Singapore: ConocoPhillips’ business hub in Asia

by Jan Hester, photography by Patrick currey

Since becoming an independent, sovereign nation in 1965, Singapore has transformed itself into an economic power and an important business hub. The World Bank recently ranked it as one of the easiest countries in the world in which to do business. More than 37,000 international companies base their operations out of Singapore — including 7,000 multinational corporations – with more than half of those running their Asia Pacific businesses from the city state, according to the country’s Economic Development Board.

ConocoPhillips is one of those companies. Its Singapore office serves as its Asia Pacific and Middle East (APME) commercial and trading hub, and the office provides functional support to business units throughout the region in areas such as medical, business development, supply chain, finance and human resources.

ConocoPhillips’ APME operations consist of producing fields in China, Indonesia, Malaysia, Qatar, Australia and Timor Leste, as well as liquefied natural gas (LNG) production and export facilities in Australia and Qatar.

Service provider to upstream

Mark Sherwill, manager, Singapore Office & Asia Crude Marketing, joined the company 15 years ago to help commercialize the Bayu-Undan field, located in the Timor Sea, and the company’s first regional liquified petroleum gas (LPG) projects. A 500-kilometer pipeline transports gas from Bayu-Undan to an LNG facility located in Darwin in Australia’s Northern Territory, while the LPG and condensate are exported from the floating storage and offloading unit Liberdade.

Mark Sherwill, manager, Singapore Office & Asia Crude Marketing

“Bayu gave us a toehold in the industry, and we started to trade LPG,” said Sherwill. “It was a challenge. Unlike crude, the LPG paper market lacked liquidity, so mitigating pricing risks in a falling market was difficult.”

In 2006 Sherwill oversaw the opening of ConocoPhillips’ office in Timor-Leste. At the time of the ConocoPhillips/Phillips 66 split, he was offered the opportunity to manage the crude trading team in Singapore.

“Getting the offer was quite a surprise, since I had no prior crude experience, and the role has been one of the most rewarding assignments in my professional life,” Sherwill said. A mechanical engineer by education, Sherwill sees his team’s role as a “service provider to upstream” and emphasizes the importance of providing the best value to the company.

The Singapore crude team now handles equity marketing — selling ConocoPhillips’ portion of what comes out of the ground — for eight grades of product, as well as serving as marketing agent for other Bayu-Undan project participants. The Singapore team trades regularly with about 20 counterparties, 18 of them in Singapore.

“We have production in five countries and sell to refineries in ten, within North Asia, Southeast Asia and the Oceanic region, each with its unique culture, politics, languages and negotiation styles. The fantastic melting pot of cultures is what makes it challenging, rewarding and exciting.” Sherwill said.

Sherwill notes that relationships play a critical role in the region.

“Trust and cultural understanding developed over years of interacting enable us to have honest conversations when negotiating and problem-solving,” Sherill said. “For example, we have an 11-year working relationship with a Japanese company as sole buyer for our Bayu LPG. The overall proposition isn’t just price, it’s relationship and broader value. We hope this knowledge will also aid our U.S. position as we expand our reach beyond North America.” 

According to Sherwill, Singapore is a great place to operate and to work.

“It’s safe and secure, and it offers a reliable tax and legal structure. Being located in the Asia Pacific oil and gas hub, we have greater sensitivity to market influences, ensuring we stay tuned into price movements and industry developments.  Also, besides cost optimization, the centralized office provides access to a pool of talented professionals,” Sherwill said.

“It’s a pleasure working with the people here. There’s a real sense of community in this office. We care about each other, and my colleagues have a strong work ethic.”

Marketing LNG

Asia Pacific Joint Venture LNG Manager Mark da Roza has been with the company for 29 years and arrived in Singapore in 2010. He and his team market LNG for ConocoPhillips’ Asia Pacific business units.

Mark da Roza, Asia Pacific Joint Venture LNG Manager

With his unique pedigree, it’s no surprise da Roza feels at home in Singapore. Born in the U.K. to a Eurasian father from Hong Kong, da Roza has deep roots in Asia. His last name is of Portuguese origin, reflecting his father’s ancestral ties to the former Portuguese colony of Macau.

Eight years ago, da Roza established the company’s Singapore LNG trading and origination desk.

“Back then, for ConocoPhillips and the market generally, spot LNG trading was a nascent business. We sold LNG from the Darwin facility on a term basis, placing occasional spot cargoes into the open market; APLNG was not yet online,” said Da Roza. “The business involved mainly long-term contracts. Since then, the market has developed and become much more liquid, supporting more spot, ad hoc, trading activity.”

Darwin LNG liquefies gas from the Bayu-Undan field. Since 2006, the facility has safely produced an average of one cargo per week for customers in Japan.

The APLNG liquefaction facility in Gladstone is a joint venture between ConocoPhillips, Origin Energy and Sinopec. ConocoPhillips operates the downstream LNG production facility and manages the marketing of cargoes not otherwise committed to APLNG’s long-term customers, Sinopec and Kansai Electric.

With production at Darwin LNG on the decline, da Roza is focused on negotiating sales agreements for the supply of LNG from gas produced at Barossa, located offshore Australia in the Timor Sea.

Plans are for Barossa, now in the early stages of engineering design, to backfill the Darwin LNG facility starting around 2023, when the gas supply from Bayu-Undan is expected to be exhausted. The current plan is to pipe gas from Barossa to a floating production storage and offtake vessel and then by a spur pipeline into Bayu-Undan for delivery on to Darwin LNG.

“Before the first cargo is produced, still five or six years away, we need to start working on our LNG marketing plans,” da Roza said.

Da Roza’s biggest ongoing challenge is marketing spot LNG from the APLNG joint venture agreement.

“We provide LNG marketing services to APLNG, but we can’t control when the cargoes will be available to load. Volumes and loading dates can change with little notice. Our spot customers can choose to pick up the LNG from APLNG’s jetty using their own vessels, or we can charter a vessel and deliver the product directly to their receiving facilities,” Da Roza said.

“We are extremely well-supported by our Houston-based Commercial Marine team, whom we call on to charter a vessel on a short-term basis when the need arises. Once we agree on the terms of a sale, we need to get authorization from numerous functional reviewers and from APLNG’s directors before a deal can be concluded. We do this for every single spot sale.”

Da Roza enjoys living in Singapore and appreciates the people he works with.

“Achieving success often comes down to being able to rely on people to work together as part a team,” da Roza said. “I’m blessed to work with very supportive people who are up to the challenge of meeting the diverse requirements of our business units throughout the region.”

Managing cost of supply

John Lim, manager, Supply Chain, Asia Pacific and Middle East, was born and raised in Singapore. Currently a reserve officer in the Singapore Navy, he trained as a naval warfare and combat officer in the U.K. and Singapore. Lim attended university in U.K. on a prestigious Singapore Armed Forces Merit scholarship and joined ConocoPhillips in 2009.

John Lim, manager, Supply Chain, Asia Pacific and Middle East

Lim and his team manage the company’s regional network of suppliers, from negotiating commercial contracts on rigs and drilling services, to support services for LNG plants, to logistical support for material management in the warehouse, to offshore helicopters for travel to and from Bayu-Undan. They also provide strategic support to business units throughout the region, looking for opportunities to reduce cost of supply.

One way they seek to reduce cost of supply is through increasing bargaining power by aggregating company spend regionally and globally.

“It’s about relationships and people. We look for opportunities to increase our regional bargaining power,” said Lim. “For example, we’ve identified synergies with Norway because of the common need for offshore subsea equipment with generic specifications, such as the wellheads used at Ekofisk and Eldfisk. So where it’s possible, we share market intelligence and information about what works and what doesn’t.

“Since we’re now a smaller company, we work to persuade suppliers to give us the same treatment as the bigger guys. It’s more about marketing our company brand now, honoring agreements and following our SPIRIT Values.”

Like Da Roza, Lim is currently focused on the Barossa project, providing support to help negotiate better prices, including services and equipment for the FPSO.

“Barossa is a multibillion-dollar project, so we’re working to get the best possible contract strategy,” said Lim.

The Singapore Supply Chain team also helps manage the ConocoPhillips Business Service (Beijing) Co., Ltd. Launched in 2014, the center addresses demand from the company’s global business units for products and services sourced from China. The team has worked together to support activities in the Lower 48, Alaska, Canada, U.K., Australia, Indonesia and Malaysia business units.

“As a company, we buy a lot of items from China,” Lim said. “The business services center helps us ensure consistent quality and reasonable pricing on anything that’s Asian.”

The Singapore team also supports contract strategies by sharing market intelligence, using detailed cost modeling when negotiating with suppliers.

“When you’re working with suppliers, it’s important to make sure both sides get a fair deal,” Lim said. “We’ve used data very effectively during deflation over the last few years. Good relations are also valuable. When you successfully negotiate a win-win, the supplier is happy and you’re happy.”

Lim has an eye for innovation and looks for new technologies that will help the team do things in a more efficient way.

“We’re currently looking at using radio-frequency identification (or RFID) for accurately tracking inventory and eventually even crane and boat utilization,” Lim said. “Fear of change and fear of failure can keep people from making improvements, so we try to get people to try new things and look at new data.”

Lim is proud of his award-winning team and their contributions.

“Our mission and our greatest challenge is keeping the cost of supply low in the Asia Pacific region.”