Unlocking Value Through Digital Transformation - 20 In The Face Of Evolving Threats 32 Specialty Chemicals: The Next Frontier 44 A Lifestyle ...
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Unlocking Value
Through Digital
Transformation
20 • In The Face Of Evolving Threats
32 • Specialty Chemicals: The Next Frontier
44 • A Lifestyle Within Reach
Hasivini Manaoogaran PETRONAS
GREETINGS
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With this first edition of Flow in 2018, propelling Malaysia’s economic growth and
we are reaffirming our foot in the future and competitiveness, the Pengerang Integrated
solidifying our forays into the world of tomorrow. Complex (PIC) in Johor’s larger Pengerang
Integrated Petroleum Complex (PIPC) is set to
Time waits for no man, they say, and in the Oil, Gas position Malaysia as the hub for petrochemicals
& Energy industry, this couldn’t be more true. For in Asia within the next two decades. We talked
the past few years, we at PETRONAS have been to three experienced professionals from our
encouraging our employees to embrace change petrochemicals business to learn more about
in an effort to ensure that we move in tandem this next frontier.
with the ever evolving world. There were things
we had to unlearn and relearn in embracing It’s impossible to talk about our tomorrow
fresh ways and ideas. without a mention of natural gas. As the
national oil and gas company, our responsibility
Aptly, in the cover story, we delve into the
Unlocking Value
to manage and add value to the country’s
realm of Digitalisation and look at how, by resources have given us the opportunity to
understanding and analysing the science
Through Digital behind data, we are able to surface that
understand the need for a more sustainable
world. It’s no longer a choice but rather a
Transformation additional value in our business and operations.
As the industry shifts landscape, we are left with
necessity to #SwitchtoGas for us to achieve
ON THE
that goal together and leave a better world for
no choice but to always be on the lookout for future generations. To better understand how
new ways to add more value to the natural crucial clean air is, we sat down with Dr Helmy
COVER
resources entrusted to us. Haja Mydin, Consultant Respiratory Physician
at the Twin Towers Medical Centre and Pantai
However, no change is without Hospital Kuala Lumpur, and co-founder of
its threats and challenges. Asthma Malaysia.
While 20 years have
seen a lot of changes And who better to vouch for the importance of
to the sector’s security air quality than those who are physically active
landscape, new forms outdoors. We met with six of our employees
The advent of new technologies has of more impactful who have made it a lifestyle to exercise out
truly transformed the way we do things threats like terrorism, in the open air. Having breathed different air
cyberattacks, piracy across the globe, they have the advantage of
across our businesses— marking the
and hijacking of knowing what fresh and clean air feels like.
20 • In The Face Of Evolving Threats dawn of Digitalisation. We will see more vessels, militancy
32 • Specialty Chemicals: The Next Frontier
44 • A Lifestyle Within Reach values being unlocked, setting the and community In this issue too, we rounded up our Corporate
protests have Social Responsibility (CSR) activities at the
course for the future where a cleaner, been making end of last year when Malaysia was struck
more sustainable world awaits. waves in this with heavy downpours, causing floods in
industry. some areas in the country. It was a time
These when Malaysians’ spirit of unity prevailed as
threats are volunteers from all across the nation lent a
discussed and helping hand to lessen the hardship of the
elaborated in flood victims.
this issue.
We look forward to sharing more stories with
As we step you in our coming issues. Until then, I hope
further into the you find this one enlightening and refreshing.
future, we take a Enjoy your read, and of course, I would love
peek at the world to hear from you. Do drop us an email at
Editor-in-Chief of petrochemicals. In flow@petronas.com for feedback and queries.
Zahariah (Liza) Abdul Rahman
Editorial Committee
Lita Osman • Azura Hashim Kamal • Praevitriana Yuliawiratman • Lili Suryani M Idris
M Harizal Kamdin • Nursyaza Nadiah Ahmad Marzuki • Chelvi Kathirgamatamby • Nur Hidayah Mazlan
Editor-in-Chief
Contributors
Zahariah (Liza) Abdul Rahman
Sreerema Banoo • Jacqueline Pereira • Brigitte Rozario
FIND INSIDE Editor’s Note 03 Managing Climate Change - Why Not Gas? 06 Unlocking Value Through Digital Transformation 10 In The Face Of Evolving Threats 20 Eastern Promises: Strength Through Unity 28 Specialty Chemicals: The Next Frontier 32 That Particulate Matter by Dr Helmy Haja Mydin 40 A Lifestyle Within Reach 44 The Ties That Bind 56
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Managing Climate Change
Why Not Gas?
By TK Tamby
Climate change - no matter how you spin it, the stark image
of melting ice sheets tells you that it’s real. And the oil and
gas (O&G) industry often finds itself stuck between the need
to fulfill voracious energy demand and not destroying the
environment in the process.
Despite its faults, can the O&G sector
provide a remedy to reduce the
amount of greenhouse gasses (GHG)
spewed into the atmosphere? Though
renewables are hailed as the panacea
for all that ails the environment, there is
a ready solution with a largely untapped
potential of reducing GHG emissions.
This solution is natural gas.
Granted, it is still a fossil fuel - however,
it is low carbon. When natural gas burns,
it produces 50 per cent less carbon
dioxide (CO2) than coal and 30 per cent
less than oil.
Though an obvious choice, there is
considerable resistance especially from
parties peddling other options for fuel.
The number one argument against
natural gas is that it consists purely of
methane – a GHG 21 times more potent
than CO2.
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However, methane is a fuel that burns For inherited or legacy assets designed the immense potential of natural gas.
completely, emitting significantly less more than 20 years ago, methane Apart from electricity, it can be used as
CO2 - the primary GHG as well as is monetised in facilities with gas a fuel for any mode of transportation.
Sulfur Dioxide and Nitrogen Oxide– the evacuation infrastructure. As for fugitive Natural gas vehicles (NGVs) are not
precursor of acid rain. Additionally, emissions, PETRONAS has put in place a zero-emission but their environmental,
natural gas produces no smog-creating Leak Detection and Repair Programme. economic and availability advantages
ash and particulate matter, which affect make them a realistic alternative to
health and visibility. There has been increased investments vehicles running on fossil fuels.
in research aimed at improving the
The global methane emission is roughly industry’s ability to detect methane The reduction of pollution would be
split between anthropogenic and natural leaks, improve emissions reporting and a much welcome change for cities
sources. Anthropogenic methane enhance efforts to reduce emissions. Late shrouded in thick smog. The city of
sources include agriculture, energy last year, the Canadian government Lanzhou in China, once described as a
production, landfills and waste water. announced an investment of C$5.3 city you can’t see from satellite due to
According to the US Environmental million for seven projects aimed at dense smog, managed to improve its air
Protection Agency, agriculture accounts tackling methane emissions in the oil and quality after switching from coal to gas.
for more than 50 per cent of total gas sector.
anthropogenic emission followed by At present, natural gas is
O&G supply chain, which accounts PETRONAS has pumped RM275 million
for around 20 per cent of emission - into carbon reduction measures since
the most viable solution to
mostly, fugitive emission from leaks 2013, which has contributed to an reduce our carbon footprint
along the value chain. 8 million-tonne reduction of CO2 and improve air quality.
equivalent emission. Whilst renewables are in the
Natural emissions of methane are
attributable to amongst others, wetland, The push to reduce GHG emission is spotlight, its viability calls
natural seeps, animals and vegetation not only motivated by the need to meet for time, large investments
decay. multiple environmental goals, but also as well as political and
to curb revenue loss. According to a
2015 article by Forbes, global oil and gas
social will. Furthermore, the
Over the years, there has been
tremendous effort by oil majors to industries allow as much as 3.6 trillion intermittency of renewables
cut methane emissions. In the case cubic feet of natural gas to escape, in generating energy when
of PETRONAS, as part of its Carbon representing at least USD30 billion in the wind blows and the sun
Commitment, the Group has imposed revenue loss.
a mandatory requirement of no
shines requires a reliable
continuous venting and flaring of Resistance on the basis of methane and compatible partner, like
methane in the design of new facilities. leak should not stop us from unlocking natural gas.
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Unlocking Value Through
Digital Transformation
Digital is enabling and disrupting the the fuel of the future, a May 2017 article behind 180) of data will exist.
way we work. The impact of the digital in The Economist reported. The same
revolution for organisations depends article reveals that data is to this century Such data flows have not only created
on digital transformation. It propels what oil was to the previous one. new businesses like Grab, WeChat
the creation of differentiated business and AirBnB, but relentlessly propel
models based on unique digital assets, “Data is the most valuable resource in all businesses to transform. Big Data,
where organisations are able to this digital age, the driving force behind Internet of Things (IoT), Analytics,
leverage the power of data to optimise growth and change,” emphasised Wan Artificial Intelligence (AI) and High-
production and deliver new value. This Shamilah Saidi, PETRONAS’ Chief Digital Performance Computing (HPC) are
allows them to increase operational Officer in her talk, The Power of Data, no longer buzzwords capturing the
effectiveness, make the right strategic as part of the Brown Bag Series for imagination, but are today’s reality.
decisions and reinvent their business PETRONAS staff in 2017.
models.
New opportunities arise with digital, So When Did Data PETRONAS’ Activity Outlook 2018-
2020 states clearly that to heighten
resulting in novel value propositions Become So Definitive? the industry’s resilience, sustainable
A radical rethink of how to draw insights from data. In offering
solutions around integration and new
competitiveness must prevail.
Digital information is unlike any Industry 4.0’s next level will further
organisations leverage services to capture this emerging previous resource. Currently 2.7 open up market players to intense
digital to fundamentally value, we should view data as an asset,
leveraged to generate value and drive
zettabytes of data exist in the digital global competition. “To thrive in this
universe, 90 per cent of it created in the challenging environment, technology
change ways of precision in decision-making. last two years, driven by exponential is key for us to unlock value and deliver
working. Data is giving rise to a new economy as
technological advances. It is predicted sustainable solutions for our industry,”
that by 2025, 180 zettabytes (21 zeros says Mazuin Ismail, PETRONAS’ Senior
By Jacqueline Pereira
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Encouraging
Disruption
n elevating digital fluency, Wan Shamilah
expects successful pilot programmes
to spread the word in their digitalisation
drive. “Our approach is not about
convincing staff, but rather immersing
them in new ways of working through
digital projects,” she states. Another
practice she promotes is ‘Fail Fast, Fail
Small,’ encouraging the digital teams
to be creative and innovative in coming
Being
up with business solutions, working in
sprints of weeks. The aim is to develop
solutions that can be scaled Groupwide.
This empowers staff because it proposed new way of working, however,
Bold
encourages understanding lessons requires shared purpose and passion,
learnt, thus diminishing the fear of without being disabled by hierarchy.
failure that can paralyse projects from While her core team is small, she has
truly succeeding. “What matters is: an extended team, aptly named Digital
did we learn from it? How then do we Squad made up of digital leads in the
pivot?” She finds this journey liberating, key business units. The Digital Squad
benefitting both talent and potential. works hand-in-hand with businesses on
prioritised business pain points.
Appointed less than a year ago and Deciding to run digital operations in a
backed by a lean team, Wan Shamilah is flat, lean environment was a calculated
responsible for driving PETRONAS’ digital move. Digital is about bringing together “By collapsing
transformation. For her, digital is not
about technology or software, but rather
multifunctional disciplines without
a limiting reporting structure. The
boundaries, we work
a new way of working for over 51,000
PETRONAS staff all around the globe.
smarter, collaborate
She also foresees agile and innovative Another practice better and naturally
digital leaders using data to deliver new
increased value, translating into higher she promotes unleash creativity.”
Vice President of Project Delivery and productivity and reduced costs.
Technology. is ‘Fail Fast, Fail She strongly believes that no hierarchy
To be agile in adapting, we must consider exists in creativity, although their digital
“To put it simply, digital is the innovative digital as the accelerator, anchored in Small,’encouraging pilots are very regimented, with stage-
gate processes. “How can we leverage
way information is combined with
technology to raise human and machine
business outcomes.
the digital teams what the data is telling us?” In a contained
performance,” Wan Shamilah affirms,
viewing the expected change not just as “You must always be to be creative and environment, with very clear purpose
and scope, pilots allow digital teams to
digital, but as business transformation
obsessed with solving innovative... creatively think problems through.
too.
pain points. Then In addressing growing unease about
machines replacing humans, and the
For PETRONAS, the everything else will economic and social consequences, she
affirms that part of digital transformation
aim is to be a data- come together.” is the opportunity for the organisation
driven organisation, “Just like oil, data is being extracted,
and its staff to establish new skills and
refresh existing ones. “We need to adapt
adopting new ways assembled, refined and used to generate
economic activity,” the maths geek with
organisationally to combine wisdom and
challenges to benefit the wider industry.”
of working, to deliver an accounting background assured her
With digital entrenched in day-to-day
audience in a sharing session, The Power
new value. of Data in the Digital Era. work, she foresees the organisation
moving at a pace to push boundaries.
“Ultimately, we want digital to be Guided by business priorities, the digital
entrenched in the way we work, team works closely with businesses to
intuitively using the tools just as we do accelerate and enable realisation of
in our personal lives.” business goals.
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Deciphering Data Classic model:
statistics and
Big data analytics:
working with text, data,
probability, that videos, images and audio;
are still relevant examples include seismic
With wisdom, and geographical data
data becomes
the solution.
Explaining his trainee data
scientist’s understanding of the
discipline, Chief Data Scientist
Dr Rajamani Sambasivam or Dr
Samba as he is mostly known
said, “The insights from data
science are going to improve the
knowledge or expertise in every
area of the organisation,” referring
to how the subject has helped
improve his own mechanical
engineering knowledge.
That is the crux of data science.
As an enabler, it takes what you
already know and leverages
information gained to the next
level with specific digital tools. Defining Data
Machine learning: including
rom as far back as 1962, data analysis
algorithms like clustering,
has been debated. According to Forbes’ Optimisation and
decision-tree, random forest,
A Very Short History of Data Science, system simulation:
artificial neural networks and
data scientists came into vogue when propagating what-if
deep learning algorithms
the mature discipline of statistics was analysis
combined with a newer discovery –
computer science.
Dr Samba classifies data science into four
general areas:
• classic model: statistics and probability,
As when Facebook identifies the person
you are with in a photograph, big Building Capability Can you think differently?” he asks
potential candidates. They must not be
that are still relevant data analytics is already at work in the averse to mathematics and have the skill
• machine learning: including algorithms background. In leading PETRONAS’ ambitious analytics to develop applications, programmes
like clustering, decision-tree, random practice, which aims to deliver value and algorithms. In decreasing levels of
forest, artificial neural networks and For Dr Samba, a mechanical engineer across the Group’s entire value chain, importance, he stresses, the arithmetical
deep learning algorithms with a PhD in fluid mechanics who data science capability-building is a key and coding angles can be taught. “But
• optimisation and system simulation: has been practicing data science for criterion. Data scientists are sourced the personality of an exploring mindset
propagating what-if analysis 15 years, data science is like watching internally, as well as externally, for is innate to an individual. That is the
• big data analytics: working with text, movies in 3D. Unlike the more limited more experienced personnel and fresh most important trait of a successful data
data, videos, images and audio; 2D experience, data science offers graduates. Other than continuous training scientist.”
examples include seismic and additional depth in understanding one’s and certification to develop this niche
geographical data core expertise with the third dimension. expertise, Dr Samba is involved in project While people are curious about the
“Whatever we can’t see in our delivery through several pilot projects. subject, general apprehension still
Until about a decade ago, a few experience or expertise, that third angle prevails. However, they have managed
corporate giants controlled algorithms. is brought out through data science, Data scientists must be able to challenge to attract internal staff with ten or
Their democratisation has now made adding more depth to the knowledge conventional thinking. “Are you ready to more years’ experience to consider
these open-source tools readily available. we have already gained.” explore, challenge how things are done? pursuing data science. The team did so
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“Nowadays, more
and more, your
competitors are not
who you expect
them to be”.
Current accelerated advances in referring to, with very little imprecise
technology allude to a future where information given by you. Human
humans and machines will coexist. This mind can simply pluck that information
new dynamic will require humans to very fast, because the mind’s neuron
use judgement as they are posed with connection is unique.” The human brain
different options to choose from when is also furnished with the contextual
completing tasks and activities in the information established by culture and
workplace, and even in more general environment, thus enabling us to process
daily interactions. information based on cues from the world
around us.
“One thing is certain,” As humans, we do not get stuck at one
stresses Dr Samba, place. We continuously innovate and
change. This is what differentiates humans
“the world is changing, from machines.
so people need to
Although artificial intelligence (AI)
continuously learn, unlearn will serve certain purposes, it will not
and relearn. This learning overtake human beings, he feels. To
by communicating through SWITCH, a
digital immersion programme which is
Pushing Boundaries cycle is not going to stop.”
him, technology is neither beneficial nor
damaging – how it is applied makes it
aimed at evangelising digital fluency of The next decade, it is predicted, will good or bad.
all staff in PETRONAS. witness ways to use all the data the It calls for continuous upskilling to
industry has generated to automate adapt to the constantly changing External influences today precipitate
The initial three-week training simple decisions and guide harder ones. environment. Similarly, he asserts that disruptions. While individuals and
mainly focuses on introducing data Ultimately, this will work towards reducing digital will continue to provide more job organisations enjoy a certain stability in
science, mathematical principles and risk and resulting in finding and producing opportunities, as the scarcity of data their current existences, they must never
programming with small data-set more oil and gas with less environmental scientists is already considerable. discount the possibility of adapting to
projects. After that, candidates work impact. forces beyond their control.
in groups, solving independent data- He also feels that machines can never
set problems. Then they work on Individuals have easily adapted on a global overtake human beings as humans He cites how auto companies are
digital pilots with experts and business scale to digital or analytics, with apps such have two fundamental needs. With threatened by software, rather than
partners. Weekly knowledge-sharing as Waze, Facebook and Google. However, their inherent thirst for knowledge and competitors from the same industry. The
sessions further enhance this hands- in corporations, with deeply entrenched wisdom, humans always want to know software for driver-less cars will cost more
on application, demystify concepts, hereditary systems, migration to digital why. The human mind is also better than its hardware. When disruption comes
and encourage extra reading. Further requires not only the process but also coped to sift through highly ambiguous, from a competitor, they may have a plan
practice ensures the required expertise, orientation, changed mentality and new imprecise data as compared to machines. in place. But in digital, you do not know
a little like learning to ride a bicycle. “The ways of working. Observes Dr Samba, “For example, I will be able to, within where it will come from. “Nowadays, more
actual learning takes place in projects,” “Adopting digital will be very easy to an a fraction of a second, pinpoint that and more, your competitors are not who
Dr Samba asserts. organisation born today!” one particular event of the past you are you expect them to be.”19 | FLOW MAGAZINE
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Industry 4.0 Analytics in Action
In today’s Industry 4.0 era, data-driven The report drew on significant primary To augment data science into a business data to estimate the likelihood
organisations need agile, able leaders market research, including a survey of model, it must be anchored on solving of future events and trends
who integrate innovation and add value 300 participants from the US, Germany specific business pain points. For • Prescriptive Analytics: applies
to their products and services. and Japan. It revealed three dimensions example, how might we predict when a
for manufacturing companies and, by machine is going to break down? How do
algorithms to optimise a
sequence of decisions for
2018 Digital Trends
A 2015 McKinsey & Company Digital extension, other companies. we ensure retention and easy availability
of corporate knowledge? How do we
desired end result and advise
Report, Industry 4.0 - How to Navigate
Digitisation of the Manufacturing Sector, To capture the potential of Industry 4.0, optimise chemical injections? on best course of action Two key trends that will gain even more
defines Industry 4.0 as digitisation companies must: • Cognitive Analytics: applies ground in 2018 are as follows:
driven by four clusters of disruptive Data is critical in addressing business human-like intelligence to
technologies: pain points such as these. In turn, data tasks, such as understanding
• drive the next wave of
operational effectiveness
analytics allows for the identification of the full context of what is 1. Artificial Intelligence 2. Blockchain
patterns in data and provides insights that being written or spoken A key discussion point at the World Blockchain is an emerging
• data, computational power • adapt business models to can help organisations make informed Economic Forum 2018 was that technology to create secured and
and connectivity capture shifting value pools decisions. Depending on the business pain point, while AI seeks to replicate human trusted database that can simplify
• analytics and intelligence • build foundations for digital a suitable analytics model is then intelligence to drive productivity and workflows and reduce intermediary
• human-machine interaction transformation Broadly, there are four types of analytics: determined. These models are live and improve lives, ultimately, there is costs. It is a distributed database
comprising, for instance, are continuously iterated and refined still a need for human touch. Today, shared among a network of
touch interfaces and to address the pain point. To support there is an opportunity to develop computers, with each computer
To leverage these multiple • Descriptive Analytics:
augmented reality this, an agile method of implementation superhuman intelligence by pairing possessing an identical copy of
opportunities, companies need to summarises historical data the complementary abilities of human the database. Using blockchain,
• digital-to-physical embark on a digital transformation- from multiple sources for quick is followed, resulting in a minimum
cognition with the best available AI
viable product (MVP). With each MVP various stages in a workflow can be
conversion, examples a continuous, long-term effort to identification of patterns for methods to create hybrid distributed verified and made transparent to the
include advanced robotics successfully navigate the changing comes incremental, bite-sized progress,
users to draw actionable insights with continued lessons learnt to finally intelligent systems. blockchain’s community, instead of
and 3D printing industrial environment.
• Predictive Analytics: uses past achieve a suitable end product. a single centralised authority.21 | FLOW MAGAZINE
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IN THE FACE OF
EVOLVING
THREATS By Brigitte Rozario
he security landscape Roy Manchip, Security Advisor, Group
in the oil and gas Health, Safety, Security and Environment
(GHSSE), echoes the sentiment that
sector has changed these new threats affect all corporations
over the past 20 years. competing in the global economy.
Traditional asset protection
concerns like theft, robbery “It’s an increasingly unstable and volatile
and pilferage have taken a world with a range of geopolitical, socio-
economic and environmental conditions
back seat to more impactful generating physical security threats to
threats including terrorism; operations of corporations. We have
cyberattacks; piracy and the evolving threat from cyberspace –
hijacking of vessels; militancy cyberattacks against websites, networks
and community protests. and SCADA (supervisory control and
data acquisition) systems, and data theft.
“In some countries, terrorist and militant Then there are threats from militant
attacks are a direct threat to O&G and terrorist groups, civil war or military
industry operations,” notes M A Kader conflict between nations, which are
M Kassim, Head of Security, Group real in certain countries and have a
Health, Safety, Security and Environment high impact. Recent examples include
(GHSSE) at PETRONAS. ongoing piracy and attacks by Niger Delta
militant groups against the oil industry
“Therefore, security measures should in Nigeria, the rise of ISIS in Iraq, and
be able to withstand these threats in battles between militant groups in South
ensuring the safety and security of our Sudan which disrupted or closed down
people and sustainability of business production for considerable periods of
operations,” he adds. time,” he explains.He explains further that under Project
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Umbra, a benchmarking exercise was
conducted to review the existing business
model and identify gaps for improvement.
“One of the key findings from the
study was the need for an updated and
standardised security management
system for the organisation,” says Dzafri.
Subsequently, an
enhanced security
management
framework, known as
Security Management
System (SeMS)
was developed
and launched, and
is currently being
implemented
Group-wide. The
management system
enables a more
systematic and Roy Manchip
standardised approach Security Advisor, Group Health, Safety, Security
to handling security and Environment (GHSSE), PETRONAS
Security drills are periodically held in the Target of attacks risks. It also includes
vicinity of the PETRONAS Twin Towers, Industry consultant Deloitte LLP in a June companies better equipped to deal with
as a precautionary measure. the introduction of
2017 report said that three out of four operational and security risks. Because minimum security
O&G companies encountered at least of the money tied up with oil production, standards which Risk management
one cyberattack last year. host governments, and the oil companies are designed for Manchip, who has an extensive
themselves, are prepared to invest more Malaysian and background in security risk
Meanwhile, global insurance company resources than some other sectors to overseas operations management, observes that the energy
Aon, in its latest Terrorism & Political secure their operations. Security is seen across PETRONAS and oil services companies tend to have
Violence map, reported that 2016 saw a as a necessary and strategic investment.” Group. a strong risk management culture.
14.2 per cent increase in the number of
terrorist attacks, with many focusing on According to market research firm Complementing “Security is one of a number of
the O&G industry. Markets and Markets, the O&G security PETRONAS’ operational risks that O&G companies
sector is estimated to grow from digitalisation agenda, face and it has to be managed. This
The obvious reason why O&G is targeted US$26.3 billion in 2015 to US$33.9 an integrated online does not always mean that all oil
is that it is worth an estimated 4.5-6.5 per billion by 2020. The highest expenditure system has also been companies get it right all of the time, but
cent of the global GDP (gross domestic projections are for companies operating introduced to improve the fact that new supplies are brought
product), hence its role in driving in the Middle East, Africa, Central Asia the management of on stream safely suggests that their
corporate and government revenues. and South America, where physical and contractors, visitors security risk management is effective.
A major security incident or attack on cybersecurity threats are escalating. and personnel
O&G production can cause supply chain entering its facilities. “This means that while there have been
disruption to the sector, which can The report indicates that projected Dzafri Sham Ahmad The system is intended to better manage attacks, and unpredictable shocks in
have dire consequences for a company security spending in North America VP of Group Health, Safety, Security and contractors or visitors at PETRONAS’ the past (e.g., the rise of ISIS in Iraq), the
and country’s revenues and economic (the US and Canada) is also expected to Environment (GHSSE), PETRONAS installations. industry has to be able to absorb them,
growth. rise as companies invest in improving adapt and recover quickly, adjusting
the protection of their systems and “As far as PETRONAS is concerned, we their operations to meet the changed
Another factor that makes O&G more infrastructure against a range of threats, have a robust plan to manage emerging threat or risk profile, while guaranteeing
vulnerable than most businesses is the including cyber and environmental security threats. We have our own reliable supply,” says Manchip.
nature of the work. To find and bring on activism. contingency and crisis management
stream production from new fields, O&G plans, and security Incident Action Plans He believes that O&G companies need
companies have to explore blocks in Investing in security (IAP) for responding to the assessed to monitor and continually update
areas of the world that are remote, exhibit Like its peers, PETRONAS too has been security risks. These plans are regularly their security risk registers, and have
hostile environments or have inherent investing in security solutions. tested to check our preparedness in appropriate strategies and decision-
security risks, putting personnel in the line the event of a security breach. We also making procedures in place to deal with
of danger. Dzafri Sham Ahmad, VP of GHSSE, maintain a close relationship with the security risks and crises, should they
PETRONAS, explains that in 2015, arising authorities, especially the National occur.
According to Manchip, while the O&G from the evident changes in the global Security Council, Police, Navy, and
sector is vulnerable and has been security landscape, the Group embarked Malaysian Maritime Enforcement Agency Kader concurs, saying, “Security risk,
for a number of years, “The inherent on an initiative to assess the adequacy as well as with host nation governments as part of project management, is one
‘can do’ engineering and project risk and preparedness of PETRONAS’ security in our international operations,” explains of the top priorities for PETRONAS. We
management approach has made oil management system. Kader. always train our (GHSSE Security)25 | FLOW MAGAZINE
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Combating Piracy Militant Attacks Threaten Nigerian Oil
Production and Revenues
The industry is
pretty robust and
has been able to
absorb the shocks
- geopolitical,
economic and
security as well as
new threats.
people to enhance their competency In light of rampant piracy incidents in
and capability. We also ensure that they 2008, Malaysian International Shipping
are kept up to date on security matters Company (MISC) and the Royal Malaysian
affecting our operations as we believe in Navy established a strategic partnership
being prepared. which would be a significant milestone
for the company and set a bold precedent
“We have put in place measures to deter, for the shipping industry. It resulted in the
detect, deny and respond to security conversion of MISC’s Bunga Mas Lima
threats. We have our own response (BM5), a 699 TEUs container ship, into an
team who have been trained specially as RMN Naval Auxiliary Vessel. It was the first
first responders to any Malaysian merchant vessel to be repurposed
eventuality. The team is for security reasons. To date, MISC is the first
groomed to be physically and only shipping company to implement After just 1½ years of ceasefire, the the Bonga Platform and the Agbami, EA
fit and responsive, and is such a unique security arrangement to militants were at it again in Niger Delta. and Akpo fields. The militants also said
equipped with relevant protect its ships, crew and cargo against The January 2018 attacks did not come they would target Nigerian oil company
training such as profiling piracy threats in the Gulf of Aden. entirely as a surprise. Last November, Brittania-U. Shell operates the Bonga and
of people so they can there were already rumblings that the EA fields while Chevron operates Agbami.
identify suspicious BM5 went to sea as a Naval Auxiliary Vessel Niger Delta Avengers militant group was Akpo stakeholders include Total, China’s
activity when patrolling. on 1 June 2009. Its mission was to escort dissatisfied with progress made since the CNOOC, Brazil’s Petrobras and Nigeria’s
MISC ships sailing through the Gulf of Aden, August 2016 ceasefire negotiations. Sapetro.
“PETRONAS’ security which was notorious for piracy activities.
policy clearly says that The talks came on the heels of the The threat was designed to pressure
we are committed To support the operations for BM5 as a Naval Avengers’ attacks on oil pipelines, which Nigeria’s President Muhammadu Buhari
to implementing an Auxiliary Vessel, its crew underwent training caused international oil companies to address inadequate development,
effective security to become Naval Reservists. to evacuate expatriate staff and cut pollution and the uneven distribution of
management system Nigeria’s oil production by 30 per cent revenues from Niger Delta oil production
Group-wide to identify BM5 was enhanced with various facilities from 2.2 million barrels per day to over the past 30 years. The Avengers
and evaluate as well such as rigid-hulled inflatable boats around 1.4 million. It was the lowest claim insufficient progress has been made
as manage security (RHIB), to facilitate the transfer of RMN’s the top African country had produced since they agreed to a ceasefire in August
risks to our people, Special Forces to MISC ships (prior to the in 30 years, tipping the country into 2016.
property, information commencement of an escort through the recession. The attacks in 2016 ended
and operations. We high-risk areas); light weapon mounts; seven years of peace and stability after The country has been linked with
have a very strong improved communication apparatus; and the militant group for the Movement allegations of corruption involving
policy and we live by it. medical facilities. The operations, code- of Emancipation of the Niger Delta politicians and community leaders. There
Security is everyone’s named OP FAJAR, saw BM5 safely escorting signed a peace deal with the Nigerian has also been uneasiness over oil industry
responsibility,” says over 415 Malaysian vessels plying the Gulf of Government in 2009, ending a three- jobs going to foreigners; many question
Kader. Aden and its adjacent areas. year insurgency against government why its citizens live in poverty while the
forces and the oil industry. country has some of the world’s richest oil
Safety first Subsequently, MISC handed over BM5 to deposits.
“Ultimately, and most RMN in 2016. The vessel joined RMN’s In January this year, the Avengers
M A Kader M Kassim importantly, we want current fleet to safeguard our Malaysian threatened to carry out attacks on deep The threats of attacks this year raised fears
Head of Security, Group Health, Safety, Security and everyone to go back waters and strengthen the country’s future sea oil facilities in the offshore oilfields of of a repeat of 2016 with waves of violence
Environment (GHSSE), PETRONAS home safely,” he adds. maritime defence strategy. the Niger Delta. The group had targeted and another dalliance with a recession.29 | FLOW MAGAZINE
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Cyberattacks a Major Risk to the Oil and Gas Sector
Successful cyberattacks can affect
upstream exploration, drilling, oil
collection and processing, gas
compression, and production metering.
In the midstream, processes disruption
from cyberattacks can impact oil and
gas processing, transportation and
storage. While downstream cyber risks
include threats to oil processing and
regasification, refining, production of
petrochemicals, oil and gas storage, and
transportation to consumers.
According to the Industrial Control
Systems Cyber Emergency Response
Team (ICS-CERT), more than a
third of the 2015 attacks on critical
infrastructure was untraceable or had
an unknown “infection vector”. As such,
the attacks could remain undetected for
days, not only crippling computers and
The oil and gas sector is one of the top This report serves as a call to arms,” they networks, but even reappearing as new
targets for hackers. In fact, it is the second said. forms over time.
industry most prone to cyberattacks
according to a report released by The worst cyberattack reported on the The industry is expected to spend up to
consulting firm Deloitte LLP in June 2017. oil industry occurred in 2012 when an US$1.87 billion on cybersecurity in 2018,
The Protecting the Connected Barrels— introduced Shamoon malware wiped in a sector that is expected to be worth
Cybersecurity for Upstream Oil and Gas over 35,000 Saudi Aramco computers in US$25.68 billion by 2020.
report, based on research conducted hours, forcing operators to use typewriters
by the Ponemon Institute, revealed that and faxes to maintain operations until Although many oil companies
over 75 per cent of companies surveyed IT services were restored. The attack are setting up industry forums,
admitted to being hit by at least one threatened, but fortunately did not stop, collaborating with others and working
cyberattack in 2016. Threat groups Saudi Aramco’s oil production which with governments to secure their
include state-sponsored actors, industrial makes up 10 per cent of the world’s oil operations, the solution doesn’t just
espionage, terrorists, environmental and/ supply. lie in new technology investments and
or anti-industry activists, and “hacktivists”. cybersecurity fixes.
The same year, the networks of the
Risks include loss of commercially- Canadian branch of Telvent, a provider Beefing up cybersecurity is not just
sensitive data and intellectual property; of IT-based remote administration and about throwing money at IT solutions.
SCADA systems shutdown that could monitoring tools for the energy sector, Companies need to identify risks and
cripple production; loss of containment; were breached in an advanced persistent develop risk mitigation strategies. Staff,
and environmental issues. The challenge threat attack and infiltration of malware. vendors, partners and contractors need
for companies is the tension between IT The attackers, believed to be a Chinese to be trained and made aware of risks
departments to secure the network and hacking group, stole project files related to to close any security gaps. All of which
control access to data and operating one of its core products, OASys SCADA. needs to be done while allowing the
systems, and field operators who need Internet of Things to flourish, providing
ready availability of access to data, logic In 2014, dozens of Norwegian O&G mobility and remote access to data and
and control systems for extraction and companies, including STATOIL, were systems.
production. victims of cyberattacks. The threat group
and motives have not been identified. It is imperative that O&G companies
The report’s authors, Andrew Slaughter, remain vigilant and resilient while
Paul Zonneveld and Thomas Shattuck, Motives for these cyberattacks include prioritising the safety and security of
stressed the significance of Deloitte’s cyberterrorism, industrial espionage, people and assets; maintaining reliable
findings. “The culture needs to change, market manipulation and fraud, and operations; and delivering new value
and that’s happening but it takes time. operations disruption. streams.29 | FLOW MAGAZINE
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EASTERN PROMISES:
STRENGTH THROUGH UNITY
by Tengku Fairuz Khalisah Tuan Ibrahim
With “Creating Value Through Collaboration” as its production from Canada, Brazil and
Norway is expected to support and
theme, the Asia Petrochemical Industry Conference drive global demand, while the Middle
East continues to remain as Asia’s
(APIC) 2018 puts the spotlight on the imperative of biggest supplier.
collaboration and cooperation in paving the way for
a prosperous and robust petrochemical industry. Asia as the key driver of
global petrochemical
industry
Rising optimism in the oil & Asia’s robust economic growth
gas industry supported by megatrends; rapid
urbanisation, growing population and ROAD TO TOMORROW.
With 2017 deemed by many as the year rising middle-class income will lead A view of Pengerang Integrated Complex taken in March 2017.
of recovery, 2018 brings about a sense to higher demand of petrochemicals.
of optimism as the oil and gas industry This will increase the potential for
continues its slow and steady recovery continuous growth of the industry in
from the 2014 downturn. Global oil prices the region.
Growing capacity expansion The need to collaborate name a few. Against this backdrop, there
are rising gradually from around $30 per in the US for the sustainability of the is a need for the petrochemicals fraternity
industry to come together and collaborate to offer
barrel in early 2016 to around $53 per One of the bright stars in Asia is China.
The shale revolution brought about a sustainable solutions demanded by these
barrel in 2017. There is also an increase Availability of coal resources and
robust petrochemical capacity expansion megatrends.”
in upstream and downstream activities imported LPG from the US, and the With intensifying competition from other
which is a positive indicator of the health development of integrated refinery in the US. According to an analysis by regions, collaboration plays a prominent
of the industry. and petrochemical complexes have Independent Chemical Information role in enhancing the robustness of the Malaysia’s petrochemical
made the availability of feedstock for Service (ICIS) eight new ethane crackers Asian petrochemical industry. Strong industry landscape
Robust global economic growth has the development of the petrochemical are expected to commence production cooperation between manufacturer and
led to a steady increase in oil and gas industry. from 2017 to 2018, producing a total consumer is needed to develop new Malaysia’s petrochemical industry began
demand. In its latest report, International of 9.2 million tonnes/year of ethylene markets for differentiated products. The in the early 1990s with the development
Energy Agency (IEA) forecasted that India is also expanding its capacity. focus on creating high-value specialty of three major petrochemical facilities
global oil demand will rise from 97.8 petrochemical capacities and chemicals which are customised to cater strategically located in Gebeng, Kertih
million barrels per day (bpd) to 104.7 increasing its flexibility in petrochemical The US polyethylene capacity is for the niche market will help propel the and Pasir Gudang. Since then, Malaysia
million bpd from 2018 to 2023 with China production. The government is planning projected to rise by 6.5 million tonnes/ industry further in positioning the Asian has been among the key petrochemical
and India contributing half of the increase to develop petrochemical complexes year, accounting for about 42 per cent of petrochemical producers as solution players in the region with a wide range
in demand. around India to meet the increasing global polyethylene capacity expansion providers. of petrochemicals being produced
demand for polymers and specialty up till 2020. The US polyethylene and exported from the country such
Non-OPEC countries are forecasted chemicals across the diverse industrial production will mostly be meant for Akbar Md Thayoob, President, Malaysian as olefins, aromatics, ethylene oxides
to dominate the global oil supply segments. In 2017, India’s Reliance export to key regions such as Latin Petrochemicals Association (MPA) said, and glycols, among many others. These
contributing 59.26 million bpd of crude Industries Limited (RIL) has successfully America and Europe. The increased “Today, Petrochemicals are regarded as world-scale plants have also contributed
oil this year, with the US contributing commissioned the world’s largest expansion has opened arbitrage the key engine of growth as we move significantly to the production of the local
the largest supply growth amounting ethane importing plant and has now opportunities to Asia, competing with into the future, shaped by the megatrends plastic processing activities in the country
to 1.4 million bpd for 2018. Apart from begun to import ethane from the US for the regional producers as well as of urbanisation, ageing population, rising by providing a steady supply of feedstock
the surging output from the US, rising its crackers in Dahej and Hazira. producers from the Middle East. middle-income, energy efficiency, just to material for the plastic industry.33 | FLOW MAGAZINE
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PETRONAS’ largest downstream project,
Pengerang Integrated Complex (PIC), is
currently on track for overall start up by
early 2019. This bold move by PETRONAS
is expected to push the Malaysian Oil
and Gas downstream sector into a new
frontier of technology and economic
development. During the construction
period, PIC employed up to 60,000
workers and created spin-off from
economic activities to its surrounding
areas. Its proximity to the world’s busiest
shipping lane and international trading
hub makes it the most strategic regional
downstream hub.
The Malaysian government’s support in
providing a conducive ecosystem has
also helped the petrochemical industry
to thrive in the country. This includes
the development of infrastructure and
offering of incentives to attract foreign
companies to invest in Malaysia and
boost local manufacturing sector
activities.
APIC 2018: Creating Value
Through Collaboration
Against the backdrop of these
opportunities, APIC 2018 will gather key
business players, leading market analysts
and industry experts in Kuala Lumpur
from 20 to 21 August to provide insights
and critical analysis from across the
chemical value chain to enhance the
growth of the industry.
Notable speakers for the event includes
Dave Witte, Senior Vice President,
Division Head – Energy & Chemicals, IHS
Markit, Clive Gibson, Vice President, Asia,
Energy & Chemicals Advisory, Nexant,
Dr Charles Fryer, Chairman, Tecnon
OrbiChem and Datuk Sazali Hamzah,
Managing Director and Chief Executive
Officer, PETRONAS Chemicals Group
Berhad.
For more information about APIC 2018,
visit www.apic2018.org.my.33 | FLOW MAGAZINE
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SPECIALTY
THE NEXT FRONTIER
by Sreerema Banoo
PETRONAS, through PETRONAS Chemicals Group Bhd, is upping
its game in the chemicals sector thanks to a two-pronged strategy
for growth. A major ace up its sleeve is the Pengerang Integrated
Complex (PIC) that houses the Refinery and Petrochemical
Integrated Development (RAPID) project in Pengerang, Johor.
W
hat makes a shampoo products that we use and come into Reports suggest that the worldwide
so moisturising that it contact with every day. specialty chemicals market will hit
leaves your hair silky soft, US$530 billion by 2022, growing at
or a toothpaste taste Whether it’s the toothbrush, soaps or a CAGR (compound annual growth
so minty fresh, or your shampoos that you use, your choice of rate) of 6.3 per cent from 2015
shirt wrinkle-free? The answer to that lies breakfast, the clothes that you put on, or to 2022. Rising population, rapid
in the realm of specialty chemicals. These the cars that you drive, specialty chemicals industrialisation and urbanisation,
are performance-enhancing properties are ever-present in our daily lives. They and increasing demand from
and solutions - the “secret ingredients” - are the formulations that make modern, automotive, construction and
that go into additives, plastics, coatings, urban life easier, more comfortable, and consumer goods industries are some
fertilisers, fragrances, and flavours of appealing. of the factors driving this growth.35 | FLOW MAGAZINE
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FUTURE-
Processed Gas
PROOFING Akbar Md Thayoob
Head of Strategic Planning
THE BUSINESS & Ventures, PETRONAS
Chemicals Group Berhad.
Natural Gas
Processing
Liquefaction
The push towards specialty chemicals,
Petroleum Products Akbar says, was born of an internal
Exploration,
Development project that sought to develop
& Production a strategy to future-proof PCG’s
Petrochemical Plant business. Dubbed Project Titanium – so
named for the metal’s versatility and
ubiquitous applications, it commenced
in September 2017 with a series of in-
Crude Oil Basic commodities house brainstorming sessions, labs and
workshops.
• Ethylene
• Methanol “It was from here that we came up with
• MTBE the blueprint to grow our specialty
Refining • Polyethylene chemicals segment,” he says.
• Polypropylene
• Propylene Growth will be driven through
• Urea three levers – organic growth i.e.
• Ammonia extension of the value chain from PIC’s
Intermediates/Specialty petrochemicals and existing complexes,
Polypropylene, mergers and acquisitions (M&A), and
Polyethylene Acrylates by creating optionality for growth via
(dashboard) (baby’s diaper) corporate venture capital and internal The group is also looking at its existing
research and development. portfolio of basic petrochemical products
and the options to extend the value
Polyethylene In recent past, PCG’s CEO Datuk Sazali chain. “Instead of selling raw materials, “We have a two-
(plastic bag) Hamzah has spoken about the group’s
interest in looking at M&A as part of
we turn them into derivatives and some
we can turn into specialty chemicals. It’s
pronged strategy
its growth strategy. In an interview a step-by-step approach. The idea is to to realise our vision
with CEO Magazine, Sazali said that
PCG is “evaluating some of the latest
extend as far down the value chain as
possible and create better value,” says
to be the preferred
MTBE (fuel additive)
technology applications beyond 2020 via Akbar. chemical company,
MMA/PIB/IIR (tyre)
partnerships and/or possible mergers and
acquisitions”. Through its joint venture company, and that is to
BASF PETRONAS Chemicals Sdn Bhd, continue sustaining
“We have the mandate to pursue the group has already added specialty
M&As,” reiterates Akbar, adding that chemicals into its portfolio with the our strength in basic
Cognisant of the growth opportunities polymers, fertilisers, methanol, and other Planning & Ventures, Akbar Md Thayoob. technological strength, market access commissioning of new plants in Gebeng, petrochemicals,
and trends that are changing the world basic chemicals and derivative products. and management capability of its Kuantan.
we live in, Petroliam Nasional Bhd The specialty chemicals segment is the This strategy, he says, increases PCG’s prospective partners or investments are and selectively
(PETRONAS) is widening its footprint in next frontier of its business strategy. volume-play advantage as a competitive key criteria. These products include aroma
ingredients, which are sold to the
diversifying into
this arena. And it is doing this through regional player and at the same time
its petrochemical arm, PETRONAS “We have a two-pronged strategy to harnesses value-play from higher- “We’re also looking at placing small flavour and fragrance industry, specialty chemicals
Chemicals Group Bhd (PCG). realise our vision to be the preferred
chemical company, and that is to
margin products. The latter is where
specialty chemicals come in. These
bets through corporate venture capital
on start-ups or companies that are
2-Ethylhexanoic Acid (2-EHAcid), which
are used in esters for film plasticisers
and solutions.” –
Listed on Bursa Malaysia in 2010, PCG continue sustaining our strength in products, he adds, also insulate the working on breakthrough technologies and synthetic lubricants, and Highly Akbar Md Thayoob
is involved primarily in manufacturing, basic petrochemicals, and selectively group against market cyclicality and or solutions that fit into chemical Reactive Polyisobutene (HR-PIB) used in
marketing and selling a diversified range diversifying into specialty chemicals and volatility - ensuring sustainability in the segments based on megatrends,” manufacturing high performance fuel and
of chemical products such as olefins, solutions,” says PCG Head of Strategic longer term. he adds. lubricant additives.You can also read
