Budget 2025: Be Supportive of OGSE Sector to Continue Growth Trajectory - MPRC

By Siti Radziah Hamzah

KUALA LUMPUR, Oct 16 (Bernama) -- Malaysia Petroleum Resources Corporation (MPRC) is optimistic the tabling of Budget 2025 will create a supportive environment for the oil and gas services and equipment (OGSE) sector to continue its growth trajectory following its recovery from recent challenging years.

MPRC president/chief executive officer Mohd Yazid Ja'afar said the OGSE sector is on the cusp of a critical juncture post-COVID-19 and a low oil price environment.

"It is in uncharted waters with the energy transition and climate change creating new demands on OGSE companies," he told Bernama. 

MPRC expects Budget 2025 to include initiatives to support OGSE companies pivot to a cleaner energy landscape.

The government is committed to incorporating climate policies and sustainability. This is demonstrated via policies including the National Energy Transition Roadmap (NETR) and the New Industrial Masterplan 2030. 

"This is especially vital for small and medium-sized enterprises (SMEs). About 70 per cent of the OGSE sector are SMEs and require greater support to manage resource constraints due to their size,” said Mohd Yazid.

Simultaneously, the sector continues to tackle structural issues related to talent, technology and innovation, and access to funding, he said.

Given these factors, MPRC’s Budget 2025 wishlist centres on programmes which support talent development to upskill OGSE workers for offshore jobs, and enhance talent capabilities in line with energy transition needs.

The agency urged the government to encourage SME participation in technical and vocational education and training (TVET) to ensure the development of a skilled talent pool, and to provide opportunities for SMEs to participate in energy transition and NETR flagship projects, such as the development of carbon capture, utilisation and storage in Malaysia, and have funding access.

MPRC also encouraged SMEs to enhance their capabilities to adopt and report on sustainability and to improve operational energy efficiency, or provide energy efficiency as a business solution.

The Malaysian Oil and Gas Services Council (MOGSC) president Syed Saggaf Syed Ahmad concurred, adding that it has asked the Finance Ministry to open up a funding portfolio for the oil and gas industry to ease liquidity issues. 

MOGSC, the largest industry association for oil, gas and energy players, would like the government to support oil and gas players with a RM3 billion allocation to secure financing from local financial institutions.  

The association has 620 corporate and associate members from every segment of the oil, gas and energy supply chain’s 60,000 workforce. Between 70 per cent and 80 per cent are SMEs. 

"It is getting difficult for industry players to get funding and financing when people are moving towards green energy. It is not appealing to banks and financial institutions to have O&G companies on their portfolio," he told Bernama in an interview recently.  

MOGSC has also asked the government to intervene to ensure that vendors and subcontractors, owed by Sapura Energy Bhd, be fully paid eventually. The restraining order imposed on Sapura Energy has affected vendors and subcontractors, he said.

Sapura Energy has been in the cash-strapped Practice Note 17 (PN17) category since May 2022.

"Nobody gets paid by Sapura Energy. I think (dues run between) RM1.8 billion and RM2 billion among the vendors. Sapura Energy is a (MOGSC) member. Do not get me wrong, we want Sapura Energy to be rehabilitated and it is part of the provision in the rule of law for it to have time to fully clean up the company. 

"But vendors need to be paid," Syed Saggaf said. 

On talent issues, he said MOGSC is collaborating with stakeholders such as Petronas to build a framework of skills set and other programmes to attract new workforce.

“We support TVET because we need talents. We are concerned there may not be enough talent in the next few years. We are working hard to ensure that talents return to the industry. It is a challenge to sell the relevance of oil and gas to new generations,” Syed Saggaf said.

-- BERNAMA