KUALA LUMPUR: Malaysia’s offshore support vessel (OSV) industry will see seven newbuilds entering into service this year and 2015 on top of the current 41 rigs, said Malaysia Offshore Support Vessel Owners’ Association (OSV Malaysia) president Dr Jamal Yusof.
He expects the industry to “grow healthily amid somewhat challenging conditions” with Petroliam Nasional Bhd (Petronas) allocating RM300 billion in capital expenditure spreading from 2012 to 2016, which will see more contracts and tenders being awarded.
“About RM65 billion is expected to be spent on various initiatives for the offshore oil and gas [O&G] industry. With stable oil prices hovering around US$100 [RM321] per barrel in the last few years, the country is set to see seven additional firm newbuilds to be added to the current assets of the OSV industry,” Jamal told reporters after the launch of OSV Malaysia’s inaugural seminar on the OSV industry yesterday.
The newbuilds will be evenly divided between large and mid-size tonnage. Pareto Securities Pte Ltd chief executive officer David Palmer said the oil services market is expected to be resilient in the short term, citing active shallow water activity, strong jack-up market and demand from offshore gas projects as the main growth driver.
“Our data shows that 80% of offshore oilfields to be developed are in shallow waters, and the jack-up fleet’s order book has increased 8% over the past six months. The OSV demand for pipe laying, decommissioning, subsea and seabed mining activity is at an all-time high,” said Palmer, adding that out of the 169 existing OSVs in Malaysia, 120 currently fly the Malaysian flag.
On the controversial cabotage policy, Jamal urged the Malaysia Shipowners Association (Masa) to ensure better enforcement of the policy to protect the interests of local shipowners.
“The lack of enforcement of the cabotage policy has seen large sums of money, manpower and skills being repatriated out of the country. This has affected local players, impacting job creation, business and investment opportunities in Malaysia.
“We hope that Masa will play a more active role to better enforces this policy to protect the interest of local players,” he said, adding that OSV Malaysia is ready to discuss this issue with Masa and the transport ministry for the betterment of local players. He added that the lack of enforcement could have a knock-on effect, costing the industry some RM28 billion.
The government introduced the cabotage policy in 1980, under which only ships that are registered in Malaysia and owned by Malaysians are allowed to carry and discharge cargo domestically at any ports within the country.
This article first appeared in The Edge Financial Daily, on May 22, 2014.