Stronger Collaboration Key To Boost Malaysia’s OGSE Resilience Amid Global Uncertainty
By Karina Imran
KUALA LUMPUR, April 24 (Bernama) -- Malaysia’s energy security continues to be underpinned by a resilient ecosystem involving multiple stakeholders, particularly oil and gas services and equipment (OGSE) players that remain a crucial component of the industry’s value chain.
Malaysian Oil, Gas and Energy Services Council (MOGSC) president Syed Saggaf Syed Ahmad said stronger collaboration between operators and OGSE players is essential to navigate ongoing uncertainty, disruptions and external shocks.
He noted that while the OGSE industry contributes between five and eight per cent to the nation’s total gross domestic product (GDP), it remains inherently more vulnerable, as about 80 per cent of its players comprise mid-tier companies and small and medium-sized enterprises (SMEs) with tighter margins and limited capital buffers.
“This reinforces the need for continuous and meaningful engagement between operators and OGSE players to ensure the sustainability of the entire value chain,” Syed Saggaf told Bernama, adding that continued government and ecosystem support remains critical.
West Asia Conflict Reshapes Industry Dynamics
The OGSE industry is undergoing a significant shift driven by macro factors ranging from geopolitical tensions, supply chain disruptions, inflation and increasingly volatile energy markets, reshaping operating conditions across the sector.
As the West Asia conflict continues, industry players need to reorient quickly while reinforcing resilience to brace against stronger headwinds.
While Malaysia’s fuel supply is assured through June, the industry faces mounting challenges.
Transportation costs have risen by 47 per cent to 176 per cent, while insurance premiums have surged by up to 337 per cent since the onset of the global supply crisis.
Against this backdrop, Malaysia OSV Owners’ Association (MOSVA) president Jamalludin Obeng said the offshore services ecosystem, once driven largely by oil prices and upstream spending cycles, as well as project pipelines of oil majors and national oil companies, is now facing heightened uncertainty.
He noted that disruptions along critical routes such as the Straits of Hormuz could shift production requirements to other regions, including Southeast Asia, presenting both challenges and opportunities for Malaysian players.
“In the short term, operators face rising costs such as fuel, crew mobilisation and compliance, while in the medium term, increased upstream activities could support higher demand for offshore support vessels (OSVs),” said Jamalludin.
He said that vessel owners are now contending with rising fuel and marine gas oil (MGO) prices, higher crewing and maintenance costs, evolving regulatory requirements, alongside tighter commercial margins, requiring greater operational discipline.
This has heightened the need to maximise fleet utilisation, minimise downtime, ensure asset reliability, particularly for ageing vessels, and remain commercially agile without compromising safety.
Overall, the environment is pushing offshore service providers to become leaner, more disciplined and increasingly resilient.
Strengthening Industry Resilience
Syed Saggaf reiterated that Malaysia’s OGSE sector remains on a constructive footing, supported by sustained upstream and midstream activities, as well as the national priority to ensure long-term energy security.
While the industry is undergoing a structural shift, he stressed that oil and gas will continue to play a strategic role even as the energy transition gains momentum. This is reinforced by the National Energy Transition Roadmap, which indicates fossil fuels, predominantly natural gas, will continue to play a substantial role in Malaysia’s energy mix through 2050.
“This highlights the continued importance of the sector, not only as the backbone of the energy system, but also as a key enabler supporting the country’s broader transition towards a more sustainable energy future,” said Syed Saggaf.
He noted that, apart from global and regional uncertainties, the evolving landscape is also shaped by shifting policy environments.
Syed Saggaf highlighted that the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is expected to be implemented in due course, will present both challenges and opportunities for the industry.
As market openness increases, he emphasised the need for proactive measures to strengthen competitiveness through capability building, productivity improvements, technology adoption and strategic partnerships.
Talent development remains a priority, as competition from other sectors continues to widen the talent gap. While automation and digitalisation are progressing, many parts of the value chain still rely heavily on skilled technical roles essential to operational reliability.
“As the industry navigates an increasingly complex and evolving landscape, resilience will ultimately depend on our ability to adapt, collaborate and invest for the long term, ensuring the sector remains competitive, sustainable and ready to support the nation’s energy future,” he added.
OGSE Outlook Remains Cautiously Positive
Looking ahead, Syed Saggaf said Petroliam Nasional Bhd’s (Petronas) commitment to sustaining production at around two million barrels of oil equivalent per day is expected to support continued capital expenditure for new and brownfield developments, alongside operating expenditure to enhance reliability, efficiency and asset life extension.
He said that MOGSC is cautiously optimistic that 2026 will be a stronger year, with selective growth still expected in the upstream segment, driven by exploration, drilling and development activities, supporting demand across engineering, fabrication, transportation, installation, as well as hook-up and commissioning services.
While demand for rigs and offshore support vessels is expected to remain relatively stable, downstream prospects are more positive, supported by ongoing construction of onshore facilities and planned turnaround activities, particularly in Pengerang.
“Local OGSE players stand to benefit from these developments, especially through participation in large onshore Engineering, Procurement, Construction and Commissioning (EPCC) projects by contributing as subcontractors and leveraging their technical capabilities and local expertise,” said Syed Saggaf.
Jamalludin added that supportive measures, including a more conducive operating environment and potential refinements to fiscal frameworks, could further strengthen industry resilience amid current uncertainties.
Building Stronger Partnerships Essential for Sustainability
The government has assured the rakyat that efforts to safeguard fuel supplies are being coordinated through the National Economic Action Council, with a focus on strengthening national energy resilience and ensuring daily life remains uninterrupted amid global uncertainties.
In supporting this, Petronas, together with OGSE players, leverages its integrated value chain to supply nearly 50 per cent of Malaysia’s fuel demand, with the remainder met by other oil companies operating in the country.
Against this backdrop, continued collaboration between Petronas, industry players, relevant agencies and the government remains critical to maintaining a stable and resilient fuel supply.
Jamalludin stated that closer collaboration between operators and service providers enhances agility. This improvement is achieved by increasing visibility into demand, schedules, vessel requirements, and operational priorities.
As a result, better planning, more efficient asset allocation, and quicker responses to disruptions are enabled.
“Such collaboration must also be supported by longer-term contracting structures that provide the sustainability and visibility service providers require, particularly as financial institutions seek greater certainty of cash flows before extending financing, especially for fleet renewal and capital investments,” he said.
With clearer contract visibility, service providers are better positioned to secure financing, reinvest in assets and maintain operational readiness, shifting the ecosystem from a reactive stance towards one that is more prepared and resilient.
“In other words, while Petronas provides an important anchor to the domestic ecosystem, a more coordinated approach will ensure the Malaysian OGSE ecosystem remains competitive, sustainable and better positioned to navigate future uncertainties,” he added.
-- BERNAMA