Kuala Lumpur, Malaysia (CU)_ According to AmInvestment Bank Bhd, Malaysia’s oil and gas industry is under the recovery mode this year, with many sectors such as engineering, procurement, construction, installation, and commissioning (EPCIC) expected to witness a steady improvement.
According to the investment bank, growing EPCIC will be powered by a variety of activities, such as pipeline installations, which will increase by 4.2x to a base case of 266 days in 2023 from 64 days in 2021 due to more construction projects coming into the current platforms or processing facilities. The bank said, “Decommissioning of wells increase to 18 this year from 15 in 2020, which will rise further to 24 in 2022 and expand to remove 51 conductors, two floaters and one fixed platform”.
AmInvestment Bank stated that 56 percent of Petronas’ 350 facilities are currently running past their design life, which is 38 percent of the 750 pipelines, and 45 percent of the 3,000 wells are idle, with more than 500 wells projected to be permanently closed by 2030. According to the investment bank, Sapura Energy Bhd’s unified service platform was well placed to secure these jobs, whereas the former local EPCIC players like Barakah Offshore Petroleum Bhd was still under PN17 status.
The bank noted that higher vessel demand to carry out drilling and ventures, which is expected to rise to 172 this year from 141 in 2020, should benefit operators like Icon Offshore Bhd, Perdana Petroleum Bhd, and Alam Maritim Resources Bhd. The Bank said, “Even so, this still represents a 33 per cent decrease from the earlier 2020 plan for 256 vessels notwithstanding Petronas’ prioritization of local ships. However, vessel requirement to support production operations is relatively flat year-on-year at 131 vessels this year”.
Due to falling oil prices and the movement control order, the number of rigs is projected to rise to 22 in 2021 from 14 in the second half of 2020. AmInvestment Bank said, “While this is below the earlier 2020 target of 26 rigs, we expect Velesto Energy Bhd to experience improving asset utilization towards the second half of the year”.
However, due to resource constraints and Petronas’ optimization strategy to “uberize” marine vessels into a single digital platform, certain areas may still struggle, for example, hook-up and commissioning activities are expected to fall 20% annually to 3.5 million man-hours this year. Offshore maintenance and construction are also projected to decrease by 10% annually to 10.1 million man-hours.
