Wah Seong Corp Bhd executive director and chief executive officer for the oil and gas (O&G) division Giancarlo Maccagno talks to StarBiz about the group’s prospects and opportunities.
Q: What is the outlook for the O&G industry?
A: The O&G sector is expected to remain vibrant, driven by continuing high oil prices brought about by supply issues and tight refining capacity.
It is understood that half of Opec’s (Organisation of Petroleum Exporting Countries) spare capacity lies in volatile countries such as Iran, Nigeria, Venezuela and Iraq.
Demand factors in driving high oil price have actually been more benign – in fact, the impact of higher oil prices is reducing demand growth.
Over the longer term, however, demand from China and the rest of the developing markets are expected to drive oil prices higher as supply growth lag demand growth.
Q: What are the prospects for the group in the O&G industry?
A: We are seeing very busy times, as oil majors rush to put in place O&G infrastructure to increase supply and feed demand.
Consumption of natural gas, for example, is growing fast in China and the rest of the world, as it is cheaper and environmentally friendlier compared with hydrocarbons and coal.
China needs at least another 40,000km of gas pipelines to meet demand of up to 60 billion cu metres by 2020. Heavy investments in O&G infrastructure will definitely drive Wah Seong’s growth in the next few years.
Q: What are the growth areas for the group’s O&G division?
A: Countries with a lot of potential are China, Saudi Arabia, West Africa and Australia.
Q: What is the group’s current order book like?
A: Currently, the group has an order book of about RM950mil, of which RM700mil are from the O&G division.
Last year, the O&G division contributed about 60% to revenue, with the balance from the non-O&G division. This year, we expect contribution from the O&G division to increase to 70%.
Q: What were the targets achieved by the group in its quest to become an Asian O&G player?
A: Our foreign revenue and assets have increased to at least 60% compared with 15% to 20% in 2002. Currently, over 90% of the revenue from the O&G division is from overseas.
We also plan to achieve revenue of RM1.5bil in 2007 but I think we should be able to hit our target this financial year instead and maintain or improve group profitability.
Q: So, what is next for Wah Seong?
A: We aim to become a global O&G player by 2012. This means setting up another satellite head office, maybe in the Middle East, to adhere to our six-hour rule, where our area of expansion has to be within six hours' travelling time from our head office.
From there, we would control and manage present and future activities in the Middle East, Africa and Europe. That is our next step once we are well established in Asia.
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