KUALA LUMPUR: The abrupt steep fall in global oil prices that has forced industry players to adjust to the “new normal” — low crude prices coupled with high cost pressures, Malaysian oil and gas services and equipment (OGSE) companies in fact fared better than regional and international players.
Speaking at the exclusive briefing organised by Malaysia Petroleum Resources Corp (MPRC), Malaysian Offshore Vessels Owners’ Association president Amir Hamzah Azizan said that the analysis showed the national oil and gas (O&G) industry is still resilient and stands a greater chance compared with other markets to rise from the current industry downturn.
“Let’s see this as an opportunity for our industry and country to rise from this downtrend. The landscape is changing globally but there is still great value in the industry,” Amir said.
“It is important to look back and understand what the future holds for us — how our O&G players can move forward, compete on a broader scale and ensure that the last man standing is us,” he added.
The finding is based on an analysis by MPRC on the top 100 OGSEs in Malaysia (MPRC100) by revenue for 2015.
Out of the top 20 OGSEs in the Southeast Asian region (on the basis of total quarterly revenue), nine were from Malaysia, eight were from Singapore, two were from Vietnam and one was from Indonesia.
Of the nine Malaysian OGSEs, the top three companies were SapuraKencana Petroleum Bhd (US$3.02 billion), MISC Bhd (US$2.81 billion) and Dialog Group Bhd (US$685 million).
Leading the pack was Singapore’s Keppel Corp Ltd, which generated US$7.49 billion in quarterly revenue in 2015, followed by Sembcorp Marine Ltd (quarterly top line stood at US$3.62 billion) and SapuraKencana.
“Using these financial data (quarterly revenue, profit before tax margins and fixed assets), we found that Malaysian companies have been catching up with their regional peers in terms of revenue and have surpassed them in terms of total fixed assets,” explained MPRC’s senior vice president, Industry and Market Enabler, Syed Azlan Syed Ibrahim.
“In addition, we found that the top Malaysian players were not as severely affected when compared with their regional peers,” he added.
This, according to the study, was partly due to the concentration of regional players in the upstream capital expenditure segments, such as fabrication as well as transportation and installation.
On the flipside, Malaysian players are spread across the value and supply chain, contributing their expertise and services in various other segments within the industry.
The OGSE sector’s fixed assets amounted to RM120.8 billion in 2015, with MPRC100 companies holding a sizeable proportion or 96.9% of the sector’s total fixed assets during the year.
The increase in fixed assets, the study shows, was driven mainly by construction and delivery of new assets already committed in the previous years.
The study also reveals a significant drop in the companies’ profit before tax in 2015. The sharp fall was attributed to losses arising from asset impairment recognised by offshore drilling rig, vessel owners due to declining rates, and lower demand for their assets. “This shows Malaysian OGSE companies have started taking measures to adjust to the new operating environment,” said Syed Azlan.