How Southeast Asian Upstream Operators Are Digitalizing

Abstract

Three of Asia’s biggest upstream operators are now in the midst of full-scale digital adoption. The companies are beginning to see results, but none is counting on a “big bang” in development of the technology any time soon. Over the past couple of years, Malaysia’s Petronas, Shell Malaysia, and Thailand’s PTT Exploration and Production (PTTEP) have each launched digital programs across their organizations in hopes of improving their exploration, development, and production work-flows and results. The change has come with a number of growing pains and lessons learned through trial and error. The leaders tasked with overseeing implementation, however, want to keep the growing pains to a minimum. For that reason, they are taking a deliberate and methodical approach to digitalization. This is especially true for Petronas, an integrated, state-owned firm that is both Malaysia’s main energy producer and chief revenue generator. Risk is not viewed favorably within the company. Petronas officially embraced digital transformation in 2017 after Tan Sri Wan Zulkiflee Wan Ariffin, president and chief executive officer, made digitalization a key focus in the company’s growth plan. As part of its implementation efforts, Petronas that year established the Center of Digital Excellence under the stewardship of Wan Shamilah Saidi, chief digital and information officer. With the integration of all digital initiatives under one platform, focusing project development, the company’s different units no longer work in isolation. “We do not believe we have to develop everything ourselves from scratch,” said Nasir Hj Darman, Petronas chief technology officer of group research and technology, on the sidelines of a recent digitally-focused SPE executive forum in Kuala Lumpur. The company’s development program consists of a mix of internal incubation, external collaboration, and acquisitions. The company’s digital strategy starts from the top with leadership directing development projects, while “bottom up” idea generation is encouraged from its engineers and scientists, Nasir explained. A ringfenced budget dedicated to technology development ensures those engineers and scientists are clear from the outset on the resources available to them. To control the quality of its research, the company established the Petronas Technology Management System that determines how projects are developed. It evaluates all projects by employing the Technology Readiness Level system to gauge technological maturity. “That is one of the ways for us to reduce risk,” Nasir said. “We want to be No. 1, but we do not want to be guinea pigs.” Khoo Choo Beng, Sarawak Shell Berhad general manager, business excellence, offered JPT similar views during the same gathering of Asia-Pacific (APAC) industry and tech executives. A regional unit of one of the largest multinational, integrated oil and gas companies in the world, Shell Malaysia, too, is a sprawling organization made up of many different divisions. Managing technology development can become unwieldy and requires structure and discipline, including in its upstream unit.