The rout in oil prices may be in its sixth month, but Indonesian business magnate Kris Wiluan isn't worried that the turmoil will hurt demand for his firm's oil exploration and production services.
"For my 30 years [in the sector], I've experienced prices going up and down. As long as there is demand, you can never replace hydrocarbon," said the chairman of mega-conglomerate Citramas Group, referring to the chain molecules found in crude oil.
Global oil prices have been in free-fall since June on a host of concerns including weak demand, a strong U.S. dollar and booming U.S. oil production contributing to a supply glut. The Organization of the Petroleum Exporting Countries' (OPEC) decision in November to reduce output added to the gloom.
U.S. crude closed at $48.79 per barrel in U.S. trade on Thursday, down sharply from a nine-month high above $107 a barrel touched in June. This week, Benchmark Brent crude fell through the $50-a-barrel mark to its lowest price level since May 2009, before recovering to settle at $51 a barrel. Since June, it has lost more than 55 percent.
Cheaper oil means trouble for refiners and oil rig builders. The decline in drilling activity also translates into less business for companies that provide drilling services or manufacture related equipment.
However, diversification will help Batam-based Citramas – which derives nearly 50 percent of its revenue from the oil and gas sector – to tide through the turmoil.
"We supply services for drilling [and] in terms of rig building, we don't have a big fleet – about 11 rigs. So we are niche in the market," said Wiluan, who founded the company in 1976. "You can feel the wind but that's a normal experience I've gone through over the past years."