SCOMI GROUP BHD, through its subsidiary Kota Minerals & Chemicals Sdn Bhd (KMC), is looking towards Asia, the Middle East and North Africa as new areas of growth and business expansion for its oil and gas division.
Its president and chief executive officer Shah Hakim Zain said Asia, the Middle East and North Africa had an estimated market size of US$250mil, US$600mil and US$300mil per annum respectively.
Although we are a wholly Malaysian company, we look at ourselves as a regional company because we face competition daily from our foreign counterparts, he said, adding that as a result, the company was well prepared for its venture overseas.
He said for the Asian region, KMC would be targeting countries like Indonesia, Thailand and Myanmar.
We have already won about US$40mil worth of contracts from the region and there is a strategic alliance in Indonesia and a joint venture in Thailand in the pipeline, he said, adding that KMC would be bidding directly in Myanmar.
He said the company would be targeting Bahrain, Qatar and Abu Dhabi as well as Iran and Pakistan in the Middle East while for North Africa, the targeted countries are Cameroon, Nigeria and Libya.
We already have a venture in Sudan worth about US$5mil and expect to expand further with new tenders, he said.
The oil and gas division's main activity is mud engineering, which contributes 85% of the revenue of the division. KMC currently has an 82% market share in the provision of mud engineering services in Malaysia. Mud engineering consists of the supply of drilling fluids, barite, engineering services, for instance, engineers to be located at the oil rigs and rental of equipment.
Drilling fluids lubricate the drills as they penetrate the earth, reducing friction and helping to remove waste and broken drill bits from the oil well.
We are also looking at expanding our mud engineering services to include fluids recovery system and waste management system for the treatment of mud waste, Hakim said, adding that KMC currently did not provide such services.
Hakim said the company was promoting the use of palm oil as part of its mix of drilling fluids or mud (consisting of chemicals, barite and base oil) as it was environmentally friendly and would enable the mud to be disposed of easily and at lower costs as the waste need not be sent back to land for treatment.
With this innovation, Hakim believes the company could further improve on its market share in the mud engineering sector.
KMC, established in 1987, specialises in the supply of drilling fluids and chemical engineering services for the oil and gas industry. Its domestic market share of the drilling fluids market as at 2001 is about 82% with its major competitors like Schlumberger unit Magcobar Inc, Baroid of Halliburton and Baker Hughes Inc holding only 13%, 1% and 4% respectively.
The company's biggest customer in Malaysia are ExxonMobil Exploration and Production Malaysia Inc, which contributes about 40% of the company's revenue for financial year 2002, followed by Petronas Carigali Sdn Bhd at 37% and Shell Sarawak Bhd at 20%. KMC currently has 80 engineers, many of them local as its local content for technical support is 97%.
As at Dec 31, 2002 the oil and gas division is the main income generator, contributing 68% of the total group turnover and 80% of its profit after tax.