KUALA LUMPUR: Being in the oil and gas (O&G) industry means a company is almost always subject to external risks, especially now as low crude oil prices are keeping investors and financial institutions away.
But that has not stopped ICE Petroleum Sdn Bhd, which is principally involved in EPCC (engineering, procurement, construction and commissioning) jobs, specialising in the fabrication of utility tanks and pipelines, from expanding downstream and outward into the Middle East, where prospects for growth are aplenty.
“While crude oil prices go down and a lot of smaller players are exiting the market, we are making money,” said ICE Petroleum group managing director Abdul Jalil Maraicar in an exclusive interview with The Edge Financial Daily.
“People are still buying [crude oil]. When the maturity time comes for you to receive the delivery of those crude, you need to store it somewhere, and that is where we come in,” Abdul Jalil said.
ICE Petroleum, formerly known as PT Technic Engineering Sdn Bhd, was previously a unit of Singapore-listed Hiap Seng Engineering Ltd before it was bought over by Abdul Jalil and executive director Muhtar Hashim in February 2015.
Some may know the O&G duo for their previous venture, where they turned around loss-making PT Technic in 18 months from 2013 to 2015, with a profit in 2014 exceeding the RM3 million guaranteed for its 51%-owned subsidiary APFT Bhd.
The same is being done to ICE Petroleum. “We have always known what we want to do when we acquired the company,” said Abdul Jalil. With the new management, the company is shifting from a “subcontractor” mindset to taking on bigger projects in the downstream O&G market.
For the financial year ended March 31, 2016 (FY16) — when Abdul Jalil and Muhtar were just 13 months with the company — ICE Petroleum’s revenue was up 96.92% to RM61.59 million from RM32.47 million a year ago. Similarly, full-year gross profit stood at RM9.88 million, more than double the RM3.73 million achieved in FY15.
They have bagged two cornerstone contracts so far, namely the development of utility tanks and pipelines in an integrated petrochemical facility in Southeast Asia, valued at over RM650 million.
This involves the construction of an utility tank measuring close to 90 metres in diameter, making it the biggest utility tank ever built by ICE Petroleum so far.
“[These are the] two signature projects that put us at the forefront as a large EPCC contractor,” said Muhtar.
ICE Petroleum is also hoping to bring in non-ringgit revenue contracts by the fourth quarter of 2017, which Muhtar said “will make a difference” in boosting the company’s further growth outside of Malaysia.
“We have become one of the pre-qualified contractors for one of the larger national oil companies (NOCs) in the Middle East,” Abdul Jalil added. The award essentially puts ICE Petroleum ahead when NOCs tender contracts in the future, he said.
The Middle East is ICE Petroleum’s core area after Southeast Asia. Countries in which the EPCC player has a footprint includes Malaysia, Thailand, Vietnam, Brunei, Singapore, Indonesia, Sudan and Egypt.
“The company has joint ventures with European companies to enter new markets in the two areas. We are starting to get the attention of the market,” said Abdul Jalil.
Mulling a listing
Perception towards the company is “half the battle” when doing business, said Abdul Jalil. This has led the duo to consider going for listing this year — as far as in the UK — mainly to improve the confidence of clients, partners and the financial sector in the company.
“That [consideration] is a result of where we have positioned ourselves in the Middle East with the European partners. It is about managing perception.
“London is a neutral [choice] for us. [But] to our Middle Eastern clients, London feels more like home. And we can be a Malaysian company that has gone abroad, and come back to the rest of the world [from the UK],” said Abdul Jalil.
He, however, did not discount the possibility of listing on the local bourse. Whichever capital market they tap into, Abdul Jalil said the projects they have won over the past two years have translated into better reception by potential investors — both locally and abroad.
“The financial institutions here are with us. We have not closed our doors to other bourses … . but we don’t want to be just ‘jaguh kampung’.
“It’s possible for us to go out, win outside our jurisdiction, come back [and] any additional questions [will be] answered,” he added.
Either way, the listing exercise can help ICE Petroleum boost its war chest to further comfort lenders when seeking institutional funders for bigger projects, which they will soon be able to take on.