OBG talks to Hj Awang Hj Ali, Executive Chairman, Belait Shipping; Supna Karwanamurthi, Managing Director, FLUX O.S.; Mohd Shafie

Interview: Hj Awang Hj Ali,Supna Karwanamurthi, Mohd Shafie

What impacts has the recent local business development (LBD) framework had on domestic companies in the energy sector?

SUPNA KARWANAMURTHI: The recent implementation of the LBD framework by the Energy Department at the Prime Minister’s Office (EDPMO) has been a major success in that it has assisted in eliminating monopolies within the oil and gas industry, thus creating a fair and even playing field for all companies in the sector. This has tremendously assisted genuine local entrepreneurs in stepping up to the call from the EDPMO and creating a healthier and more competitive economy for Brunei Darussalam as a whole.

Another positive outcome from the framework is that both Bumiputeras and local Bruneians will have a fair chance to bid for tenders and be awarded contracts in the oil and gas industry. With the LBD framework now in place, companies have to think about what they can do to contribute to the development of the nation, besides making a profit. In this regard, the framework will serve to strengthen the sector and ensure its sustainability in the future.

MOHD SHAFIE: The success of the LBD framework depends on a few factors. One of the most important is the rate at which locals are employed upon the completion of their studies and training courses. This, coupled with the commitment and support of all parties involved, would contribute to the successful realisation of the aims of the framework.

There are, of course, a number of challenges that the initiative faces as well. These include making sure that supply matches with demand in terms of both skills and jobs, as well as ensuring that the framework is compatible with the actual needs of the industry. A mismatch may lead to a further increase in the number of unemployed locals if they are acquiring a set of skills that are irrelevant in terms of trying to find employment in other industries.

New generations of skilled locals will boost the local content of firms in the oil and gas industry and ensure equal opportunity for further skills development. I am confident that this will subsequently increase the chances that, as staff retire, companies will be able to hire replacements locally.

What strategies are oil and gas companies pursuing in order to work towards the production targets set out by the Energy White Paper?

SUPNA: We, as oil and gas support services companies, are ready to assist our clients in maintaining and increasing production levels, and two major assets are crucial to achieving this goal – human capital and innovative technology.

A long-term contract must be in place for local companies to have the incentive to invest in both of these assets and to have the ability to grow steadily, while also assisting the EPDMO in achieving the targets of the Energy White Paper.

As such, the EDPMO has been actively involved in the tendering processes for oil and gas operators, to ensure that long-term contracts are awarded to local entrepreneurs that can help achieve the national vision of His Majesty Sultan Haji Hassanal Bolkiah.

HJ AWANG: I am confident that the various stakeholders, namely the government through its regulatory bodies and the oil and gas operating companies, have strategies in place for the management of existing oil fields, as well as the opening of new ones. As services companies, we have been playing a supporting role in the achievement of production targets and will continue to do so in the future.

For our industry in particular, for example, as exploration is continuously going into deeper and deeper waters, we will need to position ourselves to provide the necessary marine support and logistics by securing the needed marine assets. The same goes for the existing offshore platforms, which will also need support and maintenance as well as production stimulating activities. Therefore, local oil and gas services companies in marine services and other segments will continue to play a key role in the growth of Brunei Darussalam’s energy sector as a whole.

What progress has been made toward the development of local human capital in line with the Energy Industry Competency Framework (EICF)?

HJ AWANG: The relevant authorities must be lauded for their efforts, as they have opened up more scholarship schemes for the continued development and training of local students, and have also pushed for the creation of relevant education centres such as the Brunei Maritime Academy. The education sector as a whole is restructuring their technical education programmes to cater for the development of a more flexible and capable workforce.

The key factor in terms of building up the local workforce is time, as the main ingredients are already present and there is a strong push from all of the stakeholders. These conditions create the opportunity for the workforce to build its capacity. The rest is up to the commitment of individuals.

As domestic firms, we are owned, operated and managed locally, so we obviously wish to help more Bruneians gain employment. To play our part in the nation’s development, it is crucial that we provide the necessary career advancement opportunities for locals, while using the valuable contributions of our expatriate workers to help groom dedicated and motivated Bruneians to achieve their full potential.

AMIR: The EICF has the right goal in mind, but it will take an effective strategy and successful implementation to truly develop local human capital in line with the needs of Brunei Darussalam’s oil and gas sector. The local firms operating in the industry have embraced the framework and are currently taking on many students and trainees in an effort to aid their professional development and ensure that future generations of Bruneians are primed to enter the industry. That being said, it is also very important to place emphasis on improving the level of education that these young Bruneians receive prior to entering the job market.

The continuous overhaul and improvement of Brunei Darussalam’s technical and vocational education system can only serve to advance this goal. Furthermore, it is crucial to have teachers that possess experience on the job and in the field, who can properly teach and groom these students for the challenges that are likely to face once they begin work.

How are local companies in energy services being encouraged to diversify their offerings?

AMIR: Diversification of products and services is key to the continued success and well-being of local firms in the oil and gas services sector. Many local companies are created for one specific service or a single project, but in order to survive, it is important for those companies to look beyond their initial contracts and to assess the market in order to see where the greatest opportunities for diversification lie.

This is especially true for companies operating within small home markets and in locations with strong competition from foreign players. While support for local firms from the relevant authorities and major players in the industry is important, it is equally essential for these companies to achieve self-sufficiency and independence. Diversification is one of the key methods for achieving these objectives. Therefore, for us as a company, we are constantly looking at other areas of business that we could enter, thereby allowing us to grow and improve our capacity.

MOHD SHAFIE: Local companies are not only being encouraged by the government to diversify their services, but they are also being guided in doing so. Opportunities are regularly presented to local companies for projects where skills and capabilities can be developed. All of this is aimed at readying local firms to be able to better compete on a larger stage.

This also goes back to partnerships with international companies and the transfer of knowledge that this entails. The wide range of projects that local companies have been involved in with international players serves to both widen companies’ scope and accelerate their development. This, in conjunction with the opportunities provided with the support of various government agencies, will enable these companies to achieve their desired level of growth.

What potential exists for Bruneian energy companies to expand overseas, and how can this potential be realised?

HJ AWANG: The EDPMO, as well as the various stakeholders within the sector, have identified the oil and gas support services industry – and particularly the marine support services industry – as an important one, given the industry’s role in developing local companies and providing local employment.

There are no shortcuts, but generally speaking, if a given company has managed to develop a certain standard, while also having built up a pool of expertise and assets, the potential to expand overseas is definitely there. Going overseas, whether successful or not, will ultimately serve to help the company improve through the lessons it learns from the experience. This is especially true if the business is assetcentric and capital-intensive, as opposed to being personnel driven. From the viewpoint of the marine support services industry, ships are very expensive, and therefore, in order to expand internationally, there exists the need to build up a large fleet. Thus, partnering with a major sector player for worldwide operations may be the best way to pursue expansion.

AMIR: The goal of readying local oil and gas services companies for forays into global markets and boosting their competitiveness in order to succeed in these markets is ever-present. Of course, there are a number of challenges facing Bruneian companies that are looking to expand their operations overseas. Nearly every country, both within the region and beyond, practices their own form of protectionism designed to promote the country’s own local operators, and that is to be expected.

Furthermore, competition within the ASEAN region is quite strong in terms of both cost and the human capital available in some counties. In order for Bruneian companies to succeed in their goal of achieving an international presence, it is important to first build up the appropriate capacity at home.

Once this has been accomplished, incentives such as government-to-government agreements would go a long way to ease and strengthen these companies’ initial forays abroad.

What is the importance of partnerships between local and international players, and what forms of knowledge transfer can these types partnerships provide?

MOHD SHAFIE: Partnerships between local and international players can be seen as a mentorship arrangement through which international players share their experience and knowledge to prepare local companies for growth and future international ventures. The knowledge transfer must be conducted through mutual understanding and on the basis of mutual trust, with a common mission and a vision of building up local capacity for international markets.

SUPNA: Partnerships between local and international players can be beneficial to all parties involved, and it is particularly important for Bruneian companies to do what we have committed to contractually when it comes to technology transfer. The Bruneian firm needs to act as a sponge to learn the technical and corporate knowledge that the international partner brings to the table, while also ensuring that a learning plan is put in place and is followed through with thoroughly. Once this is done and the international partner exits the country, the Bruneian companies will have all the knowledge that is needed to be self-sustainable and the capacity to expand to international markets with the knowledge they have gained.

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The Report: Brunei Darussalam 2014

Energy chapter from The Report: Brunei Darussalam 2014

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