1. Objectives/Scope

The Integrated Logistics Control Tower (ILCT) aims to enable vessel sharing across 15 Malaysia producing Petroleum Arrangement Contractors (PACs) to lower the logistics cost across upstream operations in Malaysia. Prior to this, each PAC operated their own vessels. Opportunities for synergy and sharing between PACs were rarely tapped resulting in fragmented demand and specification, which in overall leads to higher cost.

2. Methods Procedures, Process

ILCT was triggered from a heuristic study in June 2016 and the study showed the potential of RM100 millions yearly cost saving from reduction of 10-20 vessels through fleet sharing across the producing PACs. A joint project management team was formed comprised of key logistics personnel from PETRONAS and PACs to execute ILCT. Operation simulations were conducted involving stakeholders from operations, Health, Safety and Environment (HSE), legal, finance, and procurements to identify current limitations, and the short, medium and long term solution in order to ensure such sharing will not compromise HSE and production performance.

3. Results, Observations, Conclusions

The joint project management team has encountered multiple obstacles towards ILCT implementation such as vessel priority, marine HSE standardization, vessels technical specifications, joint coordination agreement, liabilities, cost allocation, accumulative contract value re-distribution, and governance matters. In overcoming the obstacles, the team has established ILCT Committee and ILCT Manual. The ILCT Committee comprises of PETRONAS and PACs members with the key roles to control the overall allocation of vessels, mediate any conflict, and improve ILCT performance. The ILCT Manual was jointly developed by PETRONAS and PACs to govern the implementation of ILCT and is regularly referred by PACs as guiding principle in operating vessels.

This national synergy resulted in 12 vessels reductions from 142 to 130 vessels that equivalent to RM100 millions of cost savings yearly. PETRONAS and PACs benefit from this synergy mainly through optimized traveling route, which results in lower Daily Charter Rate and fuel cost. It also supports PETRONAS’ agenda to nurture capabilities of local vessel owners to become regional vessel operators. The key success of ILCT lies on PETRONAS’ role as the regulator for Malaysia upstream industry, by orchestrating the cooperation across PACs in syncing the common alignment towards achieving the desired outcome of ILCT.

4. Novel/Additive Information

Malaysia's ILCT is the biggest integrated offshore marine transportation arrangement in the world, with 120 vessels involved in serving offshore transportation needs to 198 producing fields in East & West Malaysia.

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