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A practicing Professional Engineer and DOSH qualified 1st Grade Steam Engineer, Ir Mahmood Azmy holds the position of CEO at MECIP Global Engineers Sdn Bhd, and is an active member of IEM, MOGEC and MOGSC, and serves as a board member of SEAMOG Group Sdn Bhd.


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Ir Mahmood Azmy Muhd Shukri, MECIP CEO


  1. What has been your greatest achievement so far in MECIP?
    I have been with MECIP for a while now. The greatest achievement for MECIP is that we are able to establish ourselves strongly as equivalent to other international players in oil and gas business. Being local and positioned in Kerteh, Terengganu, it is quite difficult to be visible. But we manage to step out of our boundaries in becoming more prominent in the oil and gas community. It is an achievement for us in terms of the company’s branding, which helps us in marketing, gaining trust and becoming business partners of PETRONAS, Shell, other reputable oil and gas companies, as well as working closely with MATRADE to market our services overseas. This is in line with our company name – MECIP Global, where we want to position ourselves globally as an oil and gas engineering services provider.

  2. I understand that you previously worked in PETRONAS. And now as CEO of MECIP, do you think that the business connections you made back then has helped you in your business?
    I worked with PETRONAS for more than 12 years in oil refinery and petrochemical plant, and another 10 years in a US-based company, HUNTSMAN which gave me very good technical background in oil, gas, and petrochemical business. Being in PETRONAS for many years, coupled with international exposure with HUNTSMAN, I made quite a number of connections which enriched my technical and management experience. I started my career as a project engineer in Kerteh Refinery Reformer Project, then subsequently lead maintenance team in Kerteh Refinery and the Inspection team in Kerteh Ethylene Polyethylene plant. I made my career move outside of PETRONAS to lead Engineering team in HUNTSMAN to gain further knowledge, experience and exposure working with an international company. In managing projects, maintenance, inspection and engineering work, many technical matters were covered, and I had the opportunity to work with specialists and experts in various subject matters. It was expected of me to ensure all activities managed must be well planned, conducted in high safety standards, with great attention to detail, with target of zero defect and according to schedule. I was able understand the technical part of the business and management of engineering work much better through these experiences and business connections locally and overseas. All these experiences, knowledge, contact and business relationships, are very important for me and MECIP to deliver quality engineering service to our clients.

  3.  Are there challenges you faced over the years that you have overcome? How did you do so?
    Working in oil and gas means you may face multiple challenges over the years. One of the challenges we faced is related to people. We must hire good, competent, talented and well-committed people. Because they will become our assets. Getting the right people is a real challenge. For example, when you’re building a house, the foundation must be strong. Even if the house looks beautiful on the outside, if it doesn’t have a good foundation, it will crumble when a storm comes. That’s why it’s important to get the right people, with the right attitude and mindset. We’re looking for people who want to grow with the company. I would like to groom or nurture them to be like me! I want to develop them into becoming future leaders of our business. But sometimes it’s difficult to retain good talent, as they might resign as soon as there’s a better position somewhere else, and then we have to start the hiring process all over again. That’s why we introduced a loyalty programme for our staff. Those who stay for more than 5 years in our company, we reward them with vacation trips, and the longer they stay, the better the rewards. On top of this, we also have annual dinners to encourage a community-feel in our company. We do these little things because we want our people to be happy, enjoy working and stay loyal with MECIP.

  4. Has there been a new development in MECIP, perhaps a new way of doing things or a new technology, that has recently helped a project?
    Technology has been developing so rapidly worldwide, and we have to adjust ourselves. In terms of engineering software, it has changed the way we do things. In design work, we have evolved from using manual tools to computer software and programmes. It is an expensive investment, but we must do it in order to adapt and grow our business. We are always looking for ways to improve our work processes and efficiency. With technology, it will really help us to improve our work performance to serve our client better and this is in line with our passion to serve - “Do it right the first time, every time.”

  5.  As I understand it, it is MECIP’s vision to provide local solutions with global expertise. Do you believe that the local talents are at par with overseas counterparts? 
    Overseas talents are more exposed to the global market and they might have more expertise and experience compared to Malaysian talents. Our local talents, normally having minimal overseas experience, will have limited opportunities to work overseas as they might not be familiar with the countries’ code and standards. I do believe that we have to expose ourselves more to overseas market, learn new standards and explore better ways of doing things. In terms of the local market opportunities, especially for various big local projects here in Malaysia, I do believe the local workforce are capable and competent enough to take bigger roles and responsibilities. In fact, I think we can even speed up to build our local strength if there is a policy that requires foreign players to work under local companies for mega projects in Malaysia. I strongly urge government policy to address this matter accordingly to ensure better development and growth of Malaysian local companies. “Malaysia Boleh” slogan should continue to roar.

  6. What can students or fresh graduates do to prepare themselves for a career in the oil and gas industry? 
    In general, this message is not just for students but also to young fresh graduates who are embarking their careers in oil and gas - you must prepare yourselves mentally in terms of technical know-how and communication. You must apply good analytical thinking and ask questions to enhance understanding. If you don’t ask, how will you learn? You may think it’s alright to just let things go and leave it up to your bosses to correct your work. This is not the right thinking process. You need to put in extra efforts to learn, even after office hours or during your free time on weekends. The learning curve for young graduates must be exponential and they must strive to be good in their respective technical knowledge, especially if they are engineers. If you come across something that you want to delve deeper at work, keep that as ‘homework’. Keep an inventory of things you want to learn in your pocket. I call this the ‘pocket list’. So, you will always occupy yourself with learning. Be proactive in whatever tasks and initiatives given to you. For engineers, I would encourage you to get additional certifications because a degree on its own may not be enough. Work hard towards becoming a Professional Engineer as the career objective. Join professional societies and become a member of Institute of Engineer Malaysia (IEM), Institute of Materials, Malaysia (IMM), etc. These will help you gain good connections and learn about new technologies in the industry.

  7. Having worked with various business partners all over the world, was there something from overseas that impressed you, that you have successfully adapted at MECIP?
    Working with a Japanese company like Chiyoda Corporation, was a very good experience. Being in Japan, you get to observe how Japanese people manage their time. They are very focused and the quality of work produced is extremely good. They are also very detail-oriented, even their handwriting is very neat. I enjoyed very much working with the Japanese and try to adopt similar mindset at MECIP – being result-oriented, attention to detail, work hard, and take things seriously. Sometimes you might have to stay back and work, but that’s what you have to do in order to achieve results. We will not allow substandard work to be produced. We also established a good quality culture in our office - we developed an engineering design process called interdisciplinary checks (IDC) where there are multiple checks to ensure our engineers produce quality work. And this is part of the ISO 9000 quality management system, which is basically derived from the Japanese culture. Our company is an ISO 9001-certified company, and we believe in delivering a good quality job, in a safe and timely manner. We also believe in continuous improvement or “Kaizen” – engineers must develop themselves in order to become senior engineers and so on. You can’t stay in one position forever. Punctuality is also one of the things I try to emphasize. The Japanese are very punctual with their timing. Most importantly, I value honesty at work. Japanese people are very transparent with their work – if they made a mistake, they will own up to it. For locals, saying sorry might be more difficult. But it’s important to keep that integrity.

  8. What is the company culture of MECIP?
    As I mentioned, we like to encourage continuous improvement in our company. We also encourage our engineers to practice their communications skills. For example, we have “English Day” in the office where staff will practice their presentation skills in English. Some might have broken English, but the important thing is they try and keep on improving themselves. We give awards to the “Best Speakers” in our annual dinners. We also like to reward those who give internal training and share their knowledge with others. Usually the juniors will nominate their seniors who they think are the best “coach” or “teacher”. We actually have a few excellent engineers who like to share their technical knowledge. In general, we want to improve through excellence in knowledge and we encourage everyone to learn from each other. We want our engineers to be passionate about their own expertise and share this passion with others.

  9. What is next in the pipeline for MECIP?
    We are planning to secure some overseas projects. We have been to Brunei, Jakarta, Aberdeen, Houston. We’ll be going to Abu Dhabi in Middle East in mid-November. We have our partners in Abu Dhabi and the next step is to secure overseas jobs that can be done locally in Malaysia. In recent years, we have established a good partnership with a Norwegian company, Sharecat, and have formed a Malaysian joint-venture (JV) company with them to provides oil and gas services to the European market. In our plan, Norway will be like a big “storage tank”, and they will pipe down the work to us in Malaysia to execute. Due to the economic downturn, the market is a little slow. But we hope business will pick up soon once the market recovers. We are looking for more channels like these so we can hire more local engineers and nurture them to become future leaders. Our goal is to encourage more participation and involvement of our local engineers to serve the global market through MECIP. MECIP also seriously plans to expand and venture into new horizons through SEAMOG, a new company that was formed to do EPCC packages and major plant Turnaround. We believe in consolidation and having equal shares with other three strong companies in SEAMOG will make us grow bigger and faster. We want to transform MECIP for a better future.

  10. Finally, name things that are important to you – in life or in your career.
    Always have in mind, to do the right thing. Be thankful and grateful. Be honest, trust and grow people. Don’t get easily frustrated when things don’t go your way. When you do something, there should be no turning back. You must have a goal and know which direction you are heading. Have good and sincere intentions because it will most definitely be rewarded in the end.


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Venezuelan crude oil production falls to lowest level since January 2003

monthly venezueal crude oil production

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

In April 2019, Venezuela's crude oil production averaged 830,000 barrels per day (b/d), down from 1.2 million b/d at the beginning of the year, according to EIA’s May 2019 Short-Term Energy Outlook. This average is the lowest level since January 2003, when a nationwide strike and civil unrest largely brought the operations of Venezuela's state oil company, Petróleos de Venezuela, S.A. (PdVSA), to a halt. Widespread power outages, mismanagement of the country's oil industry, and U.S. sanctions directed at Venezuela's energy sector and PdVSA have all contributed to the recent declines.

monthly venezuela crude oil rig count

Source: U.S. Energy Information Administration, based on Baker Hughes

Venezuela’s oil production has decreased significantly over the last three years. Production declines accelerated in 2018, decreasing by an average of 33,000 b/d each month in 2018, and the rate of decline increased to an average of over 135,000 b/d per month in the first quarter of 2019. The number of active oil rigs—an indicator of future oil production—also fell from nearly 70 rigs in the first quarter of 2016 to 24 rigs in the first quarter of 2019. The declines in Venezuelan crude oil production will have limited effects on the United States, as U.S. imports of Venezuelan crude oil have decreased over the last several years. EIA estimates that U.S. crude oil imports from Venezuela in 2018 averaged 505,000 b/d and were the lowest since 1989.

EIA expects Venezuela's crude oil production to continue decreasing in 2019, and declines may accelerate as sanctions-related deadlines pass. These deadlines include provisions that third-party entities using the U.S. financial system stop transactions with PdVSA by April 28 and that U.S. companies, including oil service companies, involved in the oil sector must cease operations in Venezuela by July 27. Venezuela's chronic shortage of workers across the industry and the departure of U.S. oilfield service companies, among other factors, will contribute to a further decrease in production.

Additionally, U.S. sanctions, as outlined in the January 25, 2019 Executive Order 13857, immediately banned U.S. exports of petroleum products—including unfinished oils that are blended with Venezuela's heavy crude oil for processing—to Venezuela. The Executive Order also required payments for PdVSA-owned petroleum and petroleum products to be placed into an escrow account inaccessible by the company. Preliminary weekly estimates indicate a significant decline in U.S. crude oil imports from Venezuela in February and March, as without direct access to cash payments, PdVSA had little reason to export crude oil to the United States.

India, China, and some European countries continued to receive Venezuela's crude oil, according to data published by ClipperData Inc. Venezuela is likely keeping some crude oil cargoes intended for exports in floating storageuntil it finds buyers for the cargoes.

monthly venezuela crude oil exports by destinatoin

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, and Clipper Data Inc.

A series of ongoing nationwide power outages in Venezuela that began on March 7 cut electricity to the country's oil-producing areas, likely damaging the reservoirs and associated infrastructure. In the Orinoco Oil Belt area, Venezuela produces extra-heavy crude oil that requires dilution with condensate or other light oils before the oil is sent by pipeline to domestic refineries or export terminals. Venezuela’s upgraders, complex processing units that upgrade the extra-heavy crude oil to help facilitate transport, were shut down in March during the power outages.

If Venezuelan crude or upgraded oil cannot flow as a result of a lack of power to the pumping infrastructure, heavier molecules sink and form a tar-like layer in the pipelines that can hinder the flow from resuming even after the power outages are resolved. However, according to tanker tracking data, Venezuela's main export terminal at Puerto José was apparently able to load crude oil onto vessels between power outages, possibly indicating that the loaded crude oil was taken from onshore storage. For this reason, EIA estimates that Venezuela's production fell at a faster rate than its exports.

EIA forecasts that Venezuela's crude oil production will continue to fall through at least the end of 2020, reflecting further declines in crude oil production capacity. Although EIA does not publish forecasts for individual OPEC countries, it does publish total OPEC crude oil and other liquids production. Further disruptions to Venezuela's production beyond what EIA currently assumes would change this forecast.

May, 21 2019
Your Weekly Update: 13 - 17 May 2019

Market Watch

Headline crude prices for the week beginning 13 May 2019 – Brent: US$70/b; WTI: US$61/b

  • Crude oil prices are holding their ground, despite the markets showing nervousness over the escalating trade dispute between the USA and China, as well as brewing tensions in the Middle East over the Iranian situation
  • China retaliated against President Trump’s decision to raise tariffs from 10% to 25% on US$200 billion worth of Chinese imports by raising its own tariffs; crucially, China has also slapped taxes on US LNG imports at a time when American export LNG projects banking on Chinese demand are coming online
  • In the Middle East, Saudi Arabia reported that two of its oil tankers were attacked in the Persian Gulf, with the ‘sabotage attack’ near the UAE speculated to be related to Iran; with the US increasing its military presence in the area, the risk of military action has escalated
  • The non-extension of US waiver on Iranian crude is biting hard on Iran, with its leaders calling it ‘unprecedented pressure’, setting the stage for a contentious OPEC meeting in Vienna
  • In a move that is sure to be opposed by Iran, Saudi Arabia has said it is willing to meet ‘all orders’ from former Iranian buyers through June at least; Saudi Aramco is also responding to requests by Asian buyers to provide extra oil
  • The see-saw trend in US drilling activity continues; after a huge gain two weeks ago, the active US rig count declined for a second consecutive rig, with the loss of two oil rigs bringing the total site count to 988, below the equivalent number of 1,045 last year
  • There is considerably more upside to crude prices at the moment, with jitters over the health of the global economy and a delicate situation in the Middle East likely to keep Brent higher at US$71-73/b and WTI at US$62-64/b


Headlines of the week

Upstream

  • Occidental Petroleum and Warren Buffet have triumphed, as Chevron bowed out of a bidding war for Anadarko Petroleum; Occidental will now acquire Anadarko for US$57 billion, up significantly from Chevron’s US$33 billion bid
  • The deal means that Occidental’s agreement to sell Anadarko’s African assets to Total for US$8.8 billion will also go through, covering the Hassi Berkine, Ourhoud and El Merk fields in Algeria, the Jubilee and TEN fields in Ghana, the Area 1 LNG project in Mozambiuqe and E&P licences in South Africa
  • BP has sanctioned the Thunder Horse South Expansion Phase 2 deepwater project in the US Gulf of Mexico, which is expected to add 50,000 boe/d of production at the Thunder Horse platform beginning 2021
  • Africa is proving to be very fruitful for Eni, as it announced a new gas and condensate discovery offshore Ghana; the CTP-Block 4 in the Akoma prospect is estimated to hold some 550-650 bcf of gas and 18-20 mmbl of condensate
  • In an atypical development, South Africa has signed a deal for the B2 oil block in South Sudan, as part of efforts to boost output there to 350,000 b/d
  • Shell expects to drill its first deepwater well in Mexico by December 2019 after walking away with nine Mexican deepwater blocks last year

Midstream & Downstream

  • China’s domestic crude imports surged to a record 10.64 mmb/d in April, as refiners stocked up on an Iranian crude bonanza due to uncertainty over US policy, which has been confirmed as crude waivers were not renewed
  • Having had to close the Druzhba pipeline and Ust-Luga port for contaminated crude, Russia says it will fully restore compliant crude by end May shipments, including cargoes to Poland and the Czech Republic
  • Mexico’s attempt to open up its refining sector has seemingly failed, with Pemex taking over the new 340 kb/d refinery as private players balked at the US$8 billion price tag and 3-year construction deadline
  • Ahead of India’s move to Euro VI fuels in April 2020, CPCL is partially shutting down its 210 kb/d Manali refinery for a desulfurisation revamp
  • China’s Hengli Petrochemical is reportedly now stocking up on Saudi Arabian crude imports as it prepares to ramp up production at its new 400 kb/d Dalian refinery alongside its 175 kb/d site in Brunei
  • South Korea’s Lotte Chemical Corp expects its ethane cracker in Louisiana to start up by end May, adding 1 mtpa of ethylene capacity to its portfolio
  • Due to water shortage, India’s MRPL will be operating its 300 kb/d refinery in Katipalla at 50% as drought causes a severe water shortage in the area

Natural Gas/LNG

  • Partners in the US$30 billion Rovuma LNG project in Mozambique now expect to sanction FID by July, even after a recent devastating cyclone
  • Also in Mozambioque, Anadarko is set to announce FID on its Mozambique LNG project on June 18, calling it a ‘historic day’
  • After talks of a joint LNG export complex to develop gas resources in Tanzania, Shell and Equinor now appear to be planning separate projects
  • Gazprom has abandoned plans to build an LNG plant in West Siberia to compete with Novatek, focusing instead on an LNG complex is Ust-Luga
  • First LNG has begun to flow at Sempra Energy’s 13.5 mtpa Cameron LNG project in Louisiana, with exports expected to begin by Q319
May, 17 2019
Shell Eclipses ExxonMobil Once Again

The world’s largest oil & gas companies have generally reported a mixed set of results in Q1 2019. Industry turmoil over new US sanctions on Venezuela, production woes in Canada and the ebb-and-flow between OPEC+’s supply deal and rising American production have created a shaky environment at the start of the year, with more ongoing as the oil world grapples with the removal of waivers on Iranian crude and Iran’s retaliation.

The results were particularly disappointing for ExxonMobil and Chevron, the two US supermajors. Both firms cited weak downstream performance as a drag on their financial performance, with ExxonMobil posting its first loss in its refining business since 2009. Chevron, too, reported a 65% drop in the refining and chemicals profit. Weak refining margins, particularly on gasoline, were blamed for the underperformance, exacerbating a set of weaker upstream numbers impaired by lower crude pricing even though production climbed. ExxonMobil was hit particularly hard, as its net profit fell below Chevron’s for the first time in nine years. Both supermajors did highlight growing output in the American Permian Basin as a future highlight, with ExxonMobil saying it was on track to produce 1 million barrels per day in the Permian by 2024. The Permian is also the focus of Chevron, which agreed to a US$33 billion takeover of Anadarko Petroleum (and its Permian Basin assets), only for the deal to be derailed by a rival bid from Occidental Petroleum with the backing of billionaire investor guru Warren Buffet. Chevron has now decided to opt out of the deal – a development that would put paid to Chevron’s ambitions to match or exceed ExxonMobil in shale.

Performance was better across the pond. Much better, in fact, for Royal Dutch Shell, which provided a positive end to a variable earnings season. Net profit for the Anglo-Dutch firm may have been down 2% y-o-y to US$5.3 billion, but that was still well ahead of even the highest analyst estimates of US$4.52 billion. Weaker refining margins and lower crude prices were cited as a slight drag on performance, but Shell’s acquisition of BG Group is paying dividends as strong natural gas performance contributed to the strong profits. Unlike ExxonMobil and Chevron, Shell has only dipped its toes in the Permian, preferring to maintain a strong global portfolio mixed between oil, gas and shale assets.

For the other European supermajors, BP and Total largely matched earning estimates. BP’s net profits of US$2.36 billion hit the target of analyst estimates. The addition of BHP Group’s US shale oil assets contributed to increased performance, while BP’s downstream performance was surprisingly resilient as its in-house supply and trading arm showed a strong performance – a business division that ExxonMobil lacks. France’s Total also hit the mark of expectations, with US$2.8 billion in net profit as lower crude prices offset the group’s record oil and gas output. Total’s upstream performance has been particularly notable – with start-ups in Angola, Brazil, the UK and Norway – with growth expected at 9% for the year.

All in all, the volatile environment over the first quarter of 2019 has seen some shift among the supermajors. Shell has eclipsed ExxonMobil once again – in both revenue and earnings – while Chevron’s failed bid for Anadarko won’t vault it up the rankings. Almost ten years after the Deepwater Horizon oil spill, BP is now reclaiming its place after being overtaken by Total over the past few years. With Q219 looking to be quite volatile as well, brace yourselves for an interesting earnings season.

Supermajor Financials: Q1 2019

  • ExxonMobil – Revenue (US$63.6 million, down 6.7% y-o-y), Net profit (US$2.35 billion, down 49.5% y-o-y)
  • Shell - Revenue (US$85.66 billion, down 5.9% y-o-y), Net profit (US$5.3 billion, down 2% y-o-y)
  • Chevron – Revenue (US$35.19 billion, down 5% y-o-y), Net profit (US$2.65 billion, down 27.2% y-o-y)
  • BP - Revenue (US$67.4 billion, down 2.51% y-o-y), Net profit (US$2.36 billion, down 9.2% y-o-y)
  • Total - Revenue (US$51.2billion, up 3.2% y-o-y), Net profit (US$2.8 billion, down 4.0% y-o-y)
May, 15 2019