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Service Providers Can Look Forward to Busy Year

Posted on: Thursday, 12 January 2006, 06:00 CST

SERVICE providers can look forward to a busy 2006 and beyond, amid growth in planned construction and other activities related to the upstream and downstream oil and gas industry in Malaysia.

"It is always our intention to go regional and overseas. But the company is busy with the local jobs now," Tanjung Offshore Bhd managing director Omar Khalid said.

He said research firm Frost & Sullivan has forecast that oil players will construct between 65 and 90 platforms within Malaysian waters by the next three years.

"Just think of the various businesses related to this construction and installation of platforms. First, you have the construction, then the spare parts, shipping these platforms to their respective sites and after installation, the platforms need to be maintained.

"These are new ones. What about the old ones which are between 10 and 15 years old? They too need to be serviced. These will provide long-term contracts for the service providers," Omar said.

To secure long-term contracts, he said, the service providers need to bring their expertise in after-sales and prove that they can deliver their services.

"When we made sales, 20 years after that if we do the job properly, the contracts to maintain the equipment and facilities will be ours for the long term," Omar added.

Dialog Group Bhd, meanwhile, is upbeat about the outlook of the industry, both domestic and international, especially after the company secured a contract worth RM285 million to build a fuel oil storage terminal in Singapore.

It was the company's first major contract for the downstream sector of the industry since the completion of its last major construction project in 2002.

Chairman and managing director Ngau Boon Keat sees the contract as the beginning of the return on investment in the downstream sector of the oil and gas industry in the region.

Investments in such projects in South-East Asia cooled off in 2001, with multinational companies moving their operations in the downstream businesses to China due to the negative perception of the region following the September 11 terrorist attacks in New York.

The soaring price of crude oil, which was very evident during 2005, is said to be one of the prime movers of activities in the oil and gas industry in the years ahead.

Oil price reached a record high of US$70 (US$1 = RM3.78) per barrel in September, sending jitters across the world, especially to oil importers.

Since 1993, the price of crude oil has gone up over 250 per cent from just US$19 per barrel. It rose to US$31 in 2003 before settling at the current price level of above US$60.

According to analysts, much of the exploration works in the Malaysian oil and gas industry will concentrate on deepwater fields.

It is estimated that 25 per cent of offshore oil will come from deepwater fields by 2010.

Globally, demand for fossil fuels looks certain to be steady and stable, and is expected to increase up to 50 per cent by 2030.

Source: Business Times; Kuala Lumpur

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