Jurong refinery, Singapore. Source: Wikimedia
Oil and gas companies in Singapore are moving across the straits to Malaysia, attracted by lower costs as profits tumble.
The Financial Times reported that at least three firms — McDermott, Technip and Subsea 7 — had left the crowded island in favour of Malaysia, which is also closer to its clients.
The depressed Malaysian ringgit’s, at around 4 to the US dollar, was further reducing costs.
Technip said in a statement: “Prior to the shift, Technip had two subsea hubs in Southeast Asia which were geographically close to each other, one in KL and one in Singapore with each offering different expertise, engineering disciplines and services.”
McDermott said it was attracted by Malaysia’s favourable conditions. The US-based oil and gas services firm, said the relocation would help it take advantage of the lower costs in Malaysia and give it a larger presence closer to its customers.
Oslo-listed Subsea 7 was “streamlining processes and finding efficiencies”. The engineering contractor for offshore oil and gas reportedly told the FT that it remained “committed to streamlining processes, reducing costs and finding efficiencies given ongoing market conditions”.
Singapore’s status as the regional centre for offshore fuel is increasingly under threat.
Keppel Corporation, the world’s largest jackup rigs producer, axed 6,000 jobs or 17 per cent of its global workforce in 2015. It also sliced 7,900 sub-contracted jobs, nearly 25 per cent of the total workforce in the city-state.
Sembcorp Marine, its Singaporean competitor, laid off 4,000 sub-contractors, who were mostly foreigners, last year when it reported losses of US$211 million.
Malaysia’s fuel sector is also scrambling to recover from falling profits.
State oil giant Petronas revealed earlier in this month about 1,000 jobs were being cut over the next six months.
“As difficult as 2015 has been for us, the next two years will continue to be challenging,” Wan Zulkiflee Wan Ariffin, chief executive of Petronas, told reporters in Kuala Lumpur in February.