MALAYSIAN offshore services provider Sapura Energy’s recent spate of foreign contract wins underlines how the sector has had to adapt after more than two years of low oil prices.
The industry – one of the biggest in the region, employing thousands of people – is hurting despite having been cushioned by state-owned Petronas, which favours local service providers. Government investment funds have also played a part in keeping service companies afloat. But this is unlikely to last, given that crude prices are not anticipated to return to their pre2014 crash levels anytime soon. This point is further driven home not just by bearish oil price forecasts but also by Petronas’ lasting clampdown on spending. This suggests that the time is approaching when a wave of industry consolidations will separate the strong from the weak.
The CEO of Singaporean business consultancy Consulus, Lawrence Chong, told NewsBase Intelligence (NBI) that he said it was a good move by Malaysian offshore firms to try to reduce their reliance on Petronas as a way of diversifying their income sources. But he said: “Given the entrenched nature of the role of Petronas, not all will succeed in this move so some level of consolidation in the sector might take place.”
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