KUALA LUMPUR: The decision by oil companies to shift away from West Asia and support offshore crude oil exploration in South-East Asia could potentially benefit offshore support vessel (OSV) operators.
The decision to realign investments will depend on the duration of the war in West Asia, ongoing disruptions at the Strait of Hormuz, rising oil prices, and the economics of upstream oil and gas (O&G) exploration.
Understandably, the driving factors are heightening concerns over global oil supply security, more so with crude oil prices now above US$100 per barrel, which is putting a strain on oil-consuming nations.
Global energy markets continue to be highly affected by disruptions in oil supply from West Asia, as this region contributes a significant portion of global oil production and exports. The presence of critical transit routes, such as the Strait of Hormuz, plays a vital role in these dynamics.
As a result, there may be advantages for regional offshore marine support services serving the upstream O&G industry, like Perdana Petroleum Bhd
.
This is largely due to the fact that prolonged instability in West Asia could influence oil price dynamics and upstream investment decisions worldwide, with implications for offshore exploration and related support services.
In this context, offshore services providers such as Perdana Petroleum could benefit if stronger crude oil prices improve the economics of upstream O&G projects.
Perdana Petroleum managing director Jamalludin Obeng said the military conflict is unfolding in a key oil-producing region responsible for around 20% of global O&G supply, alluding to countries now looking for alternative and secure sources of energy supply.
“Though oil majors and national oil companies have yet to make announcements on shifts in capital or operational spending, naturally, with these developments, other producing regions, including South-East Asia, may need to increase production to support global energy demand.
“This could eventually lead to higher upstream activities and increased demand for OSVs,” he told Bernama.
Jamalludin said sustained higher crude oil prices could improve the economics of upstream O&G projects, encouraging oil majors and national oil companies to proceed with exploration, development and production activities. “As offshore projects grow, the demand for supporting services, such as vessel chartering, offshore logistics, and marine support, typically increases, which benefits OSV operators,” he said.
