Report: O&G firms ditching Singapore for Malaysia

KUALA LUMPUR, March 28 — Oil and gas (O&G) firms in Singapore are shifting base to Malaysia, where overall cheaper costs has become a huge lure in an industry ravaged by falling oil prices.

According to the Financial Times, at least three such firms — McDermott, Technip and Subsea 7 — have uprooted their Singapore operations in favour of cheaper rentals and cars in Malaysia as well as the added benefit of closer proximity to their clients.

Another factor encouraging the shift is the Malaysian ringgit’s currently depressed value, now hovering at 4.0 against the US dollar, making it even cheaper to make the transition.

“Prior to the shift, Technip had two subsea hubs in Southeast Asia which were geographically close to each other — one in KL and one in Singapore with each offering different expertise, engineering disciplines and services,” the French firm said in a statement announcing the move.

The oilfield services firm explained that consolidating its operations in Malaysia was both to reduce costs as well as to allow it to operate more efficiently from a single location in the region.

McDermott said it was taking advantage of favourable conditions in Malaysia while Subsea 7 was “streamlining processes and finding efficiencies”.

The latest departures signal a further deterioration of the O&G sector in Singapore, which is home to the regional offshore marine sector.

Depressed oil prices have also hurt the industry in Malaysia, which is similarly retrenching workers in response.

State oil firm Petronas announced at the start of the month that its ongoing cost cuts will lead to nearly 1,000 positions becoming redundant over the next six months.

– See more at:


Oil and gas players in S’pore move to M’sia

Joe Fernandez | March 28, 2016

KUALA LUMPUR: McDermott, Technip and Subsea 7 are not the only service players in the oil and gas sector in Singapore, facing rising costs amidst declining revenue, who are set to relocate to Malaysia completely to cut costs, according to the Financial Times (FT). “There’s damage being inflicted on the city state by the slump in oil prices.”

Patently, Malaysia is cheaper than Singapore in many areas and made even cheaper by the decline in the ringgit. Real estate costs less, reducing expenditure on commercial property and staff housing. It’s also cheaper to buy or lease cars in Malaysia.

It’s expensive to own cars in Singapore, as a result of high registration fees and taxes and the high costs of securing a “certificate of entitlement” for the privilege of owning a car.

Singapore, despite having no oil and gas resources, was one of the top three refining centres in the world. However, Malaysia was increasingly competing with Singapore in the region’s oil, gas and petrochemicals markets, seizing opportunities. Already, the national oil corporation Petronas, is building a refinery in Johor, just across from Singapore.

Oslo-listed Subsea 7, an engineering contractor for offshore oil and gas, told FT that it was “committed to streamlining processes, reducing costs and finding efficiencies given ongoing market conditions”.

Still, the company’s logistics base, an office managing offshore personnel and a unit handling inspection, maintenance and repair, are all in Singapore for now.

US-based McDermott, an oil and gas services firm, hopes its relocation to Malaysia would help it take advantage of the lower costs in its new base, and give it a larger presence given its proximity to customers.

France’ Technip, an oilfield services outfit, decided to focus only on Malaysia at the end of 2014 to rationalise costs, said the company in a statement. “Technip previously had two subsea hubs in Southeast Asia, one in Kuala Lumpur and another in Singapore.”

“Both offered different expertise, engineering disciplines and services.”

The offshore marine sector, a key sector in Singapore, has slashed the workforce given the downturn in the oil and gas industry.

Keppel Corporation, the world’s largest maker of jackup rigs, cut 6,000 jobs or 17 per cent of its global workforce worldwide last year. It cut 7,900 sub-contracted jobs, nearly a quarter, in Singapore.

Sembcorp Marine, it’s local rival, had to let go nearly 4,000 sub-contractors, mostly foreigners, last year. It lost USD211 million in 2015.

Petronas has not been spared either by oil and gas prices heading south. It has made deep cuts in operating and capital expenditure and deferred projects. “As difficult as 2015 has been for us, the next two years will continue to be challenging,” Wan Zulkiflee Wan Ariffin, chief executive of Petronas, told the media in Kuala Lumpur last month.



About artidj

I started working as a field engineer in Oil & Gas industry back in 1996. I do this news clipping of the industry and the geography I am interested in, mainly for my own information. I'm glad you find it useful.
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