It was almost written so as not to attract attention- State oil firm PETRONAS will award contracts to unlicensed energy services companies to encourage greater competition in the oil and gas industry. That’s new. I though competition is defined as no competition. That definition is in the business lexicon of the big boys in Malaysia.
Example: Gamuda gets a plump deal by way of direct negotiation. Certain people get to operate IPPs by way of direct negotiations. Gamuda gets appointed as PDP. Gamuda is the project manager for the entire MRT project.
Competition in Malaysian business lexicon means NO competition for the big boys- feeding frenzy and free for all fight among the smaller boys. The smaller boys fight for a smaller portion of the business.
The move would be a departure from the current practice where PETRONAS only hands out jobs tolicensed players in certain segments such as oil and gas equipment makers and offshore support vessel operators, the report said. Licensed players refer to those registered with PETRONAS after fulfilling certain strict requirements.
What is the purpose of the relaxed rules? So that, intoned the report with the usual strictly business and professional as usual disposition - so that the measures will attract more foreign investment to develop Malaysia as a regional energy hub, it added.
As though in anticipation of protests from pressure groups and other economic pressure groups, PETRONAS went on to quickly said such moves would expose local energy services companies such as Malaysia Marine and Heavy Engineering Holdings Bhd , Kencana Petroleum and Ramunia Holdings Bhd to competition.
Competition is good says the conventional wisdom. As we shall see, there is no such thing as conventional wisdom as far as PETRONAS is concerned when it comes to competition. In so tender tones, PETRONAS further added that the change would not apply to the bumiputra vendor programme, where companies controlled by ethnic Malays are given preference under a policy aimed at redistributing national wealth.
This is where there are no such things as conventional wisdom. The big boys such as Kencana and Sapura are not exposed to competition. They are given super preferential treatment. Who did PETRONAS select to partner with Petrofac to develop the not easily defined marginal oil fields? Kencana and Sapura.
Everyone knows in the market, Kencana and Sapura are big at group levels only. The operations are mostly handled by their subsidiaries working with sub-contractors. Almost all of these are running inefficiently and incurring delays and so forth. That’s translated into additional costs to PETRONAS in terms of time, delayed costs and even additional direct costs.
How does PETRONAS handle those contractors operating through subsidiaries belonging to Kencana and Sapura? They practise what in banking circle is known as banker’s dilemma. If one owes the banks small amount they will come to you with brass knuckles. If one owes them super large amounts, the defaults of which can cause banks to keel over, they will treat you as the GROs do the well-heeled customers. They will treat you with extraordinary hospitality. Sit on your laps, let you fondle strategic places and so forth.
So in order to prevent Kencana and Sapura from keeling over and dragging with them PETRONAS to the bottom of the sea, PETRONAS awards Kencana and Sapura with MORE contracts. Its good money chasing after bad money. Lend more so that the borrower can secure more business. So that these people make more money and remain solvent and can help finish the PETRONAS projects. PETRONAS has even resorted to paying subcontractors directly bypassing Kencana and Sapura.
Our much heralded captains of the oil and gas industry, Mokhzani Mahathir and Shahril Shamsudin are big figures at group levels. What will they gain when Sapura and Kencana teams up and then develop the marginal oil fields?
Read carefully ya. Mokhzani stands to gain RM 400 million while Sahril Shamsudin stands to gain RM 440 million.
Man, the new economic model so loved by our PM and lovingly supported by the Messrs. Idris Jala and the Pemandu guys and the ETP guys is a boon to the big boys.
Meantime, Alfred in the kampungs and Felda schemes will say- what? me worry? We get RM 300, 3000, 500 cash what?
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