By TAN HWEE HWEE Singapore
Singapore-listed KS Energy and Shanghai Zhenhua Heavy Industries (ZPMC) have teamed up to build a high-specification jack-up drilling unit in Indonesia.
The pair will join forces to build a Friede & Goldman JU2000E jack-up rig in Batam, the first rig of its kind to be constructed in Indonesia.
The rig construction will take place at a 20-hectare yard run by Citra Tubindo, an oilfield equipment manufacturer also owned by KS Energy’s Indonesian-born chief executive Kris Wiluan.
ZPMC will supply the parts and components required for construction of the F&G JU2000E.
The rig will take at least 24 months to deliver, suggesting its delivery will take place at the earliest during the second half of 2015.
No commercial terms were released on the cost of the high specification jack-up rig, but it is expected to fall within the under $250 million going price for an F&G JU2000E unit.
The latest rig building venture with ZPMC signifies Citra Tubindo’s first move into offshore rig building business.
Citra Tubindo has 30 years of experience in manufacturing oilfield equipment and has recently delivered two land rigs now understood to be drilling at ExxonMobil’s Banyu Urip oil project in Cepu, Indonesia.
The venture into offshore rig building is in line with the vision of Wiluan to contribute to the maximisation of Indonesia’s oil and gas spend within the country.
By his estimate, Pak Kris – as he is often addressed within the industry – said Indonesia spends about $15 billion to $20 billion a year on oilfield services and materials, a large part of which is still “done outside the country”.
He estimates the major South-East Asian oil and gas producing country will require at least 30 land rigs and 10 jack-up rigs within the next three to five years.
“It is our intention to maximise expenditure in the country,” he said.
KS Energy has concurrently formalised a 49:51 joint venture with Indonesia’s state-owned Pertamina Drilling to own and operate onshore and offshore drilling units.
The joint venture now owns and operates the two land rigs on charter to ExxonMobil at an announced contract value of $98 million.
It also owns and operates a recently upgraded Indonesian-flagged rig, KS Java Star 2, which went on a two-year contract with Pertamina Hulu Energi in the West Madura Offshore (WMO) production sharing contract, on delivery from Singapore-based Keppel Fels earlier this year, according to Pertamina Drilling’s president-director Faried Rudiono.
The KS Energy-Pertamina Drilling joint venture is in talks with Pertamina Hulu Energi on a further contract extension for KS Java Star 2 to support the massive drilling campaign lined up in WMO block over the next two years, Faried told Upstream.
The present two-year contract at WMO block is valued at $87.6 million, according to KS Energy.
KS Energy has acquired a F&G Super M2 jack-up unit to be named KS Java Star 2, from ZPMC, also to be owned and operated under its joint venture with Pertamina Drilling.
KS Java Star 2 is scheduled to be delivered from ZPMC during the first half of 2014 and is understood to be offered for a contract with Pertamina Hulu Energi’s Offshore Northwest Java PSC.
By TAN HWEE HWEE Singapore
KRIS Wiluan, the Indonesian-born chief executive of Singapore-listed KS Energy, is taking a big step towards his ambition of seeing Indonesia able to provide the full suite of oilfield services by lining up a deal to build a jack-up drilling rig at his Batam facility.
Over the weekend, Kris unveiled a potential collaboration between KS Energy and Shanghai Zhenhua Heavy Industries (ZPMC) to jointly build a Friede & Goldman JU2000E jack-up rig at Citra Tubindo, an oilfield equipment manufacturer also owned by Kris.
Now occupying 20 hectares of land within Kris’s 600-hectare Kabil Industrial Estate, Citra Tubindo was set up in the 1970s to fulfill his vision of maximising oil and gas investment stemming fom Indonesia’s hydrocarbon production within the country.
Indonesia spends about $15 billion to $20 billion on oilfield services and products every year, according to Kris. By his estimate, the percentage of oilfield services spending going to domestic players has risen to as much as 50%, a vast increase since the 1970s, but Kris feels more can be done within the country.
Over the past 30 years, Citra Tubindo has expanded its customer base from the east to the west. Aside from sales within Asia, its products are reportedly sold to Japan, the US and the Middle East.
Kris’s latest ambition is to get involved in the construction and supply of Indonesian drilling units — both onshore and offshore rigs — at his Batam-based facility.
Citra Tubindo has already delivered two “walking” land rigs to KS Energy and its state-owned partner for Indonesia-focused company Pertamina Drilling.
The land rigs have started drilling at the ExxonMobil-operated Banyu Urip oil project in the Cepu block and are beating the projected work schedule on the planned wells, according to Kris. Building a jack-up drilling unit will be the next logical step up for Citra Tubindo and partnerships with other seasoned rig builders in Asia would ease its entry.
The partnership with ZPMC, assuming it is finalised, will see the Chinese rig builder supply the parts and components to Citra Tubindo for the construction of initially one F&G JU2000E unit.
ZPMC is also the majority shareholder of Houston-based rig design house F&G, but the commerical terms of the potential licensing agreement for the JU2000E design with Citra Tubindo remain undisclosed.
No cost projection has been made available for Citra Tubindo’s first JU2000E unit, although it is widely expected to fall under the $250 million bracket, the going price for similar rigs in the market.
Kris sees potential to extend the rig building partnership with ZPMC to a second JU2000E. But he is also keen to engage seasoned Singapore rig builders SembCorp Marine and Keppel Fels, which account for 70% of the world’s modern jack-ups.
The first JU2000E to be built at Citra Tubindo is expected to hit water within 24 months and will be marketed worldwide.
Indonesia will need as many as 10 jack-ups in the near-term, although these are likely to be 300-foot to 350-foot units, according to Kris. He also sees demand for at least 30 land rigs for Indonesian operations, with Pertamina Drilling primed to invest in one or two newbuild units annually.
Pertamina Drilling is close to sealing a newbuild deal with Citra Tubindo for another land rig, he added.
Singapore’s KS Energy has secured a $12 million deal to supply equipment for two jack-up rig newbuilds ordered at a mystery Chinese yard.
The Singapore-listed company’s 55%-owned subsidiary KS Distribution has inked the SGD 15 million ($11.9 million) deal, KS Energy said on Friday.
The contract covers the provision of “major capital equipment” and “ancillary services” for the rig duo, KS said.
Delivery is set for the first and second quarters of the 2013 financial year.
Although KS did not identify the yard concerned, it described it as an “established shipyard”.
Source: Upstream (The International Oil & Gas Newspaper)
The first of KSD’s constituent companies is SSH Corporation Ltd, which specialises in piping materials, fittings and flanges for the oil and gas, marine and petrochemical industries. The company also stocks high tensile steel plates. SSH Corporation is the sole distributor and representative for Lincoln Electric welding equipment and consumables in Singapore, as well as one of the distributors of the brand in other areas such as China, Thailand, Indonesia, and Vietnam.
The second company under this umbrella is Aqua-Terra Supply Co. Limited, which focuses on oil and gas consumables such as hand tools and lubricants, alongside oil field and marine related equipment. The final major subsidiary is KS Flow Control Pte Ltd, a specialist stockin the supply of high-grade components and innovative solutions for hydraulic and instrumentation applications.
Under the KSD hallmark, these companies, together with their various subsidiaries, are able to offer over 70,000 line items representing around 300 global brands. Ultimately this merger is aimed at offering a one-stop-shop operation capable of providing almost all necessary products and services to clients from a single source. “Our core competency is to be able to provide our customers with a wide range of products,” begins Richard Wiluan, executive director of KSD, by way of an introduction. “We pride ourselves on presenting very high quality products to manufacturers in the oil and gas, marine and petrochemical industries. At the moment we are mainly focusing on distribution of these products, as well as holding stock in our role as stockist.”
Headquartered in Singapore, KSD’s market reach spreads across the Asia-Pacific region with a presence in China, Thailand, Malaysia, Vietnam, Indonesia, Qatar, and the United Arab Emirates (UAE). “Naturally our strength lies in the Asia-Pacific region, but in terms of global expansion there are a lot of opportunities, such as Indo-China, northern Asia, and even still within the Asia-Pacific sector itself,” adds Richard. Following the merger, the new business collective has undergone a key internal restructuring, which has seen all three companies move from their separate offices across Singapore to one central location and warehousing facility. This has been an essential step in achieving the integrated service KSD wishes to be known for.”
It is this one-stop-shop package that Richard believes, fundamentally distinguishes KSD from the rest: “A lot of our competitors can perhaps provide part of our portfolio in terms of products such as pipes and valves, whereas we can offer our customers a vast array of products to all parts of the energy sector including upstream, downstream and petrochemical applications. But we do not consider ourselves a jack-of-all-trades, we actually do have technical expertise within the company as well, which enables us to offer advice on specific technical issues that may arise in order to support our clients’ requirements. Within this, we only represent quality products, and pride ourselves on being able to provide the products that we believe are the highest standard from the world’s quality manufacturers.”
Looking ahead, KSD is keen to move beyond just distribution and stocking into offering value-added services such as repair and maintenance programmes, engineering and even fabrication of packages or skids. However, some of these value-added services are already being offered to a limited extent. In this respect, the company will eventually be able to offer its customers more of a turnkey solution. Although KSD itself has still to integrate these capabilities into its portfolio, the company already has experience in such a set-up in previous projects through SSH Corporation. “One of the biggest projects we have ever been involved in was an ethylene cracker complex (ECC) for Shell Eastern in Singapore, where we provided all the piping materials, fittings, and flanges. As well as procuring the products from our sources, we supplied the logistics services, warehousing facilities, inspections, and even IT system monitoring as a complete holistic solution,” elaborates Richard.
These ambitions appear not to have been hampered hugely by the recent unfavourable economic conditions. In fact, situations such as the major BP disaster have put a sharp focus on quality, which has benefited KSD’s high standard of portfolio. As such, Richard’s strategy for the business remains relatively straightforward: “Our future plans are to continue to expand our product range to fill any gaps in our offering, and grow in terms of our global presence and networks. Our aim is really to become a preferred supplier to our customers, and to be able to provide them with this complete holistic response with a larger range of value-added services,” he concludes.
Services: Equipment distributor and stockist
Source: European Oil & Gas Magazine
KS Energy Limited announces that its subsidiary, KS Distribution Pte Ltd has secured two project contracts with an established shipyard from China to supply rig components worth approximately S$70 million (in total for the two contracts) for the construction of two jack-up rigs.
KS Distribution Pte Ltd is a 55% subsidiary of the Company. Under the terms of the contract, KSD is to provide integrated procurement and project management services to the shipyard from China which is constructing two jack-up rigs. Delivery under this contract will commence from the second half of FY2012 with completion targeted by the first half of FY2014.
Source: Offshore Energy Today.com (The industry’s upstream news provider)
IT was Albert Einstein who observed that not everything that can be counted counts, and not everything that counts can be counted. It is a statement that rings true for business today. Many companies know that their most important assets are intangible.
Take a company’s reputation, for instance. A good name developed assiduously over many years can be the difference between getting a deal done or having it fall through. When moving into a new market, your company’s reputation plays a big part in the number and quality of opportunities you are likely to secure.
Judgement and instinct are two other qualities that cannot be easily measured, but which may be critical factors in the success or failure of a business venture. Another is local knowledge – knowing the right way to approach a problem varies markedly from country to country.
When all these intangible elements come together in one company, the results can be spectacular. An example of such a company is SSH Corporation (SSH) – one of the largest industrial material and welding products suppliers in the region. It operates in the intensely competitive oil and gas, petrochemical and marine industries.
SSH’s reputation has been developed over 60 years. The experienced management team has shown both judgement and sound instincts in its quest to become a major international player.
The company has grown rapidly in recent years, and expanded its reach to China, Thailand and Malaysia. Headquartered in Singapore, SSH’s geographical presence now covers China, Indonesia, Malaysia, Papua New Guinea, Thailand and Vietnam.
SSH is a wholly-owned subsidiary of KS Distribution and a member of the KS Energy Group, one of the leading distributors of oil and gas equipment, spare parts, consumables and industrial products in the region. Listed on the mainboard of the Singapore Exchange, the KS Energy Group distributes more than 70,000 oil and gas-related products under more than 300 international brands.
SSH got another boost last week when it won the inaugural HSBC Leading International Business Award at the Singapore 1000 gala dinner. The award recognises the company’s success in venturing the risks associated with any overseas venture – in addition to maintaining a sound a reputable business in Singapore.
In order to win the award, SSH had to secure the highest possible credit rating for a company in Singapore – the prestigious DP1 rating. It also had to demonstrate that it was a dynamic and growing company, ahead of its competition with overseas revenue of at least S$100 million. The award was presented to SSH by HSBC Singapore’s group general manager and chief executive office Alex Hungate.
Working with partners
One quality observed about SSH’s management staff is that they do things the right way – taking steps to develop their capacity while understanding and providing for the risks involved. There are many lessons to be learnt from studying SSH’s internationalisation. In fact, the company is a case study on what to do right when expanding internationally.
When expanding its operations abroad, SSH makes smart use of the local knowledge its banking partners have in each of the countries it is interested in. Getting the right advice on the requirements of doing business and trade in different countries saves the management from having to learn the hard way when something goes wrong because one is unfamiliar with a particular country’s way of doing things.
The company understands the benefits of using trade finance and import/export facilities to manage its high volume of sales, as well as ensuring that it has sufficient cashflow to continue on its grow path.
Asked about the group’s biggest hurdle in expanding overseas, SSH chairman Kris Wiluan says: “Our greatest challenge was the need to understand and adapt to different cultures and business practices both internally and externally. Communicating between different cultures adds an element of complexity that is less prevalent in a domestically focused company.”
So what advice can Mr Wiluan offer to other companies seeking to enter the global market?
“Be prepared with a business plan supported by a strong cohesive management team. Demonstrate awareness of the other culture and an understanding of the foreign market you are preparing to enter without losing sight of the company’s core values.”
A rapid way of gaining an understanding of a new market is to work with an international banking partner that already has experts on the ground. As Mr Wiluan explains: “HSBC’s global network facilitated our international growth strategy by providing us the assistance we needed to expand into markets previously unreachable.”
HSBC has helped the company with the customisation of its trade documentation – a technical area which may seem complicated to the uninitiated, but which will make all the difference if something goes wrong.
Then there are the ever present risks associated with currency fluctuations. This is a risk that any company can take steps to manage by working with a banking partner that understands how different currency instruments can be used to achieve a company’s objectives.
By examining the risks inherent in international trade, and putting in place measures to manage them, SSH is an example of a company that has made the right moves and reaped the benefits.
By Tan Siew Meng, Head of Commercial banking for HSBC Singapore | 25 January 2011
Source: The Business Times
Actis and KS Energy Announce the Launch of KS Distribution After the Successful Completion of Offers for Aqua-Terra and SSH
SINGAPORE, May 6, 2010 /PRNewswire/ — Actis, a leading emerging markets private equity specialist, is pleased to announce the completion of its investment in KS Distribution Pte Ltd (“KS Distribution”) following the approval by the Singapore Courts of the inter conditional schemes of arrangement in respect of Aqua-Terra Supply Co Ltd (“ATS”) and SSH Corporation Ltd (“SSH”).
The creation of KS Distribution, in an S$320 million deal funded by Actis and KS Energy, aims to create Asia’s largest oil & gas and marine products distribution business with more than 60,000 product lines across nine countries. Actis has invested S$142 million in cash to acquire a 44.375% stake. KS Energy will hold the other 55%, with the remaining 0.625% held by Mr. Koh Soo Keong, CEO of KS Distribution.
The final closing of the deal concludes a four-month approval process that began in December 2009 with the public announcement by Actis and KS Energy of the proposed consolidation. The proposal received strong shareholder support in March 2010 at the shareholder meetings of KS Energy, ATS and SSH. Following the lodgement of court orders approving the inter-conditional schemes of arrangement, ATS and SSH are now wholly-owned subsidiaries of KS Distribution.
Commenting on the announcement, Mr. Paul Fletcher, Senior Partner at Actis, said, “Kris Wiluan is one of Asia’s most talented entrepreneurs; we are inspired by his vision and share his ambition to create a unique pan-Asian oil and gas business. Actis enables businesses to grow and the team will move quickly to consolidate operations across the companies, achieving synergies and increasing profitability.” KS Energy has held stakes in ATS and SSH since 2006, and the success of this transaction completes their integration. Winner of the Ernst & Young Indonesian Entrepreneur of the Year Award in 2009, Mr. Kris Wiluan, Chairman of Singapore’s mainboard-listed KS Energy Services Limited, said, “We are very pleased to bring in Actis, a strong partner whose proven business building skills and in-depth knowledge of emerging markets and the oil & gas industry will contribute significantly to the growth of KS Distribution. Actis’s investment facilitates my long-held vision of building the region’s leading Integrated Energy Supply and Services Hub. With its strong track record and operational expertise, Actis will be an invaluable long-term partner on our journey to increase the scale and reach of KS Distribution, and provide greater value-added services to our customers.”
Mr. Gary Addison, Partner at Actis in Southeast Asia, led the deal team for Actis. He said, “This was an extremely complicated transaction and one of the first deals of its kind in Asia. It is a significant transaction for Actis and strengthens our position as a leading private equity investor in South East Asia. The leadership of Mr. Kris Wiluan, coupled with our operational insight and knowledge of emerging oil and gas markets like Africa and Brazil, will provide the opportunity to create one of the region’s most attractive oil and gas services companies.”
The transaction also builds on Actis’ previous investments in the region, which have included Unza, one of the largest manufacturers of consumer products; APEC, which is involved in oil and gas exploration in Indonesia; and Teknicast, one of the largest high precision die-casting companies in the region.
Actis is a leading private equity investor in emerging markets, with US$4.8billion funds under management and a growing portfolio of investments in Asia, Africa and Latin America. Actis has over 100 investment professionals on the ground in 9 offices worldwide.
In Asia, Actis is a longstanding, experienced private equity investor with a 60-year track record across the region. Actis has over 40 investment professionals in offices in Beijing, Mumbai and Singapore, and manages more than US$2.4 billion in funds across the region.
Actis’s global platform encompasses top teams in some of the world’s key growth markets for oil and gas equipment, including China, Brazil and Nigeria. Actis has been awarded African Private Equity Firm of the Year by Private Equity International magazine, for the last three years. In 2008, Zero 2 IPO named Actis one of the Top-10 private equity firms in China.
Actis announced the closure of its global emerging markets fund, Actis Emerging Markets 3 (AEM3), in December 2008 with commitments totalling US$2.9 billion. The fund received commitments from more than 100 blue-chip investors, including institutions in Singapore and Malaysia, and sovereign wealth funds, public and corporate pension funds, insurance companies, banks, and university endowments from around the world.
This will see the privatisation of Aqua-Terra Supply and SSH Corporation, to become wholly-owned subsidiaries of KS Distribution.
KS Energy said it will own 55 per cent of KS Distribution, while 44.375 per cent will be owned by funds managed by Actis, a private equity investor.
The remaining 0.625 per cent will be held by the CEO-designate of KS Distribution.
The business consolidation is expected to be completed in May this year, pending court approval.
KS Energy said the move will provide the platform to expand into other markets and create more synergy.
“The objective is to create better shareholder value by making the company and the group more efficient by putting the team together, have more cross-selling and have less inter-party transaction problems,” said Kris Wiluan, chairman and CEO of KS Energy Services.
Source: Channel NewsAsia