PETALING JAYA: There could be some light at the end of the tunnel for the local oil and gas (O&G) sector as the government is taking steps to revive the sector.
The oil and gas services and equipment (OGSE) sector has been stuck in the doldrums, with many companies sitting on huge debts following the 2014 crude oil price rout.
Last year’s Covid-19 pandemic has put further strain on the industry.
Yesterday, the government launched its first blueprint, dubbed as the National OGSE Industry Blueprint 2021-2030, focusing on the O&G service providers that have been badly hit due to the Covid-19 fallout.
It aims to provide direction for OGSE companies to improve their competitiveness, efficiency and technological capabilities.
Spearheaded by the Malaysian Petroleum Resources Corp (MPRC), it will also look into some of the structural challenges inhibiting the growth of the OGSE sector, including industry fragmentation and concentration in low complexity work scopes.
“The blueprint is envisioned to develop a robust, resilient and globally competitive Malaysian OGSE sector by 2030.
“These initiatives encompass sector-wide recommendations on structural challenges confronting industry players, as well as recommendations to address challenges that are unique to the Malaysian OGSE segments, ” said MPRC president and CEO Mohd Yazid Ja’afar. (pic)
The 10-year blueprint has a target of having the OGSE sector contribute between RM40bil and RM50bil to the country’s gross domestic product (GDP) by 2030 from RM20bil recorded in 2020.
The blueprint was launched by Minister in the Prime Minister’s Department Datuk Seri Mustapa Mohamed.
Industry players lauded the government’s initiatives in taking steps to revive the OGSE sector.
“We are fully supportive of this effort as it will put the industry in a more structured platform to ensure relevance moving forward, especially with the transitioning in the energy sector, ” Serba Dinamik Holdings Bhd group managing director and CEO Datuk Mohd Abdul Karim Abdullah told StarBiz
.He said the implementation of the blueprint is timely, especially when the entire supply and demand chain of the O&G sector is facing “serious challenges” to remain relevant moving forward.
“This blueprint shows the government’s seriousness in reviving the industry.
“However, we need the banking institutions to come in to support the industry while major oil assets owners need to ensure project rollout to allow the flow of money within the economic cycle, ” Karim added.
Icon Offshore Bhd managing director Datuk Seri Hadian Hashim, (pic below) who lauded the initiative, said the government should assist in consolidating the local OGSE players by rationalising the numbers of providers in the main subsectors.
“The blueprint is timely, especially in setting up priority to grow the industry forward.
“The government could assist the OGSE players that have survived through the difficult times by providing them capital to spur growth.
“As for (OGSE) players that are still reeling from the industry downturn, they should be restructured and consolidated, ” he told StarBiz.Malaysia’s OGSE sector contributed RM1.1bil in pre-tax profit on the back of RM65.1bil revenue in 2019. Exports made up 32% of total revenue that year.
Meanwhile, Mustapa said that while the world is transitioning into low carbon and renewable energy, the O&G sector will remain an important part of the energy mix for the foreseeable future.
“The National OGSE Industry Blueprint 2021-2030 aims to provide direction for OGSE companies to improve their competitiveness, efficiency and technological capabilities.
“We must ensure that the growth of the sector is achieved in a sustainable manner without greater costs to future generations, through innovation and advancement in low-carbon technologies, ” he said in his speech during the launch.
Currently, there are about 4,000 O&G companies that are registered with Petroliam Nasional Bhd, of which only 2,700 licence holders are active in bidding for jobs.
Meanwhile, Norway, which has similar size O&G deposits as Malaysia, has just around 1,200 players in this sector.