KUALA LUMPUR: Malaysia’s oil and gas services and equipment (OGSE) industry is expected to improve until 2025, driven by the positive outlook and increase in the domestic oil and gas (O&G) industry activities.
Malaysia Petroleum Resources Corporation (MPRC) president/CEO Mohd Yazid Ja’afar (pix) said that in Malaysia, the OGSE industry is “not so much” affected by the global crude oil demand and prices.
He pointed out that since the global prices went down in 2015, there was an initiative adopted by domestic O&G players to implement cost saving measures and due to the pandemic occurring not long after in 2019, has resulted in tighter measures implemented by O&G players that is still in place until today.
“Irrespective of the oil price at the moment, the OGSE industry is a price taker. They cannot set the price or rates and they just have to accept the price or rates set by the O&G companies ... it all depends on the procurement strategy of these companies,” he told SunBiz.
Despite that, he said that currently there is a lot of work and demand for OGSE players in the upstream, O&G production and exploration.
“Instead of the OGSE sector as a price taker, they can now start to dictate (and choose) whichever company that gives them the best (rate),” he added.
He remarked that the “busy period” for the industry started since last year, and reckoned that its going to continue until 2025, from the amount of work it observed in the market as well as guided by Petronas’ Activity Outlook for 2023-2025.
“From what we can see, the amount of work is consistent, we have that visibility until 2025, maybe 2026. There are a lot more requests from the operators or the oil companies. So hopefully that work will trickle down to the industry at large,” he said.
He added that there are a lot more opportunities if the OGSE players were to comply with global sustainability standards so as to not restrict themselves only in Malaysia.
In terms of challenges, he said that industry players in general were facing issues with lack of awareness on sustainability and talent shortage.
“There is still lack of awareness this year with regards to sustainability, but I think there have been more attempts from the OGSE players to comply compared to two or three years back.
“With (public listed companies) PLC, they have Bursa Malaysia and the Securities Commission. The SME don't have anyone to guide them, so that’s where MPRC is coming in to address that gap,” said Mohd Yazid.
He added that the industry currently is experiencing a shortage of human talent as “suddenly there's a lot more work to be given” as demand have picked up.
“Things are picking up and (it’s expected) to look good until about 2025 or 2026, but we do not have enough talent to do it. So, we are working together with Petronas and with the industry association to come up with a short term as well as long term plan to address this immediate need of talent. Otherwise, we have work but we cannot do it and may need to resort to foreign service companies for talent,” said Mohd Yazid.
Given all the concerns experienced by the industry, he said that it was the main reason that the agency developed the National OGSE Sustainability documents, which form the three-part OGSE sustainability agenda, namely the National OGSE Sustainability Plans introduced last year, NOS-Roadmap and National OGSE Sustainability Framework (NOS-F).
MPRC hoped to introduce NOS-F, a comprehensive guide for OGSE companies to implement NOS-R and report on sustainability practices effectively, toward the end of 2024.
