KUALA LUMPUR (June 18): Finance Minister Lim Guan Eng said the forecasted rebound in crude oil prices augurs well for Malaysia's oil and gas (O&G) industry, as the improved sentiment is expected to revive exploration and production activities that were previously deferred amid the low oil price environment.

During his speech at the Asian Oil, Gas and Petrochemical Engineering Exhibition (OGA 2019), he highlighted that the price of Brent crude is expected to hover around US$60 (RM250.95) to US$70 per barrel this year.

"Last year, the world experienced great volatility in oil prices. Brent crude oil prices rose to US$86 per barrel in early October 2018 from US$67 at the start of last year.

"But less than two months afterwards, prices dropped by 30% to US$57 per barrel due to a glut in the global market, before rising to US$62 per barrel as of yesterday," he said.

From the government's perspective, Lim said each US$1 per barrel increase in oil prices brings the Treasury approximately RM300 million in revenue per year.

However, he pointed out that the government no longer heavily relies on oil revenue as before.

While petroleum-related revenue accounted for 41.3% of government revenue in 2009, this figure has declined over the years to an estimated 19.5% of total government revenue in 2019, excluding the special dividend from Petronas which was used to finance the goods and service tax (GST) and income tax refunds.

"The forecasted rebound in global crude oil prices is positive for Malaysia's upstream sector as it is reviving industry appetite in exploration and development works, especially for projects located in deepwater and technologically challenging areas where the costs of investment and operation are high," said Lim.