The Global Economy Outlook
According to the International Monetary Fund (IMF), while global growth in 2018 remained close to post crisis highs, the global expansion is weakening and at a rate that is somewhat faster than expected. Its January 2019 update of the World Economic Outlook (WEO) projects global growth at 3.5% in 2019 and 3.6% in 2020, 0.2 and 0.1 percentage point below last October’s projections. While the downward revisions are modest; IMF believes the risks to more significant downward corrections are rising. While financial markets in advanced economies appeared to be decoupled from trade tensions for much of 2018, the two have become intertwined more recently, tightening financial conditions and escalating the risks to global growth.
In its latest WEO update, IMF revised downwards its forecasts for advanced economies slightly. Across advanced economies, growth is expected to slow from 2.3% in 2018 to 2% in 2019 and 1.7% in 2020. This estimated growth rate for 2018 and the projection for 2019 are 0.1 percentage point lower than its October 2018 forecast, mostly due to downward revisions for the euro area.
• Growth in the euro area is set to moderate from 1.8% in 2018 to 1.6% in 2019 (0.3 percentage point lower than last projected) and 1.7% in 2020. Growth rates have been marked down for many economies, notably Germany (due to soft private consumption, weak industrial production following the introduction of revised auto emission standards and subdued foreign demand); Italy (due to weak domestic demand and higher borrowing costs as sovereign yields remain elevated) and France (due to the negative impact of street protests and industrial action).
• There is substantial uncertainty around the baseline projection of about 1.5% growth in the United Kingdom (UK) in 2019-20. The unchanged projection relative to the October 2018 WEO reflects the offsetting negative effect of prolonged uncertainty about the Brexit outcome and the positive impact from fiscal stimulus announced in the 2019 budget. This baseline projection assumes that a Brexit deal is reached in 2019 and that the UK transitions gradually to the new regime.
• The growth forecast for the United States (US) also remains unchanged. Growth is expected to decline to 2.5% in 2019 and soften further to 1.8% in 2020 with the unwinding of fiscal stimulus and as the federal funds rate temporarily overshoots the neutral rate of interest. Nevertheless, the projected pace of expansion is above the US economy’s estimated potential growth rate in both years. Strong domestic demand growth will support rising imports and contribute to a widening of the US current account deficit.
• Japan’s economy is set to grow by 1.1% in 2019 (0.2 percentage point higher than in the October 2018 WEO). This revision mainly reflects additional fiscal support to the economy this year, including measures to mitigate the effects of the planned consumption tax rate increase in October 2019. Growth is projected to moderate to 0.5% in 2020 following the implementation of the mitigating measures.
Economic activity in emerging and developing economies is also projected to tick down to 4.5% in 2019 (from 4.6% in 2018), with a rebound to 4.9% in 2020.
• Growth in emerging and developing Asia will dip from 6.5% in 2018 to 6.3% in 2019 and 6.4% in 2020. Despite fiscal stimulus that offsets some of the impact of higher US tariffs, China’s economy will slow due to the combined influence of needed financial regulatory tightening and trade tensions with the US. India’s economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease.
• Growth in emerging and developing Europe in 2019 is expected to weaken more than previously anticipated, to 0.7% (from 3.8% in 2018) despite generally buoyant growth in Central and Eastern Europe, before recovering to 2.4% in 2020. The revisions (1.3 percentage point in 2019 and 0.4 percentage point in 2020) are due to a large projected contraction in 2019 and a slower recovery in 2020 in Turkey, amid policy tightening and adjustment to more restrictive external financing conditions.
• In Latin America, growth is projected to recover over the next two years, from 1.1% in 2018 to 2.0% in 2019 and 2.5% in 2020 (0.2 percentage point weaker for both years than previously expected). The revisions are due to a downgrade in Mexico’s growth prospects in 2019–20, reflecting lower private investment and an even more severe contraction in Venezuela. The downgrades are only partially offset by an upward revision to the 2019 forecast for Brazil, where the gradual recovery from the 2015–16 recession is expected to continue. Argentina’s economy will contract in 2019 as tighter policies aimed at reducing imbalances slow domestic demand, before returning to growth in 2020.
• Growth in the Middle East, North Africa, Afghanistan and Pakistan region is expected to remain subdued at 2.4% in 2019 before recovering to about 3% in 2020. Multiple factors weigh on the region’s outlook, including weak oil output growth, which offsets an expected pickup in non-oil activity (Saudi Arabia); tightening financing conditions (Pakistan); US sanctions (Iran) and across several economies, geopolitical tensions.
• In sub-Saharan Africa, growth is expected to pick up from 2.9% in 2018 to 3.5% in 2019 and 3.6% in 2020. For both years the projection is 0.3 percentage point lower than last October’s projection, as softening oil prices have caused downward revisions for Angola and Nigeria. The headline numbers for the region mask significant variation in performance, with over one-third of sub-Saharan economies expected to grow above 5% in 2019–20.
• Activity in the Commonwealth of Independent States is projected to expand by about 2.5% in 2019–20, slightly lower than projected in the October 2018 WEO due to the drag on Russia’s growth prospects from the weaker near-term oil-price outlook.
Key sources of risk to the global outlook are the outcome of trade negotiations and the direction financial conditions will take in months ahead. If countries resolve their differences without raising distortive trade barriers further and market sentiment recovers, then improved confidence and easier financial conditions could reinforce each other to lift growth above the baseline forecast. However, the balance of risks remains skewed to the downside.
Beyond the possibility of escalating trade tensions and a broader turn in financial market sentiment, other factors adding downside risk to global investment and growth include uncertainty about the policy agenda of new administrations, a protracted US federal government shutdown as well as geopolitical tensions in the Middle East and East Asia. Risks of a somewhat slower-moving nature include pervasive effects of climate change and ongoing declines in trust of established institutions and political parties.
With momentum past its peak, risks to global growth skewed to the downside, and policy space limited in many countries, multilateral and domestic policies urgently need to focus on preventing additional deceleration and strengthening resilience. A shared priority is to raise medium-term growth prospects while enhancing economic inclusion.
The Malaysian Economy
The Malaysian economy grew by 4.7% in the fourth quarter of 2018 (3Q 2018: 4.4%), supported by continued expansion in domestic demand and a positive growth in net exports. Private sector expenditure remained the main driver of domestic demand, while a 1.3% rebound in real exports of goods and services (3Q 2018: -0.8%) contributed towards the positive growth of net exports. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.4% (3Q 2018: 1.6%).
Domestic demand expanded at a more moderate pace of 5.6% during the quarter (3Q 2018: 6.9%). Growth was weighed down by a moderation in gross fixed capital formation.
• Private consumption growth remained robust at 8.5% (3Q 2018: 9.0%), despite the front loading of purchases during the tax holiday period in the previous quarter. Income and employment growth continued to drive household spending. Government measures to alleviate cost of living, such as special payments to civil servants and pensioners, also provided some support to consumer spending.
• Private investment growth moderated to 4.4% (3Q 2018: 6.9%), attributed to slower capital spending across major economic sectors. However, ongoing multi-year projects particularly in the manufacturing sector continued to provide support to overall growth.
• Public consumption expanded at a slower pace of 4.0% (3Q 2018: 5.2%), attributable to a more moderate growth in supplies and services.
• Public investment remained in contraction during the quarter (-4.9%; 3Q 2018: -5.5%), due mainly to a decline in capital spending by public corporations.
• Gross fixed capital formation (GFCF) expanded marginally by 0.3% (3Q 2018: 3.2%), as private sector capital expenditure moderated amid a contraction in public sector investment. By type of assets, capital spending on structures expanded by 0.8% (3Q 2018: 1.8%), while investment in machinery and equipment declined by 1.5% (3Q 2018: 5.9%).
On the supply side, major sectors continued to expand, while growth in the commodity-related sectors improved.
• In the services sector, the wholesale and retail trade sub-sector remained supported by continued strength in consumer spending.
• The information and communications sub-sector benefitted from continued demand for data communication services and the positive impact on fixed broadband demand following the implementation of the Mandatory Standard Access Pricing (MSAP) mechanism.
• Growth in the transport and storage sub-sector improved marginally in line with better trade activity.
• Activity in the finance and insurance sub-sector expanded at a moderate pace as higher growth in insurance claims and lower fee-based income weighed on the performance of the sub-sector.
• Growth in the manufacturing sector remained driven by continued strength in the electronics and electrical (E&E) and transport-related production. Relatively strong growth in the E&E cluster was attributed to the frontloading of exports globally in anticipation of higher trade tariffs between the US and China.
• Growth in the transport-related production was supported by the manufacture of passenger cars and auto parts, as a result of aggressive promotional campaigns by car dealers as well as the replenishment of vehicle stocks after the end of the tax holiday.
• Performance of the mining sector rebounded, supported by higher oil and natural gas production following the maintenance shutdown in the previous quarter.
• Despite weak palm oil harvesting and rubber tapping activities due to adverse weather conditions, the agriculture sector recorded a smaller decline.
• The construction sector registered lower growth due to a moderation in the civil engineering and special trade sub-sectors. The civil engineering sub-sector was impacted by near completion of large petrochemical projects and delays in highway construction. Support from early works activity on the special trade sub-sector waned, as projects transitioned to mid-phase. Growth in the non-residential sub-sector improved slightly, while growth in the residential sub-sector remained weak amid the high number of unsold residential properties.
Amid escalating trade tensions and tighter global financial conditions, the Malaysian economy recorded a respectable growth of 4.7% in 2018. Growth in 2018 was further affected by unanticipated supply disruptions in the commodity-related sectors. For 2019, as supply disruptions recede and new production facilities commence, the Malaysian economy is expected to continue to expand at a steady pace. Private sector demand is expected to remain the main driver of growth amid fiscal rationalisation while the external sector would be weighed down by weaker global demand. Although sentiments have moderated from recent highs, private sector expenditure will continue to be supported by fundamental factors such as continued income and employment growth. Risks to growth remain tilted to the downside, stemming mainly from further escalation of trade tensions and tightening of global financial conditions.
Global Oil Performance
In 2018, Dated Brent averaged US$72 per barrel (as at 7 December 2018), compared to average 2017 price of US$54 per barrel, a 33% annual increase. Oil prices have been fluctuating in 2018 from year-high of US$86.20 per barrel in early October to lowest of US$57 per barrel in end November as the global oil market turned from tight to oversupply.
Extension of production cut by OPEC+ to end 2018 managed to stabilise the global oil market. Commercial oil inventories for the Organisation for Economic Cooperation and Development (OECD) countries declined sharply to below the five-year average of 2.8 billion barrels in March 2018. However, towards the end of year, the global oil market turned into surplus resulting in oil prices weakening to below US$60 per barrel. This was driven by demand concern and increased supply from the US. Production from the US continue to grow, hitting a record-high of 11.7 million barrels per day (bpd) in November 2018 to average 10.9 million bpd in 2018. OECD oil stocks increased by 63 mil barrels from March 2018 to 2.9 billion barrels at the end of Q3 2018, indicating a surplus market.
On 7 December, OPEC+ pledged to extend the production cut to June 2019 with participating members in OPEC reducing output by 800,000 bpd and non-OPEC 400,000 bpd, with the intent to stabilize the oil market. However, the growth of US tight oil production and expectation of global oil demand growth amidst the concern on trade war and weakening emerging markets’ currencies will influence the global oil market in 2019.
The oil market will be a tale of two halves in 2019, according to Wall Street forecasters. Oil analysts expect prices to recover in the first six months of 2019, following a sell-off that has slashed the cost of crude by about 40% since October. But in the back half of the year, commodity watchers anticipate new headwinds for the oil market. Overall, Wall Street expects a moderate recovery for oil in 2019. Investment banks see Brent crude, the international benchmark for oil prices, averaging about US$68 - US$73 a barrel next year while forecasts for US crude mostly fall in a range between US$59 and US$66 a barrel.
The key drivers behind the anticipated rally in the opening months of 2019 are OPEC policy and North American oil production. OPEC, Russia and several other producers have launched new production cuts that aim to remove 1.2 million bpd from the market. The producers began capping output in January 2017, but lifted the curbs in June 2018 ahead of US sanctions on Iran, OPEC's third largest producer. The alliance will get a hand in course correcting from Alberta, Canada. Officials there have ordered producers to slash output by 325,000 bpd in order to drain brimming stockpiles of oil. Storage tanks have filled up because the province does not have enough infrastructure to transport crude. Pipeline bottlenecks are also putting a lid on US production growth. Takeaway constraints in the nation's top shale field, the Permian Basin underlying western Texas, are largely expected to persist at least through the first half.
But in the back half of 2019, US output flips from a bullish boost to bearish drag in oil markets. Once new pipes start bringing Permian oil to market, American output is expected to surge and put fresh downward pressure on crude prices. OPEC could offset that surge by extending its production cuts, which expire in June. The alliance will meet in April to determine whether market conditions warrant keeping the curbs in place.
Economic risks could also cause oil to spike or slump beyond the anticipated range. Analysts see economic growth remaining fairly robust in early 2019, supporting an increase in fuel demand. However, growth is expected to slow heading into 2020. The biggest economic risk is that tit-for-tat tariffs between the US and China devolve into a full-blown trade war. The world's two biggest economies could impose tariffs on all goods shipped between the two behemoths if they do not clinch a final deal in the coming months. An economic slowdown in China could have significant impacts on energy markets because Asia is the engine of oil consumption, while demand is fairly anaemic in developed Western countries.
The Malaysian Oil & Gas Industry
The local oil and gas (O&G) sector will get more push from the government this year amid rising exploration and production (E&P) activities. Deputy International Trade and Industry Minister Dr Ong Kian Ming said the O&G sector, which falls under the under the mining and quarrying category, will be second in the limelight after E&E industry to receive a greater push and attention in 2019 due to its potential growth.
With oil prices expected to range between US$60 and US$70 this year, some of the E&P activities that have been deferred or stopped could be revived. The ministry expected a lot of potential especially in the downstream projects and products, he said, referring to the Petronas’ Pengerang Integrated Complex (PIC) in Johor and related activities such as the Dialog Group Bhd’s deepwater terminal and other investments into the Pengerang project by other companies.
According to Malaysian Investment Development Authority (MIDA), there are over 3,500 O&G businesses in the country. They comprise international oil companies, independents, services and manufacturing companies which support the needs of the O&G value chain both domestically and regionally. Many major global machinery and equipment (M&E) manufacturers have also set up bases in Malaysia to complement home-grown M&E companies, while other Malaysian O&G companies are focused on key strategic segments such as marine, drilling, engineering, fabrication, offshore installation and operations and maintenance.
Mining investments in the mining sub-sector, comprising O&G exploration and quarrying other minerals, spearheaded the primary sector. Fuelled by natural gas extraction activities, this sub-sector contributed 94.3% of total investments of the primary sector in 2017 with a total of 32 projects approved, with investments of RM11.7 billion. Domestic investments amounted to RM7.3 billion (62.4%) while foreign investments totalled RM4.4 billion (37.6%).
Manufacturers are now focusing on providing services to the assets which are approaching their end of design life. Of the 12 projects approved in 2017 (total investment of RM731.7 million), six were expansion or diversification projects, with some focusing on refurbishment and upgrading activities. Domestic investments contributed RM593.2 million (81%), while foreign investments totalled RM138.5 million (19%). These projects are expected to generate a total of 2,527 employment opportunities.
The petroleum products (including petrochemicals) industry have benefitted from the overall drop of oil prices over the past few years. The industry is expected to have grown moderately in 2018, as companies responded to stabilising oil prices and continuing access to low cost of feedstock. It is also an industry that has attracted the greatest level of domestic direct investment (DDI) in 2017, amounting to RM25.6 billion out of RM26 billion in approved investments across 10 projects that created 1,949 job opportunities.
Thus, in spite of the global trends, the O&G industry continues to play a significant role in the economic development of Malaysia.
Petroliam Nasional Bhd (Petronas) saw its net profit decline 21% in the fourth quarter ended December 31, 2018 (4QFY18) to RM14.3 billion, from RM18.2 billion in the previous corresponding quarter mainly due to higher product costs, depreciation and amortisation as well as petroleum proceeds. Revenue for the quarter, however, rose 13% to RM69.9 billion, compared with RM61.8 billion in the same period in 2017, primarily attributable to the impact of higher average realised prices for all key products. However, this was partially offset by the impact of lower sales volume, mainly for liquefied natural gas.
For the full year of 2018, Petronas’ net profit soared 22% to RM55.3 billion, from RM45.5 billion in 2017, on the back of higher revenue and supported by net write-back of impairment on assets. The group’s revenue increased 12% to RM251 billion, against RM223.6 billion a year ago. Cash flows from operating activities improved to RM86.3 billion, an increase of 14% from RM75.7 billion in 2017. Totals assets increased to RM636.3 billion, from RM599.8 billion recorded in 2017.
As at 2018, Petronas’ gearing ratio went up to 19.7%, from 16.1% in 2017, arising from additional provision for the decommissioning of assets following the revision of estimated abandonment costs for O&G properties, coupled with lower shareholders’ equity. Capital investments for 2018 stood at RM46.8 billion, mainly attributed to upstream projects in support of the group’s operational excellence and growth strategies. On its outlook, Petronas expects the O&G industry will continue to operate in a challenging environment arising from market uncertainties and geopolitical risks.
Dialog Group Bhd’s net profit for the second quarter ended December 31, 2018 (2QFY19) rose 18.15% to RM136.78 million, from RM115.76 million a year earlier, thanks to cost savings realised on completed projects and increased share of profit in joint ventures and associates. Higher earnings were recorded despite revenue falling 28.9% to RM609.61 million, from RM857.43 million previously, mainly dragged by the group’s Malaysian operations due to the near completion of the engineering, procurement, construction and commissioning works in the Pengerang Deepwater Terminals (PDT) Phase 2 projects. Total net profit for the first two quarters came to RM251.42 million, down 9.13% from RM276.69 million a year earlier. Half-yearly revenue also fell 20.51% to RM1.3 billion from RM1.64 billion.
Dialog executive chairman Tan Sri Dr Ngau Boon Keat said the group has continued to deliver on its commitment to growing sustainable, recurring income and enhancing shareholders’ value. With the completion of PDT Phase 2A and 2B, and the refinery projects at Rapid, Dialog is now actively involved in plant maintenance services for these projects. The group also continued to make progress for Phase 3 — land reclamation activities are in progress and are scheduled for completion at end of 2019, and is having active discussions with potential customers for Phase 3. Barring any unforeseen circumstances, the group is confident that its performance will remain strong for the financial year ending June 30, 2019.
Dayang Enterprise Holdings Bhd returned to the black in its financial year ended December 31, 2018 after its final quarter of the year raked in a net profit of RM97.72 million compared to a net loss of RM55.21 million in the previous corresponding quarter, on higher work orders received and performed under its topside maintenance contracts. Quarterly revenue jumped 64.9% to a record high of RM285.65 million from RM173.26 million in the previous year, despite the fourth quarter being a typically weak quarter due to the monsoon weather.
It attributed the remarkable achievement to robust work orders issued for the PCSB Maintenance, Construction and Modifications Contract (MCM) and Topside Maintenance Services works under the Pan Hook-up and Commissioning Contract (Pan HUC) as well as the newly minted Pan MCM Contracts which were rolled out in the fourth quarter.
As a result of the strong operational performance in the fourth quarter of 2018, Dayang also recorded one of the highest quarterly profit after tax in its history. This is largely attributable to better cost control, improved efficiency and streamlined project management. It is also evidently positive that vessel utilisation came in stronger at 73% in the fourth quarter, compared to a utilisation rate of 51% for the fourth quarter a year ago.
For the full financial year 2018 (FY18), Dayang recorded a net profit of RM164.22 million compared to a net loss of RM144.89 million, while revenue rose 34.9% to RM937.64 million from RM694.99 million in FY17. Dayang is optimistic that its strong earnings trend will be sustainable considering its fairly sizeable order book of RM3 billion, which would last them until 2023.
Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) slipped into the red with a net loss of RM122.69 million in the year ended December 31, 2018 (FY18) from a net profit of RM34.23 million a year ago. It attributed the net loss to the widened loss of its marine and engineering divisions. MMHE’s FY18 revenue increased 1.88% to RM974.35 million from RM956.41 million in the same period a year ago due to significant drop in revenue following lower conversion works and dry docking activities. For the fourth-quarter, the company recorded a net loss of RM25.22 million against a net profit of RM48.13 million a year ago, while revenue increased 10.2% to RM273.24 million from RM247.95 million.
MMHE said it would remain prudent on the outlook for the industry in the near term given the uncertainties surrounding timing of capital spending by major O&G players. It expects the outlook for marine business to remain positive as global liquefied natural gas trade is projected to expand firmly driven by increase of exports from the US and Australia to Asia. The group had during the year secured a number of long term offshore fabrication frame agreements which are on call-out basis including the long term agreement signed with Saudi Arabian oil company, Saudi Aramco. These are expected to contribute positively to group revenue in 2019 and beyond. MMHE also remains committed to replenish its orderbook in various geographical areas.
Wah Seong Corp Bhd reported its first loss-making quarter in two years as contributions from its O&G and renewable energy segments declined, while its industrial trading and services business sank into losses. It posted a net loss of RM9.98 million for the fourth quarter ended December 31, 2018 (4QFY18) against a net profit of RM65.96 million in the previous corresponding quarter. Revenue declined 27.86% to RM706.37 million from RM979.2 million.
Its O&G segment's profit before tax declined to RM6.9 million from RM64 million during the quarter. Excluding one-off items arising from the gain on sales and leaseback of land offset by impairment of certain idle assets, the segment would record a profit before tax of RM36.6 million. Its renewable energy's profit before tax retreated to RM7.3 million from RM12.1 million due to compression in profit margins on revenue from equipment fabrication and steam turbines' business. Its industrial trading and services segment recorded a loss before tax of RM2.9 million versus a profit before tax of RM0.4 million a year ago, due to lower profit margins and higher expenses in the construction equipment and power generation businesses as well as its building materials business.
For the full year (FY18), its net profit was down 42.67% to RM64.8 million from RM113.02 million in FY17, despite revenue climbing 18.82% to RM2.96 billion from RM2.49 billion. This is as its O&G segment's profit before tax declined to RM105.8 million from RM132 million a year ago, which was partly mitigated by the marginally higher profit before tax of RM30.7 million versus RM29.5 million in the renewable energy segment, and the profit before tax of RM7.1 million versus a loss before tax of RM0.5 million in its industrial trading and services segment.
On prospects, Wah Seong said the outlook for profits should improve in the course of the year, as it is seeing an upturn in tendering as well as preparatory activities by O&G majors for a number of prospective projects, which are expected to convert into firm bids in the near term with awards taking place in the next six to 18 months. Its order book now stands at RM1.1 billion, comprising RM774.2 million in the O&G segment, RM283.3 million in the renewable energy segment and RM54.4 million in the industrial trading and services segment.
Petronas Activity Outlook
Petronas expects a better outlook in 2019 for key segments in the upstream O&G sector. This can be gleaned from its 2019-2021 Petronas Activity Outlook (PAO) report published in December 2018, compared with its 2018-2020 PAO report's projections.
It is more positive on its expectations for the drilling segment, going by the expected number of jack-up rigs of between 16 and 19 required for the three-year period, which is almost double the projection of between six and 10 published in the previous year.
Another highlight is the much better outlook for marine vessels, on the back of an expected pickup in drilling activities in the period. Petronas increased the expected number of vessels required by the Malaysian upstream sector by an average of about 20 vessels across the board for the three-year period — comprising anchor handling tug supply (AHTS), platform- and straight-supply vessels (PSVs & SSVs) as well as fast crew boats (FCBs).
Outlook for carbon steel line pipes has also been tweaked upwards for 2019, with growing prospects seen, whereby jobs appear to be spreading into 2020 and 2021 as well, compared with more expected uncertainties for the segment in the previous report. Concurrently, the activity outlook for pipeline installations followed a similar growth projection into 2021, although the outlook for the rest of the offshore installation segment is generally mixed. Based on the report, flexible pipes will see a higher take-up of 24 – 26 kilometres (km) in 2019, as will corrosion-resistant alloy line pipes, which will increase to 25 – 30km in 2020.
Compared with the previous report, Petronas also increased slightly the expected man-hours for hook-up and commissioning activities for the whole three-year period, as with the maintenance, construction and modification works.
Players can also expect more decommissioning activities in the offshore upstream segment, which is an activity to restore a previously producing site to a safe and environmentally stable condition. It comprises well abandonment to prepare a well to be closed permanently and upstream facilities decommissioning once they reach the end of their production life cycle or when there is insufficient hydrocarbon to make production activities commercially viable. Particularly on well abandonment activities, Petronas projected those to involve around 50 wells in 2019, followed by around 40 wells in 2020 and around 60 in 2021. According to the report, decommissioning activities are expected to intensify as considerable assets have been operating beyond 40 years. Among these aged assets are some 11% of 353 offshore platforms, 8% of 10,235km worth of pipelines and 11% of 3,935 well strings.
On the downstream sector, Petronas has increased the number of expected plant turnaround activities in 2019, with projected man-hours more than doubling to 8.1 million from the previous projection of 3.5 million. Turnaround activities, however, are expected to slow in 2020, before recovering the year after.