Malaysia’s oil & gas services and equipment (OGSE) companies recorded a 7% year-on-year growth in revenue to RM72.7 billion in the fiscal year 2022 (FY2022), driven by higher contracting rates and asset utilisation amid the award of new contracts.
In its FY2022 edition of the OGSE100 publication released today, Malaysia Petroleum Resources Corporation (MPRC) said 73.5% of the industry revenue was contributed by the country’s top 100 OGSE companies by revenue. Non-OGSE100 mid-tier companies (MTCs) and small and medium-sized enterprises (SMEs) accounted for 13.8% and 12.7%, respectively.
The report also said the OGSE industry total population stood at 2,286 companies in 2022, made up of the OGSE100, 1,945 non-OGSE100 SMEs and 241 non-OGSE100 MTCs. Meanwhile, of the 241 MTCs, 12 had grown from SMEs in the previous year whereas 23 had reverted to SME status.
“Our analysis of the OGSE industry and 100 top OGSE companies by revenue for FY2022 showed the fragility of the recovery achieved in 2022. This can be seen with a contraction in the industry’s profitability in FY2022 compared with the previous year, despite growth in revenue,” said Mohd Yazid Ja’afar, President/CEO, MPRC.
According to the OGSE100 FY2022 report, the OGSE industry registered pre-tax losses of RM3.5 billion against profit before tax (PBT) of RM4.2 billion a year earlier mainly due to RM5.2 billion in impairment losses from a number of public-listed companies within the OGSE100. Excluding the impairments, the industry would have registered PBT of RM1.7 billion, of which the OGSE100 accounted for RM974.4 million. In FY2021, the industry had recorded PBT of RM4.2 billion.
Nonetheless, Yazid expressed optimism on the OGSE industry going forward, based on the latest outlook from PETRONAS. According to the PETRONAS Activity Outlook 2024-2026, Malaysia is forecast to see stable activity for drilling rigs, fixed structures, installation and projects, whereas commitments by Malaysia Petroleum Management will also drive plug and abandon activities. Additionally, downstream opportunities remain in Pengerang and Sarawak, where plant turnaround work will be required.
“These projects represent vast opportunities for local OGSE players equipped with the right tools and expertise to capitalise on for the next three years,” he said.
He also reiterated the need for OGSE companies to pivot towards sustainability, as OGSE companies must increasingly comply with requirements from sustainable practices by customers, regulators, investors and financial institutions. To this end, Yazid highlighted MPRC’s development of the three-part national OGSE sustainability programme, which commenced with the National OGSE Sustainability (NOS) Plans in 2022. This year, MPRC will introduce the NOS- Roadmap, creating pathways for OGSE companies to adopt and respond to sustainability requirements, before the NOS-Framework is subsequently launched by 2025.
