Kencana Petroleum wins oil rig project from Thailand-Malaysia authority
Kencana Petroleum has won an oil and gas contract worth some RM 780 mm from the Thailand-Malaysia Joint Development
Under the contract, Kencana Petroleum is the main contractor for the engineering, procurement, construction, installation and commission (EPCIC) of an oil rig on the east coast of Thailand. The job, which was awarded after a competitive bid, also includes laying pipelines.
But who exactly is Kencana Petroleum?
It is an integrated oil and gas service provider -- focusing on the production aspects -- and is a company in the Kencana Capital stable, which has capabilities in the engineering and fabrication of oil and gas production facilities, both onshore and offshore.
The fabrication work is done by Kencana HL while the design-engineering subsidiary is Kencana Bestwide. Together, the companies are carving out a niche for themselves in the world of oil and gas.
Abroad, Kencana Capital owns Strarch Australia, a company that constructs aircraft hangars with several jobs
overseas. Kencana Capital is an investment holding company with several shareholders, including Datuk Mokhzani
“It [the JDA contract] is our largest contract from the oil and gas sector to date,” says Mokhzani.
Although Kencana Capital will be subcontracting parts of the project to other parties, and has also engaged a Thai
party to work with, Mokhzani hopes that the project will help put the company on the radar screens of the bigger
“We are not huge like some of the players here, so we carve our niche by working on specialised jobs,” he says.
The company’s first international foray was when it was awarded a project -- an EPCIC job -- in south Sudan in
2004. It was part of a Malaysian consortium. The facility in Sudan was recently completed despite various
complications and difficult working conditions. In fact, the oil was piped to shore for the first time on June
“We are the first and only Malaysian consortium to finish an oil and gas project in Sudan,” says Mokhzani.
Going forward, Mokhzani explains that with Kencana Petroleum, he does not wish to rush into the expansion of the
“I don’t want to expand like crazy -- we want to keep growing but we want to take a more measured approach,” he says. “I don’t want to have a huge [fabrication] yard and no work.”
Project-wise, the company is currently working on a vertical oil extraction structure in Lumut for a New Zealand
company. The structure will be 104 m tall when complete, and will be shipped off to New Zealand. But more
importantly, Kencana Petroleum is poised for its flotation on the Main Board of Bursa Malaysia, which it tentatively
plans on doing by the end of the year.
“Our expansion requires injecting more capital into the business, and the jobs that are out there are big -- we need the financial resources,” explains Mokhzani on Kencana Petroleum’s desire to list.
Kencana Petroleum has its roots in the 1980s. It originated as Kencana HL, a fabrication company that eventually became the subsidiary of Kencana Petroleum. Mokhzani invested in Kencana HL in 2001, when it was called HL Engineering.
“Back then [in 2002], HL Engineering was still small and oil was about $ 27 per barrel,” he says. “Looks like we caught it at the right time.”
HL Engineering came with a 20-acre fabrication yard in Lumut, Perak, which has now been expanded to 53 acres, with
another 150,700 sq ft under construction. Mokhzani also invested in Bestwide, now called Kencana Bestwide, which
focused more on design engineering and project management.
“We found that the two companies complemented each another, and took it from there,” he says. The company’s big break, however, only came in 2002, when Murphy Oil gave it a project.
“Murphy [Oil] gave us a small-large job -- it was small for the industry, but large for us,” explains Mokhzani.
Completing the project was somewhat of a badge of recognition for Kencana Petroleum and by 2003, the company was
confident enough to venture out to the Middle East and Africa. Kencana Petroleum was incorporated last year to
facilitate the rationalisation of the business and group the two companies -- Kencana HL and Kencana Bestwide --
under one umbrella.
For those who are wondering, Mokhzani makes it very clear that he is not “re-entering the corporate scene” per se. “I’m not going to be a corporate player,” he says firmly.
He adds that previously, when he was at the helm of Tongkah Holdings and Pantai Holdings, the companies acted more as
holding companies than operating companies, and they had various businesses. Kencana Petroleum, on the other hand, is
more of an “operational company”.
“The road that we will take is that we’re listing the operating company -- not the holding company,” says Mokhzani.