Storage tanks fabricated for Petronas: 22
Pangerang development costs: MYR 14 billion (USD 3.34 billion)
A silver lining in down marketNovember 25, 2016
TOGY talks to Mallek Rizal Mohsin, group managing director and CEO at Handal Resources, about how the company is diversifying and expanding in the face of challenging oil prices and slow upstream activities. Handal Resources is a provider of cranes for offshore operations. The company leases, manufactures and repairs cranes, as well as providing trained crane operators and technicians.
Why have you decided to focus on the upstream sector?
I believe every downside has an opportunity, so it is important to position yourself well when there is not much activity in the market. It is about taking advantage of the distressed companies you can acquire. We have three operational subsidiaries and Handal Resources is the only company listed on the stock exchange.
Handal Offshore Services is our crane subsidiary. Handal Engineering is on the downstream side, while Handrill is our more conventional subsidiary. These are the areas we are looking to match with potential subsidiaries.
We are currently looking to grow our drilling side. The economy is heavily dependent on oil revenue. Petronas is maintaining the current production and, with new technology and cost-efficiency measures, production can be further increased. This is the area we are looking at.
You previously signed an MOU with Nabors, correct?
Yes. Nabors is one of the best drilling companies in the world. They have assets in the USA and in the Middle East. Their current client is Exxon Mobil. Although we have similar assets, we are partnering with them because they have solid manpower and technical expertise we can borrow. We view this partnership as a way to move forward. It is on hold at the moment.
Is crane maintenance the core of your business?
Yes. For the midterm, we are looking to develop our upstream and drilling activities. We are also looking to expand more dynamically on the downstream side. When upstream activities are low, downstream will pick up. At the moment, we have a fabricator of storage facilities and we are a subcontractor for plant maintenance at the Petronas lubricant plant. We fabricated 22 storage tank farms for Petronas, which we are currently maintaining.
What other opportunities do you see on the downstream side?
There are some very preliminary discussions with the state for building some storage facilities as well. Last November we signed an agreement to acquire a plot of land and build storage facilities on the north-east coast of Malaysia.
What do you think will happen to downstream activities in Malaysia? Do you think any new projects will be coming in?
I think Petronas will be focused on developing Pangerang for the time being, as the whole project is going to cost MYR 14 billion (USD 3.34 billion). Due to slow upstream activities, they need to generate cash revenue from this one.
Where do you think most short-term opportunities are in Malaysia? Are they in crane maintenance?
There are not many specialised players doing crane maintenance services. We are the only ones in Malaysia. As long as there are upstream activities, you need cranes available 24/7. Beyond crane maintenance, we have to be innovative in developing new business, whether organically or by looking at other companies. These are our two focus areas.
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