Sofiyan Yahya, SEAMOG CEO
What do you think about this statement, “It’s not what you know, it’s who you know.” Do you agree with that? Has your professional network been helpful in your career progression?
I think for oil and gas industry, that’s not accurate. In general, oil and gas requires a higher standard of specifications, behaviour and discipline. So, no matter who you know, if you cannot perform at that higher level of standards and expectations, then you will eventually fail as a business. The ‘who you know’ is not sustainable in the oil and gas industry and is very short term, if that is your planned route to success. What is more important in this industry is what do you know, what are you capable of and what is your deliverable?
Recent news have reported that the market condition for the oil & gas industry is slowly recovering. At the moment, the oil prices seem to hover between $50 - $60 per barrel. Do you think the price will go any higher?
I think in the short term or in the near future, it’s not going to go above $60. I do believe $50 - $60 is what the range will be.
What do you think is the future for oil & gas, especially with the emergence of Renewable energy?
Renewable energy has been around for a while. The way I see it, it is an alternative. We still have coal for our power stations, and also hydroelectric power, so to me it is about co-existing alternatives. The world needs to look at the most efficient energy source and energy usage. I believe that renewable energy will co-exist with oil and gas, and that oil and gas will still be around for sometime because it has its niche where it is actually the most cost efficient use and application of energy. Of course if a time comes when renewable energy is much more efficient than anything else, then we should all move towards that – that’s a different scenario. For the moment, I believe that like with everything we have in this world today, we have alternatives. And having alternatives is always a good thing for the world.
Do you foresee further consolidation in the supply side happening in the Malaysian oil industry in the near future?
In the short term, the consolidation will happen because of the current situation. If we’re talking about the Malaysian scenario then of course it is dependent on how big is the Malaysian market. Now that it’s shrunk in certain areas, they will have to consolidate, otherwise they cannot survive. This will definitely have to happen in the near future and it is going to shape the industry. After that, we can’t say what will happen next. The crystal ball is very hard to see with clarity at the moment.
What will be the critical success factors or qualities needed of entrepreneurs in the local oil and gas sector to sustain and even strive in the current competitive climate?
Commitment to the business is important. A real entrepreneur who wants to go into a certain industry sector has to be really committed. By having this commitment and determination, you will find the solutions to be successful. It’s not so much about competitiveness – this is not the first time the industry climate has become very competitive. In fact, this is probably the third time in the span of 10-20 years that we are seeing this sort of business environment. During this time, businesses must persevere. When the going gets tough, the tough gets going. And it’s not just oil and gas, other industries go through downturns as well. So, if an entrepreneur wants to go into the local oil and gas industry, they must have that commitment and determination to see through their business plan and their services or products offerings. If you do not have that determination, I do not think you will succeed. Again, this applies to any business in any industry sector.
Besides depending on PETRONAS for contracts, do you see more local players preparing to venture overseas for more work (eg. what SapuraEnergy has done to-date)? As Malaysia has a low-cost base and experienced workforce.
The industry does not depend solely on PETRONAS for contracts. Yes, Malaysia does have relatively low-cost base, and we also have an experienced workforce. I think it’s very important to encourage Malaysians to work overseas. For regions such as the Middle East, despite their already diverse workforce, they welcome Malaysians for our experience, capability and professionalism. Perhaps because of our focus here in Malaysia has been maximising Malaysian content, Malaysians tend to focus on Malaysian work rather than go overseas. In this downturn however, more Malaysians have found work overseas. We spoke about consolidation earlier, and with more businesses offering wider range of services and capabilities, Malaysian players are becoming more attractive and relevant overseas.
Do you have a motto or philosophy that you follow in life?
Set your goals and be determined. Determination is the key ingredient in what I do. Never give up and be determined to see things through.
And finally, what do you do to unwind after a stressful day at work?
I love getting into nature and photography. I guess they are activities that are completely opposite from what I do in my day-to-day business, hence the opportunity to unwind.
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In the U.S. Energy Information Administration’s (EIA) November Short-Term Energy Outlook (STEO), EIA forecasts that U.S. crude oil production will remain near its current level through the end of 2021.
A record 12.9 million barrels per day (b/d) of crude oil was produced in the United States in November 2019 and was at 12.7 million b/d in March 2020, when the President declared a national emergency concerning the COVID-19 outbreak. Crude oil production then fell to 10.0 million b/d in May 2020, the lowest level since January 2018.
By August, the latest monthly data available in EIA’s series, production of crude oil had risen to 10.6 million b/d in the United States, and the U.S. benchmark price of West Texas Intermediate (WTI) crude oil had increased from a monthly average of $17 per barrel (b) in April to $42/b in August. EIA forecasts that the WTI price will average $43/b in the first half of 2021, up from our forecast of $40/b during the second half of 2020.
The U.S. crude oil production forecast reflects EIA’s expectations that annual global petroleum demand will not recover to pre-pandemic levels (101.5 million b/d in 2019) through at least 2021. EIA forecasts that global consumption of petroleum will average 92.9 million b/d in 2020 and 98.8 million b/d in 2021.
The gradual recovery in global demand for petroleum contributes to EIA’s forecast of higher crude oil prices in 2021. EIA expects that the Brent crude oil price will increase from its 2020 average of $41/b to $47/b in 2021.
EIA’s crude oil price forecast depends on many factors, especially changes in global production of crude oil. As of early November, members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) were considering plans to keep production at current levels, which could result in higher crude oil prices. OPEC+ had previously planned to ease production cuts in January 2021.
Other factors could result in lower-than-forecast prices, especially a slower recovery in global petroleum demand. As COVID-19 cases continue to increase, some parts of the United States are adding restrictions such as curfews and limitations on gatherings and some European countries are re-instituting lockdown measures.
EIA recently published a more detailed discussion of U.S. crude oil production in This Week in Petroleum.
The U.S. Energy Information Administration (EIA) forecasts that members of the Organization of the Petroleum Exporting Countries (OPEC) will earn about $323 billion in net oil export revenues in 2020. If realized, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues.
Crude oil prices have fallen as a result of lower global demand for petroleum products because of responses to COVID-19. Export volumes have also decreased under OPEC agreements limiting crude oil output that were made in response to low crude oil prices and record-high production disruptions in Libya, Iran, and to a lesser extent, Venezuela.
OPEC earned an estimated $595 billion in net oil export revenues in 2019, less than half of the estimated record high of $1.2 trillion, which was earned in 2012. Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programs, and support public services. EIA expects a decline in net oil export revenue for OPEC in 2020 because of continued voluntary curtailments and low crude oil prices.
The benchmark Brent crude oil spot price fell from an annual average of $71 per barrel (b) in 2018 to $64/b in 2019. EIA expects Brent to average $41/b in 2020, based on forecasts in EIA’s October 2020 Short-Term Energy Outlook (STEO). OPEC petroleum production averaged 36.6 million barrels per day (b/d) in 2018 and fell to 34.5 million b/d in 2019; EIA expects OPEC production to decline a further 3.9 million b/d to average 30.7 million b/d in 2020.
EIA based its OPEC revenues estimate on forecast petroleum liquids production—including crude oil, condensate, and natural gas plant liquids—and forecast values of OPEC petroleum consumption and crude oil prices.
EIA recently published a more detailed discussion of OPEC revenue in This Week in Petroleum.
In 2019, consumption of renewable energy in the United States grew for the fourth year in a row, reaching a record 11.5 quadrillion British thermal units (Btu), or 11% of total U.S. energy consumption. The U.S. Energy Information Administration’s (EIA) new U.S. renewable energy consumption by source and sector chart published in the Monthly Energy Review shows how much renewable energy by source is consumed in each sector.
In its Monthly Energy Review, EIA converts sources of energy to common units of heat, called British thermal units (Btu), to compare different types of energy that are more commonly measured in units that are not directly comparable, such as gallons of biofuels compared with kilowatthours of wind energy. EIA uses a fossil fuel equivalence to calculate primary energy consumption of noncombustible renewables such as wind, hydro, solar, and geothermal.
Source: U.S. Energy Information Administration, Monthly Energy Review
Wind energy in the United States is almost exclusively used by wind-powered turbines to generate electricity in the electric power sector, and it accounted for about 24% of U.S. renewable energy consumption in 2019. Wind surpassed hydroelectricity to become the most-consumed source of renewable energy on an annual basis in 2019.
Wood and waste energy, including wood, wood pellets, and biomass waste from landfills, accounted for about 24% of U.S. renewable energy use in 2019. Industrial, commercial, and electric power facilities use wood and waste as fuel to generate electricity, to produce heat, and to manufacture goods. About 2% of U.S. households used wood as their primary source of heat in 2019.
Hydroelectric power is almost exclusively used by water-powered turbines to generate electricity in the electric power sector and accounted for about 22% of U.S. renewable energy consumption in 2019. U.S. hydropower consumption has remained relatively consistent since the 1960s, but it fluctuates with seasonal rainfall and drought conditions.
Biofuels, including fuel ethanol, biodiesel, and other renewable fuels, accounted for about 20% of U.S. renewable energy consumption in 2019. Biofuels usually are blended with petroleum-based motor gasoline and diesel and are consumed as liquid fuels in automobiles. Industrial consumption of biofuels accounts for about 36% of U.S. biofuel energy consumption.
Solar energy, consumed to generate electricity or directly as heat, accounted for about 9% of U.S. renewable energy consumption in 2019 and had the largest percentage growth among renewable sources in 2019. Solar photovoltaic (PV) cells, including rooftop panels, and solar thermal power plants use sunlight to generate electricity. Some residential and commercial buildings heat with solar heating systems.