Malaysia can become a key deepwater oil and gas hub globally

If done right, Malaysia can become a key deepwater oil and gas hub globally after Houston, Rio De Janeiro and Aberdeen.

Disclosing this, Deputy Prime Minister Tan Sri Muhyiddin Yassin said clearly, the era of easy oil is over and the exploration and production of oil and gas will move increasingly into deeper waters, presenting new challenges as well as opportunities.

“Engineering and support services demand for this water access in the Asia Pacific, particularly in the South China Sea, which has been growing strongly over the past two to three years.

“Malaysia needs to be nimble in responding to this factor’s new requirements,” he said at the Signing Ceremony of a memorandum of understanding (MoU) between Asia Supply Base Sdn Bhd (ASB) and Labuan Shipyard & Engineering Sdn Bhd (LSE) here yesterday.

ASB was represented by its chairman Datuk Uzair Yahaya while LSE by Datuk Zulkifly Rafique.

However, Muhyiddin reminded that the window of opportunity was not perpetual and hence, capacity and capability are of the essence if not paramount for Malaysia to leverage on and build existing oil and gas assets.

He said ASB and LSE in Labuan were both opportunely and strategically located on the doorstep of oil and gas activities, being about 200 nautical miles to the nearest oil and gas fields off East Malaysia.

ASB is a one-stop centralised logistic support centre tailored to the requirements of oil and gas exploration, development and production activities.

LSE meanwhile, has a proven track record in oil and gas engineering and fabrication, ship-building, ship-repair and construction of power barges.

The MoU between ASB, a wholly-owned entity of the Sabah government, and LSE witnessed by Muhyiddin, is aimed at turning Labuan into a hub for oil and gas as a positive economic contribution to Sabah.

Through the MoU, ASB and LSE are to offer their capabilities and facilities as established players in their respective fields, namely logistics and engineering fabrication, while positioning themselves to actively participate in the development of the oil and gas industry in Sabah.

According to Muhyiddin, location alone would not make a successful oil and gas regional hub, saying that today, oil and gas players demanded an efficient one-stop shop with fully integrated services of facilities, warehouses, workshops as well as ship maintenance and fabrication yards.

“For example, our worthy oil and gas hub competitors in Singapore have benefited tremendously from a central biographical location and connectivity.

“More importantly, they have successfully leveraged on the comprehensive oil and gas ecosystem in place, encompassing the whole spectrum of operators, specialised equipment manufacturers, service providers and offshore engineering companies,” he highlighted.

Meanwhile, Muhyiddin said Sabah in particular, had shown strong potential in the oil and gas business where recent oil and gas discoveries in the Dumusut/Kakap, Malikai, Jangas, Ubah Crest, Pisangan and Kamunsu deep water fields off the State’s shores were currently being developed and are expected to commence production between 2011 and 2015.

He said the Kikeh deepwater field, the country’s first deepwater offshore development, in fact had already begun production in August 2007.

“This sizeable ultra deepwater blocks offshore, coupled with the Kebabangan cluster gas fields, the completion of the Sabah Oil & Gas Terminal (SOGT) and the Sarawak-Sabah pipeline project, would position Labuan and Sabah as one of the leading oil and gas hubs in the country and possibly in the region,” he added.

Muhyiddin said to stay ahead in the global marine and offshore arena, the Labuan marine and offshore industry, also needed to continually improve the competitive edge.

He also said a cost-competitive and efficient pro-business environment, with strong infrastructure and a comprehensive supporting industry, would be critical success factors to bring in investors.

“While cost and efficiency are very important short to medium term success factors, the long term key for Labuan to be a successful oil and gas hub, is the creation of a sustainable pipeline of highly skilled and productive workforce grounded on a strong engineering foundation,” he explained.

Also present yesterday were Sabah Deputy Chief Minister Datuk Yahya Hussin, ASB chief executive officer Datuk Harris Haji Annuar Tan, Sabah Assistant Resource Development & Information Technology Minister Datuk Jainab Ahmad as well as Labuan MP Datuk Yussof Haji Mahal.