Malaysian Oil Sector Rebalances Portfolios
New research by DNV GL, the technical advisor to the oil and gas industry, has revealed that confidence in growth in the Malaysian oil and gas sector has tumbled since 2014, from 96% to 21%, with tough, short-term, cost-cutting efforts expected to increase in 2017.
Diversification will be a hallmark of 2017, with 49% of those surveyed looking to increase investment in, or diversify into, areas beyond oil and gas.
Thirty-seven per cent of senior oil and gas professionals in Malaysia are actively looking for new gas projects as a result of falling oil prices, compared to 31% globally. However, the Malaysian respondents' views on renewable energy investment in 2017 are divided, with 49% expecting it to decrease while 44% expect it to rise or stay the same.
Short-term agility, long-term resilience is DNV GL’s seventh annual benchmark study on the outlook for the oil and gas industry, providing a snapshot of industry confidence, priorities and concerns for the year ahead. It draws on a survey of 723 senior sector players 1 .
Hernando Caceres, Country Manager Malaysia, DNV GL – Oil & Gas , says: “The sector is bracing itself for a tough twelve months, with deeper cuts in spending and jobs expected. However, there are signs that industry leaders are taking long-term action to reorganize for a new era.
The sector is looking for sustainable growth through diversification, with a particular focus on new gas projects. This marks a change in mindset to embrace a more robust, diverse and sustainable energy future.” In line with depressed confidence levels in the country and relatively matched to global opinion, 67% and 58% of Malaysian respondents respectively expect CAPEX and OPEX spending to decrease in 2017.
However, a far larger share in Malaysia, 81% versus 55% globally, expect a rise in job losses in the year ahead – significantly up from 60% last year. Only 16% of those questioned believe the worst of the industry downturn is already over, compared to 27% globally.
The majority (58%) of Malaysian oil and gas professionals see their current cost-efficiency measures as marking a permanent shift towards a leaner way of working. However, a concern raised in the research is that over a third (35%) see cost-cutting initiatives in their own company as increasing the health and safety risk (19% globally).
There is also a clear drive to increase M&A activity over the next twelve months, up from 19% to 37%. More than four out of five respondents (86%) expect increased industry consolidation in 2017.
