This article first appeared in The Edge Financial Daily on May 25, 2017

KUALA LUMPUR: The termination of the planned merger between UMW Oil & Gas Corp Bhd, Icon Offshore Bhd and Orkim Sdn Bhd has not deterred Icon Offshore from pursuing transformation.

“We have a game plan that will ride us out. We are a material player and I’m sure we can transform to do something different. If an opportunity comes, we will work harder,” Icon Offshore managing director (MD) Amir Hamzah Azizan told reporters after the group’s annual general meeting yesterday.

The offshore support vessel service provider will capitalise on the recovery of the industry, which experienced a three-year down cycle due to the collapse of crude oil prices. According to Amir, there is an increase in activities in the oil and gas (O&G) industry, placing the company in a better position to vie for more jobs.

“Going forward, [our performance] will be driven by, most importantly, the level of activities that are beginning to creep back into the business,” said Amir.

“Additionally, Petronas has reissued its five-year contracts for its integrated logistics control tower initiative and we are poised to compete aggressively for that. The key thing about this is that the jobs are bundled into segments, giving bigger [O&G] players greater chance to compete, if they are diversified,” he added.

It is understood that the contracts could be worth multibillions, with Amir adding that there are seven packages that fit its business and could see up to 30 of its vessels utilised.

On top of the more stabilised prices of crude oil “which have bounced to the mid-US$50 level” from as low as US$26 per barrel in 2016, Amir Hamzah indicated that the outlook for the O&G industry seems more favourable this year, as contracts issued of late generally carry long-term agreements.

Elaborating on this, he said long-term contracts would enable O&G players to “manage their businesses better”.

“In light of the price volatility that has come in, oil producers have had to live with a challenging environment. The first apparent impact on oil majors is that their operating and capital expenditures have been constrained, Amir said.

“We believe the future will be better than how things are now. As oil prices have stabilised, we believe it is good for the industry to move forward. As for Icon Offshore, in the short term we have a game plan which will help us fit better and build ourselves in this environment,” he added.

On the consolidation in the local O&G industry, Amir said “I think there were some good opportunities that could have come up [from the merger]. Nevertheless, we look forward to [prospects] that involve the bundling of oil & gas (O&G) services, so we can work along that line and change the nature of our business and offerings.”

“Additionally, I think the concept of [merging companies] into a stronger service provider is fundamentally important for Malaysia’s O&G industry,” he reiterated.