The head of the Malaysian oil and gas company said services companies should hold off on expanding their fleet, citing evidence that charter rates were set to drop.
“There is an oversupply of OSVs in Peninsular Malaysia for Petronas’ demand. So, these companies have to expand regionally,” he was quoted by local media as saying.
The Malaysia Star quoted him as saying in a recent tender exercise, the offshore vessel charter rate was 15% lower than the current market price.
He said the rates were set to drop because of the increase in offshore supply vessels, barges and drilling rigs available on the market.
Shamsul reportedly said companies involved in these businesses could be in for tough times and should take a cautious view of their business, going forward.
He explained that there was a situation of too many projects happening at the same time in the region, where a large number of upstream projects were taking place simultaneously while lacking good sub-contractors.
Shamsul described the situation as “project bunching”.
He reportedly added that exploration expenditure by oil majors, including Petronas, was “going to be tight.”
“All oil majors are presently undertaking a review of projects, and Petronas itself has aborted some of its projects. It is sometimes better to wait for the contracting market to get better. When the market is not too tight, then we can embark on those projects,” he said.