No financing leeway even for Malaysia’s oil and gas players


Can we have a Bank Minyak dan Gas, similar to Agrobank?

Dateline 2017-12-30, Asean Today:

The Malaysian oil and gas industry has been suffering from prolonged low oil prices. During the past ten years, crude oil prices fell from above US$130 per barrel to an all-time low of US$26 per barrel. The unpredictable and changing global environment cause oil prices to fluctuate severely. Recently, members of the Organisation of Petroleum Exporting Countries (OPEC) have been complying with the agreed production levels. The gradual reduction in oil inventories will help alleviate the oversupply of oil. But, prices will unlikely return to its past average of at least US$80 per barrel soon.

Sources: Petronas Activity Outlook 2017- 2019Petronas Activity Outlook 2018-2020

Meanwhile, The Edge’s December 2017 weekly report noted that banks have been more cautious in their lending to the O&G sector in recent years. It quoted O&G players like Deleum Bhd and Uzma Bhd. Given the current global dynamics, it may be reasonable for the banks to act in its own interest. However, their decision to not lend capital needed may drag Malaysian Oil and Gas Services and Equipment (OGSE) industry further away from its long-term vision of being able to compete with the best in the world across multiple categories in terms of cost and quality.

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