licensing and a basic design package, and this allows us to leverage construction, engineering and equipment. We are widely considered to lead the market for our key technology. This is a luxury and an obligation because when you are the market leader, you are the object of study and you have a target painted on your back, so to speak.

Why did you locate your regional hub in Malaysia?
We are trying to get closer to our customers and locate the business resources, management and product delivery within the region. We have offices in China and India. Malaysia is in the middle, providing a geographic advantage.
There is also a business advantage. Malaysia is a friendly place to do business and the stability of the government is also a business factor. It is cost effective, and while Singapore and Bangkok are also cost effective, we leveraged on UOP’s previous workings with MIDA. It has been a great partner from an overall business point of view.

Could you elaborate on Honeywell’s relationship with Petronas?

We have a good relationship with Petronas and are working together on certain programmes. UOP and Petronas will develop these ideas, evaluate if they are ready for commercialisation and determine how they can be developed. Petronas would be the first to adopt what we develop, and we would supply the products globally.
We are looking at a five-year horizon for execution. We are providing some products and solutions for Petronas, which is dealing with some changes in customer demand and fuel specifications. This has forced them to change the way they run refineries in terms of operation and equipment. We are working with Petronas as they undergo these changes.

How has the low price of oil affected oil and gas operations in Malaysia?

The fall in the price of crude has had a significant impact in Malaysia since a large portion of the country’s GDP is contributed by crude oil from Petronas. The company can make money at almost any price, but stabilisation is necessary if we are to make reasonable long-term plans.
Petronas is now in much better shape than it was at the beginning of the year. From what we see, the whole region is recovering. Companies believe that prices have recovered and are fairly stable, and that they can begin to make investment plans. There has been a lot of growth in Indonesia, Malaysia, Thailand and the Philippines, and there is a lot of demand.

How are standards for refined products changing in Malaysia?

Euro 3, Euro 4 and Euro 5 specifications for diesel and petrol are being introduced. Though timing depends on the country, they will be introduced within five years. We are also seeing shifts in demand; major changes are happening in the region. What China does impacts much of the rest of the region because there is a lot of trading back and forth. As China moves increasingly toward a consumer economy, what they use, import and export will change.

How would you describe the market for refined products and petrochemicals?

There have been some shifts, and our customers are determining where and how to invest as well as in what products. The number of these conversations has increased, and I think that we are heading in the right direction.

How is the upstream sector developing?
The upstream sector in this region is less optimistic because the oil tends to be more expensive to pull out of the ground. Things are not improving uniformly. If you are drilling offshore, conditions have not yet improved. Still, the rig count in the USA is rising, and I think the days of USD 27 per barrel of oil are behind us for a while. Investment is shifting from upstream to downstream.

Could you estimate the dollar value of the downstream market in Malaysia?
The budget for the RAPID [Refinery and Petrochemical Integrated Development] project is USD 12 billion. If you look at Malaysia and the rest of the region, the investment in this part of the world is going to be in the tens of billions of dollars. I think investment in Malaysia over the next five years could be USD 10 billion–30 billion per year on average.

For more information on Honeywell UOP, such as its highlights of its latest technologies, see our business intelligence platform TOGYiN. TOGYiN features profiles on companies and institutions active in Malaysia’s oil and gas industry, and provides access to all our coverage and content, including our interviews with key players and industry leaders.
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