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Interview with Pak Kris Wiluan – Managing Asia


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KS in jack-up newbuild teamwork

By TAN HWEE HWEE Singapore

Jack-up tie-up: KS Energy chief executive Kris Wiluan

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.

Great leap ahead for KS Energy

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.

KS Energy Limited Financial Results

February 22, 2012KS DistributionNews

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