Specialised know-how that leads to success

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Dato’ Kamarul Muhammad, CEO of UZMA
Dato’ Kamarul Muhammad, CEO of UZMA

Uzma Group is a Malaysia-based oil and gas service company providing an array of services to the upstream sector across exploration, development, and production focusing in subsurface, well services and production optimization. Inside Investor sat down with , to discuss the company’s method and its success.

Q: What are you current key projects?

A: Let me start with the basics. Our group is a service-based operation. We help clients to assess their oil or gas reservoir, how to best produce, and how to sustain or improve production.  We are directly involved in the key assets of our clients. Therefore we are slightly different from other Malaysian oil and gas companies. However, our key projects relate to the issues that we are currently facing in the country. The national oil and gas production started to decline almost 20 years ago, at first very slowly, but now the decline is accelerating and has reached almost one per cent annually. We are trying to find new resources and to rejuvenate existing resources. A lot of our current projects focus to that. Currently, we are installing various units of an inhouse designed and patented solution which assist our client produce from idle wells throughout Malaysia. We are focusing on helping clients that are facing a production decline.

Q: This means you are primarily a solutions provider?

A: Yes. We don’t have one single product. We go to the client and try to identify what the problem is then offer a solution.  Many of them need to look for more resources or need to get more oil from existing fields. We have the solutions to rejuvenate dying fields.  For example, we have one key project with a national oil company. We have been working with them since 2003 on this project that seeks to move to secondary and tertiary recovery from a matured field. We are looking for new resources and how to enhance those resources and how to sustain production.

Q: How many people are working for Uzma?

A: We currently have about 150 full time staff and 300 consultants.

Q: In which countries are you operating?

A: Apart from Southeast Asia, we have operations in Africa, the Middle East, on the Indian Subcontinent, and in Australia, and offices in Bangkok, Indonesia, and Qatar. However, most of the work is actually done here in our head office and in our lab. We analyse and study the situation, and then we do the installations at the production site. We are spread out pretty well. Prior to 2008, our revenue was split 50:50 between overseas and domestic operations. However, when the oil prices came crashing down in 2008, we had to refocus on projects that deliver recurring revenues. Last year, Uzma secured roughly RM1 billion in contracts in Malaysia which balanced the situation out.

Q: Are you working together with partners?

A: Yes we do work with partners both international and domestic.

Q: What is the current situation on the oil and gas exploration market globally?

A: Today, countries like China, India, and Russia are using a lot of energy, and the industry unfortunately cannot keep up with that demand. Because of that, the oil price have remained high, and together with that the cost of production has gone up. In my opinion, oil prices will stay where they are right now, between $80 and $100 per barrel, for the foreseeable future. But oil production is getting more expensive. For example, deep water production already costs $60 to $70 per barrel, and it might rise to $80. Conventional oil production, depending on the location, costs $18 to $35 per barrel, but the current production will continuously decline, and by 2018 the gap will open inevitably. If the industry is not going into more exploration and production enhancement, then we will be in trouble. But if, for whatever reason, oil prices go down to $60 to $70, most explorations will no longer be profitable and projects will stop.

Q: So there is a big pressure to find new resources? Where do you look for it?

A: We went to Inner Mongolia in 2008. As a Malaysian company, we were relatively unknown there, and we needed to prove our capabilities. We chose Inner Mongolia because there is a small field there to explore, where we can demonstrate our capabilities and apply our key technology in a harsh environment. We tested various production methods over there and soon we hope to commence commercial production. The field is proven and the challenge has been to ensure production can be maintained consistently. It has proved to be a worthwhile venture for us in terms of knowledge and experience gained.

Q: How big is the Inner Mongolian field?

A: Initially it was estimated at 200 to 250 million barrels of heavy crude, but we think it’s closer to 190 million STOOIP. It is still sizable for the region. It is not particularly expensive to explore but the challenge is to produce as it is extremely heavy crude, and we have experimented with certain technologies like steam injections with chemicals to increase production. Typically, the recovery factors for these kinds of fields is about eight to ten per cent. We are now four years in Inner Mongolia and hope to commence commercial production soon. The key thing for us is to bring our technology over there.

Q: Do you have operations or partners in the GCC?

A: We have various operations in GCC and we work with different partners in each of GCC country. Our operation in GCC is operated from our office in Doha. Our clients there includes Qatar Gas, Dolphin Oil, Maersk Oil, and QP

Q: Can you tell us about the corporate structure and the shareholders of Uzma?

A: Right now, I am still the biggest shareholder in the company. Roughly 20% are owned by institutional investors.

Q: Do you find it difficult to get skilled staff?

A:  We have quite a low staff turnover rate. We create an environment where people love to work. So far, we have managed to keep people. About 80 per cent of our staff is Malaysian, they speak English and have a good education. We are training them in house as well. As we are in the middle of an expansion, we are continuously looking for new people. For a service company like us, the biggest asset is brain power. The key thing is to create a conducive working environment that lets your employee be creative, energetic, productive and looking forward to coming to work everyday.

Q: What relations do you have to sector-specific educational institutions?

A: We have been sponsoring students in various disciplines to increase their special skills.  This year we are sponsoring two students and last year one student from overseas. But we want to sponsor more students.

Q: What is your short term business strategy?

A: We want to make an impact at least in this region as a regional player. We want to be an alternative to the big multinationals in the region and want to compete with them. We are a relatively young company at 12 years old whereas Malaysia has been in the oil business since the 1970’s. We are the only local company who has the capability, technology, and experience to become a real alternative to the big players. And we want to further internationalise our services, for example by expanding to the ASEAN, Indian Subcontinent and  Australiasia. The fact is that we have really grown based on our merits and our capabilities. We are trying to increase hydrocarbon production for our clients in the shortest period of time. For example, we have a client in Australia for whom we did studies to increase the output. The production was only 800 barrels per day, and we managed to increase it to 2,000 barrels a day after three months. We are implementing the results of those studies to other projects as well.

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Reading Time: 5 minutes

Dato’ Kamarul Muhammad, CEO of UZMA

Uzma Group is a Malaysia-based oil and gas service company providing an array of services to the upstream sector across exploration, development, and production focusing in subsurface, well services and production optimization. Inside Investor sat down with , to discuss the company’s method and its success.

Reading Time: 5 minutes

Dato’ Kamarul Muhammad, CEO of UZMA
Dato’ Kamarul Muhammad, CEO of UZMA

Uzma Group is a Malaysia-based oil and gas service company providing an array of services to the upstream sector across exploration, development, and production focusing in subsurface, well services and production optimization. Inside Investor sat down with , to discuss the company’s method and its success.

Q: What are you current key projects?

A: Let me start with the basics. Our group is a service-based operation. We help clients to assess their oil or gas reservoir, how to best produce, and how to sustain or improve production.  We are directly involved in the key assets of our clients. Therefore we are slightly different from other Malaysian oil and gas companies. However, our key projects relate to the issues that we are currently facing in the country. The national oil and gas production started to decline almost 20 years ago, at first very slowly, but now the decline is accelerating and has reached almost one per cent annually. We are trying to find new resources and to rejuvenate existing resources. A lot of our current projects focus to that. Currently, we are installing various units of an inhouse designed and patented solution which assist our client produce from idle wells throughout Malaysia. We are focusing on helping clients that are facing a production decline.

Q: This means you are primarily a solutions provider?

A: Yes. We don’t have one single product. We go to the client and try to identify what the problem is then offer a solution.  Many of them need to look for more resources or need to get more oil from existing fields. We have the solutions to rejuvenate dying fields.  For example, we have one key project with a national oil company. We have been working with them since 2003 on this project that seeks to move to secondary and tertiary recovery from a matured field. We are looking for new resources and how to enhance those resources and how to sustain production.

Q: How many people are working for Uzma?

A: We currently have about 150 full time staff and 300 consultants.

Q: In which countries are you operating?

A: Apart from Southeast Asia, we have operations in Africa, the Middle East, on the Indian Subcontinent, and in Australia, and offices in Bangkok, Indonesia, and Qatar. However, most of the work is actually done here in our head office and in our lab. We analyse and study the situation, and then we do the installations at the production site. We are spread out pretty well. Prior to 2008, our revenue was split 50:50 between overseas and domestic operations. However, when the oil prices came crashing down in 2008, we had to refocus on projects that deliver recurring revenues. Last year, Uzma secured roughly RM1 billion in contracts in Malaysia which balanced the situation out.

Q: Are you working together with partners?

A: Yes we do work with partners both international and domestic.

Q: What is the current situation on the oil and gas exploration market globally?

A: Today, countries like China, India, and Russia are using a lot of energy, and the industry unfortunately cannot keep up with that demand. Because of that, the oil price have remained high, and together with that the cost of production has gone up. In my opinion, oil prices will stay where they are right now, between $80 and $100 per barrel, for the foreseeable future. But oil production is getting more expensive. For example, deep water production already costs $60 to $70 per barrel, and it might rise to $80. Conventional oil production, depending on the location, costs $18 to $35 per barrel, but the current production will continuously decline, and by 2018 the gap will open inevitably. If the industry is not going into more exploration and production enhancement, then we will be in trouble. But if, for whatever reason, oil prices go down to $60 to $70, most explorations will no longer be profitable and projects will stop.

Q: So there is a big pressure to find new resources? Where do you look for it?

A: We went to Inner Mongolia in 2008. As a Malaysian company, we were relatively unknown there, and we needed to prove our capabilities. We chose Inner Mongolia because there is a small field there to explore, where we can demonstrate our capabilities and apply our key technology in a harsh environment. We tested various production methods over there and soon we hope to commence commercial production. The field is proven and the challenge has been to ensure production can be maintained consistently. It has proved to be a worthwhile venture for us in terms of knowledge and experience gained.

Q: How big is the Inner Mongolian field?

A: Initially it was estimated at 200 to 250 million barrels of heavy crude, but we think it’s closer to 190 million STOOIP. It is still sizable for the region. It is not particularly expensive to explore but the challenge is to produce as it is extremely heavy crude, and we have experimented with certain technologies like steam injections with chemicals to increase production. Typically, the recovery factors for these kinds of fields is about eight to ten per cent. We are now four years in Inner Mongolia and hope to commence commercial production soon. The key thing for us is to bring our technology over there.

Q: Do you have operations or partners in the GCC?

A: We have various operations in GCC and we work with different partners in each of GCC country. Our operation in GCC is operated from our office in Doha. Our clients there includes Qatar Gas, Dolphin Oil, Maersk Oil, and QP

Q: Can you tell us about the corporate structure and the shareholders of Uzma?

A: Right now, I am still the biggest shareholder in the company. Roughly 20% are owned by institutional investors.

Q: Do you find it difficult to get skilled staff?

A:  We have quite a low staff turnover rate. We create an environment where people love to work. So far, we have managed to keep people. About 80 per cent of our staff is Malaysian, they speak English and have a good education. We are training them in house as well. As we are in the middle of an expansion, we are continuously looking for new people. For a service company like us, the biggest asset is brain power. The key thing is to create a conducive working environment that lets your employee be creative, energetic, productive and looking forward to coming to work everyday.

Q: What relations do you have to sector-specific educational institutions?

A: We have been sponsoring students in various disciplines to increase their special skills.  This year we are sponsoring two students and last year one student from overseas. But we want to sponsor more students.

Q: What is your short term business strategy?

A: We want to make an impact at least in this region as a regional player. We want to be an alternative to the big multinationals in the region and want to compete with them. We are a relatively young company at 12 years old whereas Malaysia has been in the oil business since the 1970’s. We are the only local company who has the capability, technology, and experience to become a real alternative to the big players. And we want to further internationalise our services, for example by expanding to the ASEAN, Indian Subcontinent and  Australiasia. The fact is that we have really grown based on our merits and our capabilities. We are trying to increase hydrocarbon production for our clients in the shortest period of time. For example, we have a client in Australia for whom we did studies to increase the output. The production was only 800 barrels per day, and we managed to increase it to 2,000 barrels a day after three months. We are implementing the results of those studies to other projects as well.

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