Tuesday, December 29, 2009

Oil & Gas Industry and Petronas VDP

Oil & Gas Industry

1) Generally, petroleum industry can be divided into 2 main sectors namely Upstream and Downstream. These main activities are as follows:

i) Exploration
ii) Development of oil and gas basin
iii) Oil and Gas production

i) Refinery
ii) Processing and dilution of gas
iii) Marketing
iv) Gas reticulation process
v) Manufacturing of petrochemical items

2) Basically, crude oil produced from upstream sector would market by downstream sector either in crude oil or petroleum form produced from processed crude oil.

3) In the meantime, gas would send to downstream sector to be liquidfied and sell in the form of processed gas and petrochemicals.

Petronas VDP

4) The intention of this program is to produce as much as possible a competitive and developed tekno-entrepreneur in manufacturing of products/components for high and medium scale technologies. The intention of implementation of Petronas VDP is only for the sectors that Bumiputera entrepreneur less or haven't involved yet.

5) This program possibly would increase or upgrade skill and capability of Bumiputera entrepreneurs in the that particular field, in line with government initiative to create Bumiputera community in industrial and trading sectors.

6) Thus, Petronas VDP is one of the strategy to support and would become a catalyst of Bumiputera involvement in Petroleum industry.

7) If we look the intention of Petronas VDP as mentioned above, we would find it such a good idea to support Bumiputera entrepreneur involvement in high and medium scales technologies. But what I would like to discuss here, is the implementation of this VDP.

8) As a person who indirectly involved in Oil & Gas industry, I have found the implementation this VDP seems do not covering the whole Bumiputera entrepreneurs community in this sector. There were actually small Bumiputera entrepreneurs are benefited from this program which had monopolized certain SWEC codes, consequently, the other Bumiputera entrepreneurs involvement in that particular codes were undermined.

9) Recently, I have heard that VDP vendor is trying to apply VDP for skid packages. That mean the involvement from other Bumiputera entrepreneurs would significantly reduced because skid packages would includes with Fuel and Gas Conditioning Skid Package, Liquid Handling Package, Some Thermal Skid Package, Gas Coalescer Skid Package, Fuel Gas Skid Package and many more.

10) For your info, these skid packages are very commonly require by Petronas Carigali especially for offshore exploration and onshore. If the VDP awarded to this vendor, the affect on this decision would possibly force the other Bumiputera entrepreneurs to close their business.

11) To be fair to everybody, Petronas must look on this matter as it would possibly increase the cost and not viable for Petronas in the future. Thus, the prime intention of VDP to create a Bumiputera entrepreneurs community would not success due to this unwise implementation.


  1. Sir, what is your opinion on this news?

    --------- as of 4th May 2011

    Amarinth gains Petronas approved vendor status

    4 May 2011 | Updated: 4 May 2011 10:25 am

    Woodbridge, UK – Amarinth, a supplier of centrifugal pumps and associated equipment to the industrial, chemical and petrochemical industries, has gained Petronas approved vendor status – the certification necessary to provide equipment into the majority of the oil and gas projects in the Malaysia region.

    According to Amarinth, the deal gives it more access to the Malaysian market for the oil and gas industry, especially for its range of API 610 centrifugal pumps, used in onshore and offshore applications.

    Read more: http://www.theengineer.co.uk/channels/process-engineering/amarinth-gains-petronas-approved-vendor-status/1008491.article#ixzz1LQseGSxX

  2. Dear Razaleigh,

    Thanks for the comment. For your info, centrifugal pumps or other rotating equipments are not my expertise, we are more specialized in static equipment.

    Anyway, after reading through the given link, I reckon Geveke Oil & Gas Malaysia Sdn Bhd is Nederland based company. I presume the local participation in this company could be very minimal, or possibly just as sleeping partner as to comply the local regulation set by Petronas & government - I could be wrong, I hope so. Considering the foreseeable huge opportunities offered by local O&G industry and Petronas, this foreign company decided to penetrate our O&G market.

    That is where VDP should play a role - as I have elaborated above, the purpose of VDP is to equips our bumiputera entrepreneur with the right sense of business attitude and skill as well as acquiring knowledge and know how on O&G engineering discipline through technology transfer. The special privileged has been given to every local VDP vendors i.e. direct award or etc - considering their huge investment with foreign partners.

    As I has criticized before, the Achilles heel of any created system or invention is always due to weak implementation and the wrong attitude of its benefiter and implementer. It is same with NEP, the system is already well crafted, unfortunately we always tend to abuse it.

  3. VDP sucks!

    -PCSB proj. Engr-