Sapura Energy says interest in upstream projects picking up
KUALA LUMPUR: Sapura Energy Bhd, Malaysia’s largest oil and gas service provider, said it was beginning to see interest building in upstream projects following sharp rollbacks in recent years from lower oil prices.
“Projects that were on hold before are starting to be looked at again (globally),” Sapura chief executive Shahril Shamsuddin told Reuters on the sidelines of the Asia Oil & Gas Conference in Kuala Lumpur.
“It’s going to take time for the decisions to come through. It would take about 10-15 months before we could see projects come online again,” he said.
Shahril attributed the increase in interest to the recovery in oil prices and the need to replenish a natural drop in reserves.
Brent crude prices have recovered about 80 percent from 12-year lows hit early in 2016, although they are still at less than half the levels of mid-2014 due to a supply glut, and retreated back below US$50 at the end of last week.
The drop-off in prices over the last three years has forced global oil and gas majors to sharply cut costs and capital spending, especially for upstream - or exploration and production - projects.
In Malaysia, national oil company Petroliam Nasional Berhad (Petronas) said last year it would slash spending by 50 billion ringgit ($ 11.5 billion) over the next four years, hurting service providers such as Sapura.
Shahril said there have been few upstream projects in Malaysia but that Sapura was bidding on some currently.
“I think towards the end of the year we will see more activities coming online,” he said.
“There are also investors coming to Malaysia that are looking for new acreage to invest in.”
Sapura will look at new markets in the Middle East, the Mediterranean, and East and West Africa, and expand into existing markets like Mexico, he said.
Sapura’s first gas delivery from its block SK310 production sharing contract off Sarawak will be in October, Shahril said. — Reuters