Xinhua, Kuala Lumpur :
Malaysia’s oil and gas sectors are likely to cut earning over the next two years as project rollouts is slowing down and delays in new tenders are expected, according to a local research house AmResearch.
An AmResearch report available here Tuesday said “we have downgraded our sector view to neutral from overweight given the slow rollout of domestic developments, downscaled projects, declining marine charter rates, increasing competition from overseas fabrication players due to the relaxation of local content requirements and deteriorating visibility of regional prospects, especially in Australia’s mega-billion gas field developments.”
“Additionally, there are concerns that the possible replacement of Petronas president and chief executive officer Tan Sri Shamsul Abbas next year may lead to further temporary delays in contract awards,” AmResearch said.
The research house noted that contract awards to Malaysian Oil and Gas players in the third quarter of this year fell to only RM 711 million (about 218.76 million U.S. dollars) from RM 8 billion (about 3.55 billion dollars) previously.
“The slower project rollouts are underscored by recent Upstream reports that the Petronas-operated Baram Delta Gas Gathering Project 2 (Bardegg 2) and Baronia enhanced oil recovery development off Malaysia appear to have slowed with the partners yet to award the central processing platforms (CPP) to front- runner Hyundai Heavy Industries.”
However, the research house noted that globally, there were ongoing revisions in project cost and scale, given the increasing cost consciousness by oil majors as crude oil prices have softened even though development costs have escalated over the past three years.
“Additionally, even though Malaysia’s oil giant Petronas is still likely to ramp up its capital spending post-2015, there will be increased competition from foreign yards as local vendor policies are being relaxed under more complex engineering projects, ” the research house said.
