- Autor: Astrid Folkvord Janbu
- Keywords: Oil & Gas
Regional Communications Manager, Region South East Asia & Australia, DNV GL - Oil & GasTelefon: +65 9658 8512
Astrid Folkvord Janbu
Astrid Folkvord Janbu
Head of Media Relations, DNV GL – Oil & GasTelefon: +47 478 45 860
VP Director of Communications, DNV GL - Oil & GasTelefon: +47 415 60 264
Thirty-seven per cent of senior oil and gas professionals in Malaysia are actively looking for new gas projects as a result of falling oil prices, compared to 31% globally. However, the Malaysian respondents' views on renewable energy investment in 2017 are divided, with 49% expecting it to decrease while 44% expect it to rise or stay the same.
Short-term agility, long-term resilience is DNV GL’s seventh annual benchmark study on the outlook for the oil and gas industry, providing a snapshot of industry confidence, priorities and concerns for the year ahead. It draws on a survey of 723 senior sector players 1 .
Hernando Caceres, Country Manager Malaysia, DNV GL – Oil & Gas , says: “The sector is bracing itself for a tough twelve months, with deeper cuts in spending and jobs expected. However, there are signs that industry leaders are taking long-term action to reorganize for a new era.
The sector is looking for sustainable growth through diversification, with a particular focus on new gas projects. This marks a change in mindset to embrace a more robust, diverse and sustainable energy future.” In line with depressed confidence levels in the country and relatively matched to global opinion, 67% and 58% of Malaysian respondents respectively expect CAPEX and OPEX spending to decrease in 2017.
However, a far larger share in Malaysia, 81% versus 55% globally, expect a rise in job losses in the year ahead – significantly up from 60% last year. Only 16% of those questioned believe the worst of the industry downturn is already over, compared to 27% globally. The majority (58%) of Malaysian oil and gas professionals see their current cost-efficiency measures as marking a permanent shift towards a leaner way of working. However, a concern raised in the research is that over a third (35%) see cost-cutting initiatives in their own company as increasing the health and safety risk (19% globally).
There is also a clear drive to increase M&A activity over the next twelve months, up from 19% to 37%. More than four out of five respondents (86%) expect increased industry consolidation in 2017.
Cost pressures are accelerating some more positive cost-control measures in Malaysia. More Malaysians than globally (79% versus 66%) believe that cost pressures are driving their company to collaborate more with industry and 72% agree that operators will increasingly push to standardize their delivery globally, up from 55% last year.
Digitalization is also increasingly seen as a means to enhance operational and cost efficiencies. Since the downturn, the imperative to adopt and embrace digitalization is also higher in Malaysia than globally (44% versus 39%).
“The effects of the downturn are being strongly felt in Malaysia. It is concerning to learn that a high share of decision makers in Malaysia feel that cuts across their business may be negatively affecting HSE levels, as well as training and competence. We as a sector should never compromise on safety,” adds Hernando Caceres.
“The key to recovering and rising beyond the downturn is the ability to adapt and embrace digitalization, standardization and the benefits of collaboration.”
Other key findings include:
- When asked to predict the price of oil at the end of 2017, Malaysian respondents forecast an average of USD55.6 per barrel, lower than the global average of USD57.8 per barrel, and the average from Asia Pac respondents with USD60.0 per barrel.
- 40% of Malaysians do not believe the oil price will rebound in 2017, compared to 28% globally.
- Malaysians feel more strongly about the barriers to growth than their global counterparts. Though uneconomic oil prices are cited as the biggest concern (60% versus 64%), the oversupply of oil and gas (42% versus 27%) and the weak global economy (37% versus 27%) are seen as greater obstacles than they are globally.
- 70% will seek to achieve greater standardization of tools and processes in the year ahead, up from 57% in 2016.
- The main areas where costs cuts are expected are organizational restructuring (38%), operating expenditure (38%), and the labour force (34%).
- Nearly half (47%) expect R&D/innovation spending to be cut in 2017.
- Nearly nine out of ten (88%) respondents stated that gas will become an increasingly important component of the global energy mix over the next ten years.
- The focus on extending the lifespan of assets has also increased significantly since 2016 (up from 25% to 49%).
- Cyber security (49%), closely followed by digitalization (47%) and subsea innovation (47%), are the highest priority areas for R&D, pilots/trials and the implementation of emerging oil and gas technologies in Malaysia in 2017.
1. The outlook for the oil and gas industry in 2017 is an industry benchmark study from DNV GL, the leading technical advisor to the industry. Now in its seventh year, the programme builds on the findings of six prior annual outlook reports, first launched in early 2011. During October and November 2016, we surveyed 723 senior professionals and executives across the global oil and gas industry, along with 14 in-depth interviews with a range of experts, business leaders and analysts. Two–thirds (66%) are employed by suppliers and service companies across the industry, while 26% of respondents work for oil and gas operators. The remaining respondents come from regulators and trade associations. The companies surveyed vary in size: 41% had annual revenue of USD500m or less, while 18% had annual revenue in excess of USD5bn. Respondents were drawn from right across the oil and gas value chain, including publicly-listed companies and privately-held firms. They also represent a range of functions within the industry, from board-level executives to senior engineers.