OIL AND GAS INDUSTRY IN MALAYSIA

Petroleum Oil is formed more than 600 million years ago from pressure built on tiny dead living animals and plants (plankton) sank on seabed and through pressure from the top of the seabed.

THE ORIGIN OF OIL AND GAS INDUSTRY IN MALAYSIA

Our oil and gas industry in Malaysia has growth started following the formation of Petroleum Nasional Berhad (Petronas), a government entity owned by Ministry of Finance established in 1974. This is the result of Petroleum Development Act 1975 (PDA) that gazettes Petronas as the ownership of rights in oil and gas found in both offshore and onshore in Malaysia, taking the role as our national oil company. In return for the ownership and rights in petroleum resources, Petronas is to make cash payments to the federal government and the relevant state government.

Prior to the PDA, the ownership of oil and gas found in onshore and offshore belongs to state government. Petronas becomes a major source of government’s annual revenue.  Petronas contributes revenue to state and federal government in Malaysia for a sum of approximately RM 37 billion in 2016, collected in the form of dividends and taxes.

As a result of the PDA, we also see the development of the oil and gas industries in Malaysia in past four decades, which eventually give rise to many companies, covers a large range of both upstream to downstream of oil and gas industry, are listed in Bursa Malaysia, that with aggregate market capitalization of hundreds of billions in Ringgit Malaysia. Few Petronas’ subsidiaries are also listed in Bursa Malaysia, namely Petronas Dagangan Bhd, Petronas Gas Bhd, Petronas Chemicals Group Bhd and MISC Bhd.

UPSTREAM, MIDSTREAM AND DOWNSTREAM

At the upstream, we have listed companies involved in exploration (i.e. finding petroleum oil) and exploitation such as Hibiscus Petroleum Bhd and UMW Oil & Gas Corp Bhd.

At the midstream and downstream, listed companies could be classified based their involvements in different areas such as

1. supporting the oil and gas industry such as provision of engineering and support services.
2. provision of transportation services in the form of vessels for transporting oil and petrochemicals.
3. refinery of crude oil to various oil products and retailers
4. manufacturing pipelines for transporting oil
5. petrochemical plants that produces various petrochemical components used in producing plastics, fertilizers, pesticides and many other industrial uses.

IN LOW CRUDE OIL PRICE ENVIRONMENT, IT IS NEGATIVE TO MIDSTREAM COMPANIES PROVIDING ENGINEERING SUPPORT AND PIPELINES. INSTEAD, COMPANIES IN REFINERIES MAINTAINS ITS POSITIVE PERFORMANCE

Tabulated below is an example of listed companies in Malaysia in various roles that are all within the oil and gas industry.

Read more on...

https://m.facebook.com/story.php?story_fbid=2023746087865345&id=1654674194772538

Disclaimer:

The author wishes to declare that the author and Asia Equity Research do not have any share ownership in any of the companies discussed prior to this and until current date. The author can be contacted at general@aer.global for any further enquiries on the contents of this article.

You are required to obtain written consent from Asia Equity Research Sdn Bhd (AER), if you wish to redistribute or reproduce in its original form the information from this article or quoting in other materials. AER reserves the right to take legal action against any party / parties that violates any property rights with respect to this article without obtaining such written consent.