KUALA LUMPUR (Sept 25): Velesto Energy Bhd has urged the government to provide incentives to financial institutions to encourage them to lend more support to local oil and gas (O&G) players.

Its president Rohaizad Darus said such support remains crucial for local players, especially the small and medium enterprises (SMEs), to get adequate financial backing from financiers.

"For us (Velesto), (financing) might not be critical but [it is] for the smaller players… I would like to see some incentives given to encourage banks to support local players especially SMEs," he told reporters on the sidelines of the Fourth Malaysia Oil and Gas Services Exhibition and Conference here today.

Rohaizad suggests that the incentives could be introduced in the upcoming Budget 2019 in November.

"Maybe the national budget could allow some incentives to encourage the financial institutions to support SMEs in the O&G industry. Such incentives could be given to the banks, not [necessarily] directly to the O&G players.

"When it comes to downturns, O&G SMEs are the worst hit. If the financial institutions don't support them, it gets more difficult for them," he added.

Soon after the 2014 oil price downturn, it is understood that SMEs have been unable to get the adequate financing from financial institutions to get their businesses going.

The trend, according to recent news flows, has largely persisted, although there has been some positive development following the involvement of Petroliam Nasional Bhd and associations in the O&G sector to bring players, regulators and banks to discuss the way forward.