Oil & Gas Services and Equipment (OGSE)

The Oil, Gas and Energy (OGE) industry plays a prominent role in Malaysia’s economy, contributing about 20 per cent of national GDP over the past decade. The OGE NKEA is a focused and sustainable initiative to attract more investments into Malaysia, to develop human capital, to encourage greater technology transfer and to use Malaysia as a regional base to do business in the Asia Pacific region.

Under OGE NKEA are 13 Entry Point Projects (EPPs) that attract significant new investments, generate new jobs and can contribute to economic growth for the long term. The aim of these EPPs is to turn Malaysia into the number one oil and gas hub in the Asia Pacific region by 2017.

The Government believes these EPPs will spur greater breadth of related investments in key areas such as deep-water, enhanced oil recovery (EOR) techniques and marginal oil and gas fields developments.

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What it takes to make it happen

Transforming Malaysia as the regional oil and gas center

The Oil, Gas and Energy NKEA is targeting 5 percent annual growth for the sector in the decade from 2010 to 2020. This is indeed an ambitious goal, particularly against a backdrop of the natural 2 percent decline of oil and gas production. This target translates into an increase of RM131.4 billion in the period from 2010 to 2020.

To achieve this target, the Government and the oil and gas industry will focus on three thrusts: sustaining oil and gas production, enhancing downstream growth and making Malaysia the number one Asian hub for oil field services.

Thrust #1: Sustaining Oil and Gas Production
  • Rejuvenating Existing Fields through Enhanced Oil Recovery
    Enhanced oil recovery implementation in Malaysia is estimated to add approximately 166,000 barrels per day of oil production in 2020. The total investment needed to achieve this is approximately RM68.6 billion and the contribution to GNI is RM16.6 billion.

  • Developing Small Fields through Innovative Solutions
    The development framework for small fields will increase Malaysia’s oil production by approximately 55,500 barrels per day in 2020. The total investment needed to achieve this is approximately RM13.3 billion and the contribution to GNI is RM5.5 billion.

  • Intensifying Exploration Activities
    The impact of these measures will be to sustain Malaysian oil and gas production in the long run, and hence production from any new oil and gas discoveries will need to come on-stream in a timely manner. An estimated total of RM18.4 billion investment is required for this project by 2020.

Thrust #2: Enhancing Downstream Growth
  • Building a Regional Storage and Trading Hub
    The Pengerang independent deepwater oil storage terminal in Johor will generate RM1.6 billion GNI by 2020 through three streams. First, independent logistic players will charge storage fees, generating approximately RM0.5 billion in additional GNI. Second, the availability of storage will drive additional shipping volumes, generating an expected RM0.3 billion in GNI. Lastly, trading of crude oil and petroleum products is expected to generate an additional RM0.8 billion in GNI. The planned terminal will require private investment of RM4.8 billion and will provide a total storage capacity of 5 million cubic metres. An estimated 800 new jobs will be created from the venture, excluding any spin-off from other sectors.

  • Unlocking Premium Gas Demand in Peninsular Malaysia
    Unlocking premium gas demand, a liquefied natural gas (LNG) regasification terminal has been built in Melaka to treat imported LNG. To make gas imports economically feasible, the gas will be sold at a liberalised and unsubsidised price. This will have an estimated GNI impact of RM10.6 billion, of which RM2.4 billion will be in the Oil, Gas and Energy NKEA. It will also create 27,000 new jobs by 2020, largely in other sectors beyond oil, gas and energy.

Thrust #3: Making Malaysia the Number One Asean Hub for Oil Field Services
  • Attracting Multinational Companies to Bring a Sizeable Share of Their Global Operations to Malaysia
    Malaysia aims to attract 10 to 20 major international companies in the Oil Field Services and Equipment (OFSE) industry to bring approximately 10 percent of their business operations to the country. If this aspiration is achieved it will have considerable impact creating over 20,000 jobs and almost RM6.1 of incremental GNI by 2020.

  • Consolidating Domestic Fabricators
    Consolidation of major offshore structure fabricators in Malaysia to match the scale and efficiency of major regional player would translate to a GNI impact of RM4.1 and the creation of 5,000 jobs. An estimated private investment of RM4.0 billion is required to pay for internal efficiency programmes such as the automation of non-destructive testing, steel-cutting and bending.

  • Developing Capabilities and capacity through Strategic Partnerships and Joint Ventures
    At present there are considerable gaps in the domestic OFSE industry, with Malaysian companies lacking capabilities and experience particularly in engineering and installation, limiting their ability to gain a strong share in the regional market. This activity aims to incentivise domestic companies to form joint ventures with world class companies to build their capabilities and track records. Our ambition is to gain 15 percent of the shallow water and 50 percent of the deepwater market in Asia Pacific (of which the vast majority are found in Malaysian waters) by 2020. Achieving this would mean a contribution of RM4.0 billion in GNI and job creation of some 15,000 jobs.