Shell to boost consultancy team

TheStar.com: Shell to boost consultancy team

“service the Shell group of companies in the Asia-Pacific”

BY K.P. LEE

9 July 04

ROYAL Dutch-Shell plans to double the size of its technical consultancy team in Malaysia by year-end and make the unit its flagship oil and gas consultancy operation in the region that will eventually contribute up to a third of its total global income from this niche business.

Operating as Shell Global Solutions (M) Sdn Bhd, a Multimedia Super Corridor status company based at the Petronas Twin Towers in Kuala Lumpur, the unit has been growing at an exponential rate since it was set up two years ago principally to service the Shell group of companies in the Asia-Pacific but with third-party clients fast catching up to become a major revenue generator.

Managing director Lee Tzu Yang told StarBiz in an interview that the company was reaping the benefits of the thriving oil and gas activities in the region, which he said had given it a rich source of consultancy work, from exploration and production upstream to supply chain management downstream.

Although he declined to divulge financial numbers, Lee said the company’s existing workforce of some 100 people, up from only 20 a year ago, would be doubled to 200 by the end of the year, and further increased to five times the current number in the next few years.

The Malaysian unit forms one of the latest additions to the network of Shell Global Solutions consulting firms first set up seven years ago, initially in Europe and the United States, to tap the oil super-major’s vast experience in energy businesses ranging from oil exploration, production and refining to the marketing of fuels and lubricants, and production of liquefied natural gas (LNG) and chemicals.

Finding that its operational and technical knowledge, as well as its research and development (R&D) expertise, was also much sought after by other oil companies, particularly national oil concerns in developing countries, Shell mandated this service unit to sell its services to third parties. And Asia is now seen as its fastest growing market where about a third of its revenue is derived from third-party work.

Lee said for the network as a whole, between a quarter and a third of its revenue came from the region and the proportion would likely grow, as Asia was poised to experience the largest increase in energy demand of any region over the next two decades.

Shell’s decision to base its main Asian operations in Malaysia, therefore, was to ensure it was “proportionately represented in the region,” Lee said, with physical proximity to clients seen as crucial for increasing “customer intimacy.”

Shell Global Solutions is one of nine service hubs maintained by Shell in Malaysia that provides a range of services for the group from management and financial to information technology, but it is the only one that actively seeks out business opportunities from outside the group.

In Malaysia, Petroliam Nasional Bhd (Petronas) remains the unit’s most important client. Among its largest contracts, the firm provides technical services to the massive Petronas LNG complex in Bintulu, Sarawak.

And earlier this year, it was also commissioned by the national oil company to introduce a programme to improve bottom lines at the Malacca refinery complex that houses two refining plants with a processing capability of 200,000 barrels per day.

Elsewhere in the region, Shell Global Solutions works with the likes of PetroChina Company Ltd, Thai Oil Company, Japan Energy Corp and Indonesia’s Pertamina.

China has been a growing source of work for the company. Several gas plants there have adopted its coal gasification technology to produce gas from its domestic coal supply, thus helping the country to reduce its oil imports.

Citing Malaysia’s transport and communications infrastructure, its economic and political stability, as well as the availability of experienced and qualified workers as positive factors, Lee said the decision to use the country as a base for the region was a correct one. Lower costs of doing business vis-à-vis Europe or the US also factored in the decision.

“The figures were definitely supportive of the case (for Malaysia),” he said. In what was essentially a people-centred business, the company’s capital investment would remain relatively low, Lee added.

“This is a knowledge business and our assets are our people. It’s an invisible capex company,” he said, adding that “investment” for the firm would be in the form of local employment and the increased specialist expertise that was built in an increasingly services- and knowledge-based economy.

According to the firm’s human resources manager, Leslie Hayward, the number of Malaysians now accounting for 30% of its workforce will likely increase in its current wave of recruitment of more consultants. Its non-Malaysian employees come from some 22 other countries.