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MALAYSIA's oil and gas services and equipment (OGSE) sector must leverage expertise in energy transition to access downstream consumer markets, according to Economy Minister Datuk Seri Rafizi Ramli.
Rafizi stressed that local OGSE players possess the technological capabilities to pivot into renewable energy sectors such as solar panels and sustainable aviation fuel.
"Since the launch of the National Energy Transition Roadmap (NETR), I’ve personally witnessed a surge in foreign interest in our OGSE, particularly from Japanese companies looking to tap into our renewable energy space," Rafizi said in his speech at the launch of the National OGSE Industry Blueprint 2021-2030 Mid-Term Review (MTR).
However, he pointed out a mismatch in local supply, with insufficient domestic players positioned to capture these emerging opportunities. "Unfortunately, we do not have enough local players positioned to capture these opportunities," he explained.
To address this gap, Rafizi outlined the government's commitment to aggressively supporting the expansion of local OGSE companies into the renewable energy sector under the MTR.
"By 2030, we aim to have 10 OGSE companies successfully pivoted into the renewable energy space," he said, adding that projects like plastic-to-fuel could diversify revenue streams and offer innovative growth avenues.
One of the key goals of the MTR is to scale up local OGSE players into regional champions. Rafizi highlighted that 80% of OGSE companies in Malaysia are small and medium enterprises (SMEs).
Under the "regional champions programme," companies will be required to have over RM50 million in revenue and a track record of positive profits before tax over five years, with no legal issues.
"The idea is to identify and match opportunities, enabling access to financing and marketing, which can include mergers and acquisitions, management buyouts, or joint ventures," he said.
The minister also addressed the financial challenges the industry has faced since the COVID-19 pandemic, which exposed vulnerabilities in the OGSE sector.
"The pandemic revealed the financial weaknesses of many OGSE players, who found themselves trapped in overspecialised business models, burdened by excessive debt, and suffering from shrinking profit margins," he stated.
The geopolitical shocks from global conflicts, which have triggered significant fluctuations in oil prices, have further compounded the industry's struggles, leaving supply chains vulnerable.
Rafizi pointed to a stark drop in investments in the sector, citing that in 2019, the OGSE industry attracted approved investments of RM3.3 billion, but by 2022, this figure had plummeted to just RM363 million—a nearly 89% decrease.
"This sharp decline underscores the urgent need for reform and innovation within the industry," he said.
The MTR, launched as part of the broader OGSE Blueprint, builds on the original framework introduced in April 2021.
It outlines a refreshed vision to develop a robust, resilient, and globally competitive OGSE industry that contributes to Malaysia's national energy security, sustainability, and energy transition by 2030.
The MTR includes 26 streamlined initiatives, covering key areas such as industry development, finance, technology, talent, export, and the national agenda.
A notable feature of the MTR is the regional champions programme, which aims to scale up SMEs to compete on the global stage and increase export revenues to at least 50%.
This initiative will play a crucial role in positioning Malaysia’s OGSE industry for success in a rapidly evolving global market. – March 20, 2025
