Explore overseas marts, OGSE players told
KUALA LUMPUR: Local oil and gas services and equipment (OGSE) companies need to explore overseas markets and take advantage of the anticipated higher capital expenditure (capex) spending by global oil producers.
Malaysia Petroleum Resources Corp (MPRC) senior vice-president, Syed Azlan Syed Ibrahim, said global oil producers had started to invest in developing their oil and gas reserves, given the recent stability in oil prices.
“Global capex spending for offshore upstream activities is expected to rise from 2017 onwards, while 51 greenfield projects are expected to be sanctioned between 2018 and 2021 in Asia (excluding Malaysia),” he told a media briefing on the latest MPRC100 rankings and industry analysis for the 2016 financial year.
He said these projects, mainly from China, India and Indonesia, signalled recovering prospects in overseas markets.
President/chief executive officer, Datuk Shahrol Halmi, said that jobs in the local oil and gas market are currently only half of what they used to be, though the number of players remained the same.
“Inevitably, some companies might not be able to secure jobs and thus financing from banks. Therefore, this is a good push for players to go overseas to look for opportunities while procuring funding from the same currency that they are getting their revenue from.
“Furthermore, Malaysian OGSE companies should focus on providing economies of scale and integrated solutions, owning technologies, employing quality talent and having export capabilities,” he said.
On the global oil price, which recently hit the psychologically important US$70 (US$1 = RM3.92) per barrel level for the first time since December 2014, Shahrol advised players not to be too excited by the temporary blip, and instead, they should focus on the one- or two-year trend.
He said although oil price had been moving between US$60 and US$70 per barrel over the last two to three months, Shahrol was not optimistic it would touch US$100, adding that MPRC projected for the price to be between US$55 and US$65 per barrel this year.
“I think we are seeing signs that US shale oil is coming into the market, which will immediately dampen down the price,” he said.
In the latest MPRC100 ranking, Sapura Energy Bhd regained the top spot in the top 100 OGSE companies in Malaysia, while MISC Bhd eased to the second spot and Dialog Bhd stayed in third place.
MPRC100 data showed that overall revenue for the OGSE sector fell 10.1 per cent to RM66.6 billion, while total OGSE pre-tax profit declined significantly to RM146 million in the 2016 financial year from RM5.3 billion in 2015, due to asset impairment charges by capital intensive players. — Bernama