Energy Ventures wants to set up base in Batam

Energy Ventures wants to set up base in Batam

SINGAPORE (Reuters): Energy Ventures Inc (EVI), U.S.-based manufacturer of oil field products, is seeking to establish a world class production site on Indonesia's Batam island, a senior EVI official said on Thursday.

"We are going to develop a manufacturing presence in Batam for completion tools and offshore equipment. I can assure you developments in Batam are going to be very significant," Bernard Duroc-Danner told Reuters in an interview.

"This is a global market, we look for such locations all the time. This one (Batam) has been selected as a particularly excellent one."

EVI earlier signed a strategic alliance with Indonesian oil and gas pipeline manufacturer P T Citra Tubindo that will give the company a stake in a drilling tools plant jointly with Citra in Batam which is about 20 km off Singapore.

"We are taking ownership in a plant and providing technology to make a line of drilling tools. We are also going to have a marketing venture," Duroc-Donner said.

EVI is looking to invest "well in excess of US$10-20 million" over the next five to 10 years to turn its manufacturing base in Batam into a formidable force that will raise its share of the Asian market substantially.

Currently, between five and 10 percent of EVI's revenue comes from Asia and Duroc-Donner hopes to raise this to 20-25 percent once its investments in Batam are completed.

Its current revenue share from Asia, he said, is "completely out of synch with the importance of the market."

Duroc-Donner said group revenue in 1997 is expected to reach around US$850 million compared to US$478 million in 1996.

"Wall Street expects revenues to be circa $1.3-1.4 billion in 1998, which is not unreasonable," he said.

EVI has a drilling tools plant in Singapore which contributes around US$10-15 million to group revenue but the plant will not be expanded as the focus of its manufacturing site is now on Batam, Duroc-Donner said.

The company has around 50 manufacturing plants and almost all of them are located in North and South America.

On the financial and monetary crisis sweeping Southeast Asia, Duroc-Donner, who has faced similar turmoils in South America and Mexico where the company has a big exposure, said that the impact on oil and gas exploration would be minimal.

"In spite of all these things, hydrocarbon demand has continued to grow. We would have had a higher growth but now this will put a dent in the demand," he said.

Duroc-Donner said that the company was also attracted to the region by the tremendous oil and gas exploration works that are taking place, especially the multi-billion dollar Natuna gas field developments.

Natuna is the biggest gas field development in Asia with 222 trillion cubic feet of general reserves of which 46 trillion are commercially recoverable.

The first gas is expected to be recovered in 2003 with investments running into over US$40 billion for the entire project.