I think oil and gas will remain an important contributor to Malaysia’s GDP and a primary part of our economy.

Hanif HASHIM Country Manager PETROFAC

in figures

Average cost per development on the Cendor field: USD 400 million-500 million

Collective worth of the company’s projects: USD 2 billion

Light at the end of the well

December 23, 2016

TOGY talks to Hanif Hashim, country manager for Petrofac in Malaysia, about the complexities and potential production at the Cendor field as well as the bright future of the Malaysian hydrocarbons industry. Petrofac designs, builds, operates and maintains oil and gas facilities. The company’s operational centre in Malaysia is now responsible for offshore projects collectively worth more than USD 2 billion.

Could you outline the company’s trajectory in Malaysia?
Petrofac has been present in the country since 2004. In 2006, the Cendor field became available under a fast-track project that included ten offshore production units. We came in with the goal of making a marginal field commercial and utilised an innovative solution never before attempted in the country.
When we arrived, the field had not been commercial for 30 years, but we were able to implement an innovative, low-cost, fast-track development solution. We performed all the necessary subsurface work and determined that there was more oil than anticipated. The moon pool we had brought was inadequate, and we had to replace it with an FPSO [outfitted with] wellhead platforms in order to embark upon development at a larger scale.
We operate block PM304 of the Cendor field. We have about 300 employees, in the office, at the supply base and offshore. The majority of our employees are Malaysian, though I enjoy diversity.

Has the crash in oil prices affected plans for the future?
We want to continue to pursue similar opportunities and capitalise on the infrastructure we’ve built with our partners, Kuwait Foreign Petroleum Exploration Company, PetroVietnam and PETRONAS Carigali. We are looking to form a partnership once we put FPSO platforms in place. The intention is to bring new fields into the infrastructure, working closely with Petronas.
The crude price has created challenges, and our approach to partnerships must be more collaborative. However, we were able to think outside the box 30 years ago. By looking creatively at challenges and collaborating with Petronas, we can hopefully bring two or three new fields into the infrastructure, including East Cendor and Cendor Graben.

 

How are the reservoirs structured?
The geology is complex. There are areas in which you can’t get seismic resolution to the extent that a map can be made. In spite of the geophysical complexities, we’re able to capitalise on the infrastructure at a low cost.
While the geology is very dynamic, we’re able to work differently, which makes us unique in our ability to commercialise fields. Because we are not Exxon or Shell, we have had to find our own niche, enabled by our different approach.

Could you give us an example of an innovative approach?
I was a subsurface manager for Petrofac for many years, and my team spearheaded the appraisal campaign that enlarged the field. We did this by approaching the field differently. We performed geophysical studies specialised according to processing and interpretation, and we then integrated geology.
Sometimes we provide companies with complete geographic geophysical analysis, but if a judgment call is involved you will not get a geophysical interpretation, due to shallow gas. At this point we use the engineering and geological assessment, because geology doesn’t stop at the reservoir. We then combine the geographical and specialised geophysical information, to determine whether we have sufficient information.
In the case of the Cendor field, we had enough information and were able to develop the engineering formula. We approach even small sites with an eye to optimise them by using smaller facilities. What we need then is a combination of detailed subsurface analysis combined with the development solution. In the event that subsurface analysis comes up with a range of outcomes, we pump into the low side in order to generate sufficient return on investment.
Our combination of surface and subsurface analyses distinguish us from other companies. It’s about the contribution to the whole value chain and about starting small and growing organically. That’s how we make things work.

What investment has Petrofac made in this infrastructure?

Technical work is ongoing. We are determining the optimum scale of development solutions, whether wellhead platforms, moon pools or FPSOs are right for the sites. At the same time, we are pursuing work for subsidiaries, which will determine the size and quantity of wells required.
The scale of investment is a function of the ongoing technical requirement. It allows us to continue completing technical work for the next three-to-six months. The optimal solution would be a wellhead platform and a pipeline running 10–15 kilometres, requiring 5–10 wells.
We’ll be better able to estimate the investment range when the development is in place, but I think it will average USD 400 million–500 million per development. It will not be cheap, we’re talking about another round of billions in the next five years. The cost of doing business is being recalibrated.

Could you describe the crude oil being produced at the asset?
The Cendor field has one of the highest premiums in the country. Based on our sample and the fact that we are developing within the same geological cluster, we are talking about a high-quality Cendor blend, which will be good for us, Petronas and the country.

What are your expectations for the Malaysian oil and gas industry?

I think oil and gas will remain an important contributor to Malaysia’s GDP and a primary part of our economy. The country has opportunities that have yet to be developed and optimised, and there are areas in the vicinity that have yet to be explored. We have new plants in our Cendor block, and we are able to replicate them throughout the country.
Engineers are increasingly adopting creative strategies, and our infrastructure is as mature as that in the North Sea. We have the infrastructure, the people, the skills and the resources. Companies are coming and I hope they remain, because there are long-term opportunities here.
Under the leadership of Petronas, we’ve managed to sustain production, and I think reserves are growing, particularly gas reserves. Once the gas is there, it’s just a matter of putting it into LNG infrastructure and waiting for a large enough market, such as the Chinese, Japanese or Indian markets, to take an interest. Overall, the fundamentals are strong, and the fact that reserves are still being discovered and production is sustained suggest that we are on a good track.
Additionally, Petronas and MPM [Malaysia Petroleum Management] will co-ordinate to ensure the success of the industry.

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