Business

Thursday January 15, 2009

Perisai carves a niche in oil and gas sector

CEO OUTLOOK


Perisai Petroleum Teknologi Bhd MD Nagendran Nadarajah is upbeat about staying focused on services for deepwater and small/marginal oilfields.

What is the outlook for Perisai in view of the current global economic conditions?

Production activities driven mainly by deepwater developments continue to remain robust and we believe Perisai has developed an edge in this area to enable us to sustain our growth momentum for the year.

We are optimistic as we have successfully evolved and transformed ourselves into a one-stop support centre for marginal and small oilfields and deepwater developments which provide niche services to the oil and gas sector.

Exploration activities in deepwater and marginal oilfields continue to be sustained as companies look to these areas in the wake of depleting oilfields.

Nagendran Nadarajah

We provide manufacture and supply services and development solutions for small and marginal fields which we believe will continue to attract customers looking for innovative solutions and economically-viable technologies.

One key factor is Perisai’s value-creating proprietary technology – it currently owns more than 100 patents directly or via licensing in a number of countries worldwide, of which some 12ha is co-owned with Petronas.

By transforming ourselves and acquiring strategic assets, combined with our patented technologies and in-depth know-how, we will be able to withstand the current challenging economic climate and are optimistic of achieving triple-digit gains in net profit for 2009.

What are the challenges for Perisai in the current economic conditions?. How can the company mitigate this?

By far the biggest challenge has been the ability to raise new financing from the capital markets. The company is currently looking at divesting some of its non-core businesses and hopes to raise additional financing to fund its long-term objectives.

We do however have locked-in contracts which will continue to support our earnings this year and we also expect new orders to flow in, driven both by local projects as well as overseas ventures.

What is your take on the low oil price and how will this affect your business?

Certainly we are not experts in predicting oil and gas prices. Low oil prices are largely due to factors such as speculation and geo-political scenarios at a certain point of time.

However, we do have to take note that oil production does not come to a grinding halt just because oil prices drop. In many cases, for oil and gas niche service providers such as Perisai, it is business as usual.

Having said that, it is an extremely confusing environment we find ourselves in when spot prices are trading at the US$40 range and 12- month futures at US$50 range.

If oil prices dip below US$30 per barrrel and stay below that for protracted periods, it may affect some of the opportunities that Perisai has been targeting especially the small and marginal fields and deepwater development solutions.

On a brighter note, more than 70% of Perisai’s long-term net profit is protected by locked-in contracts

The current economic conditions have made companies reluctant to invest. What is Perisai’s stand on this and what kind of expansion plans do you have in the pipeline?

We see opportunity in adversity and so for Perisai, this is a good time to invest in acquiring assets when commodity prices are falling.

Our business has seen steady growth where we have developed sustainable relationships with partners and customers. Now is the time to seize opportunities to expand our capabilities and strengthen our technical know-how, which for us mainly concentrates on state-of-the-art technological solutions and specialised equipment.

Our expansion plans as such will concentrate on efforts to seek and acquire proven industry technologies that will enable oil companies to develop and produce from fields previously deemed un-economic using conventional developments methods. This we believe will continue to give Perisai an edge as a one-stop centre.

Will power and oil and gas continue to be the primary focus of the company’s business? Are there plans to diversify the company’s income base?

There are no plans to diversify the company’s income base at this juncture. We will remain focused on our core business.

Going forward, Perisai will continue to focus mainly on the upstream sector of the oil and gas sector and work on developing further our existing expertise in the areas of field development and drilling services.


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