Page 15 - Malaysia Marine & Offshore Industries Directory 2019/2020
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                 MALAYSIA MARINE & OFFSHORE INDUSTRIES DIRECTORY 2019/2020
  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%
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