RM217bil investment in oil and gas industry needed

KUALA LUMPUR: An estimated RM217.6bil will be needed from now until 2020 for the oil and gas and energy industry to continue contributing significantly to gross national income (GNI) as envisioned under the Economic Transformation Programme (ETP).

This were among the findings of 35 members in a lab held over eight weeks in June and July for the industry, which has been identified as one of 12 national key economic areas.

“The industry faces significant challenges in keeping up with the GNI targets as domestic oil and gas production declines,” lab members said.

They added that the industry was struggling to produce 600,000 to 700,000 barrels of oil equivalent per day in the recent past as large reserves were no longer easy to find.

Three main focus areas were identified by the lab to help the industry face the challenges: sustainability, growth areas and diversification.

In a breakout session held yesterday following the presentation of the ETP by Minister in the Prime Minister’s Department Senator Datuk Seri Idris Jala, the lab members said this would enable the industry to contribute to an incremental GNI of RM131.5bil and 52,000 jobs by 2020.

The industry has been contributing 20% to Malaysia’s gross domestic product annually over the last two years, of which 90% came from exploration and production.

The lab said 12 entry point projects (EPPs) and seven business opportunities would help boost GNI and jobs with 99% of the investment to come from the private sector, as was already the case. “Business opportunities” mean that these are projects that the private sector are open to pitch to the Government in a private-public partnership.

The EPPs were developed across four themes, namely sustaining oil and gas production, enhancing growth in downstream, making Malaysia the number one hub for oil field services and building a sustainable energy platform for growth.

Among the 12 EPPs are deploying nuclear energy for power generation, building up the country’s solar power capacity, attracting multinational companies to bring their global oil field service and equipment operations to Malaysia and consolidating domestic fabricators. Other projects include building a regional oil storage and trading hub, unlocking premium gas demand in Peninsular Malaysia, tapping Malaysia’s hydroelectrical potential as well as rejuvenating existing fields through enhanced oil recovery, developing small fields through innovative solutions and intensifying exploration activities.