O&G SECTOR SET TO BE NEXT STAR
Govt to pay greater attention to industry this year due to its growth potential, says deputy minister
THE local oil and gas (O&G) sector will get more push from the government this year amid rising exploration and production (E&P) activities.
Deputy International Trade and Industry Minister Dr Ong Kian Ming said the O&G sector, which falls under the mining and quarrying category, was the second most important after electrical and electronics industry.
He said it would receive more attention this year due to the sector’s growth potential.
“We are looking at US$60 to US$70 (RM244.30 to RM285) oil price now and this is sufficient to revive some of the E&P activities that may have been deferred or stopped after oil fell below US$40 a barrel.
“I am cautiously optimistic that the O&G sector will rebound. The ministry is always ready to discuss how we can help companies improve their production this year,” said Ong during a Chinese New Year gathering at the ministry, here, yesterday.
He said while not many companies had shut down, many had been forced to scale down their operations.
He said the ministry was seeing a lot of potential from downstream projects and products.
He was referring to Petroliam Nasional Bhd’s Pengerang Integrated Complex in Johor and related activities, such as Dialog Group Bhd’s deepwater terminal investments in the Pengerang project.
According to the Malaysian Investment Development Authority, there are more than 3,500 players in the local O&G sector, comprising global oil firms, independents and services and manufacturing companies that support the needs of the O&G value chain domestically and regionally.
Many global machinery and equipment (M&E) manufacturers have set up base in Malaysia to complement homegrown M&E firms, while other local O&G companies are focused on key strategic segments such as marine, drilling, engineering, fabrication, offshore installation and operations and maintenance.
Investments in the mining subsector, comprising oil and gas exploration and quarrying other minerals, and fuelled by natural gas extraction activities, contributed 94.3 per cent of total investments in the primary sector in 2017, with 32 projects approved for total investments of RM11.7 billion.
Domestic investments amounted to RM7.3 billion, or 62.4 per cent, of the total.
The petroleum products sector, which included petrochemicals, has benefited from the overall drop in oil prices over the past few years.
It grew moderately last year as companies responded to stabilising oil prices and continuing access to low-cost feedstock.