KUCHING: Sarawak today has positioned itself well to ensure greater participation of the state with the formation of state-owned companies to spearhead activities and projects in the oil and gas industry.
Perdana Petroleum Berhad’s Managing Director and the President of the Malaysian Offshore Supply Vessels Owners Association (MOSVA), Jamalludin Obeng said the state, under the current leadership of Premier Datuk Patinggi Tan Sri Abang Johari Openg has made the right decision to expand and this has put Sarawak on the map for potential investments in the oil and gas industry.
“The state has made huge progress the past four years under the present leadership and with the existence of its own oil and gas company, PETROS (Petroleum Sarawak Berhad).
“We have seen how in a short period of four years PETROS is now an established organisation to spearhead activities of Sarawak’s oil and gas activities,” he said when met by New Sarawak Tribune at the closing of the Oil and Gas Service and Equipment (OGSE) Roadshow 2022 at the Borneo Convention Centre Kuching (BCCK) on Thursday (June 23).
“The Sarawak Economic Development Corporation (SEDC) also has a specific subsidiary, SEDC Energy that will focus on the oil and gas sector, especially for downstream activities in Bintulu that will add greater participation of the state,” he said.
He expressed confidence that the state has taken the right approach, as there will be more activities in both upstream and downstream in Sarawak for the next few years.
Jamalludin who was also one of the panelists in the panel session on Boosting Resilience among the OGSE companies during the OGSE Roadshow 2022 emphasised that the OGSE companies or the support contractors and vendors are equally important to support the activities in the oil and gas industry and needs to gear up to support the increase in activities in the sector.
“Local companies and players, including Perdana Petroleum are in the best position to provide the support services here, due to their local infrastructure and resources.” he added.
Perdana Petroleum is one of the major companies in Malaysia that has provided Offshore Support Vessel (OSV) with its fleet of 16 vessels since 1988.
OGSE OR SUPPORT SECTOR STILL FACING CHALLENGES
Despite the high oil price, OGSE companies are still facing challenges after the prolonged low activities from 2015 to 2019 stemming from the oil price plunge of 2014 and COVID-19 pandemic of 2020 and 2021, and especially with the current hike in fuel prices and inflation.
He said the significantly high crude oil price caused by current geopolitical events and tight supply due to lack of investments upstream in the past few years has contributed to the cost of operations and logistics.
“Geopolitical impact is an inherent nature of the oil and gas industry and the after effects from the Russian invasion of Ukraine has impacted the industry globally.”
“When we entered the endemic phase of COVID-19 early this year, we thought the profitability level of OGSE sector would bounce back fast to the pre-pandemic level of two years ago, however that has not been so due to inflation, higher fuel price and uncertainty on the banks’ overnight policy rate (OPR).’
“There lies the challenge on the receptiveness of the financial institutions and banks towards the OGSE sector, with the new challenges, as activities need to be supported by the financial institutions and banks,” said Jamalludin.
He felt that the perception by the financial institutions and banks toward the sector as a sustainable business should change and be more positive with the upcoming activities in the industry and that there are many solid and capable OGSE companies available that will support the activities.
PERDANA PETROLEUM HAS WEATHERED THE STORM
“There are many OGSE companies, including Perdana Petroleum that have weathered low oil price and the COVID-19 pandemic.
“Clients such as PETRONAS and SHELL, along with the financial institutions need to see that these are the companies that can thrive when there are higher activities, thus need to be supported.
“Admittedly, the operations during the COVID-19 pandemic were tough and expensive,” he added.
“During the height of the pandemic, if just one crew on one of our Perdana Petroleum vessels contracted COVID-19, the whole vessel will need to be in quarantine for two weeks, and the waiting period along with the many SOPs then made the operation costly.
“Moving forward like any other OSV companies that has marine assets, Perdana Perdana will need to undergo fleet renewal in order to be sustainable and remain relevant.
“With our vessels’ age averaging around 12 years, we will need to embark on fleet renewal soon.
“Having newer vessels to support the industry should also be a high concern to our clients to support their activities as each year there will be vessels in the whole supply chain currently supporting their activities that be no longer be allowed to operate in Malaysia.” said Jamalludin.
In terms of the prospects for the OGSE sector, he mentioned in the panel session that the upcoming higher activities upstream and downstream in Sarawak will augur well for the sector even though there are challenges facing the sector.
To overcome the issue, especially for small and medium enterprises (SME), he advised them to be more prudent financially and focus on managing their technical capabilities with their limited available resources.
At the same time, Jamalludin also reminded the SME sector to look for alternatives to move ahead, perhaps by increasing automation and digitalisation that can help reduce cost, especially in time of difficulty like today.
