KUALA LUMPUR: The oil and gas services and equipment (OGSE) is likely to contribute between RM40 billion and RM50 billion to Malaysia's gross domestic product (GDP) by 2030, more than doubling from RM21 billion recorded in 2020.
Minister in the Prime Minister's Department in charge of economic affairs Datuk Seri Mustapa Mohamed said the government's target was intensified with the launch of the National OGSE Industry Blueprint 2021-2030.
However, he said the government encouraged the OSGE players to consolidate and scale up their operations to penetrate overseas market.
"Ideally, there should be mergers of these smaller entities. But mergers must be on a wiling buyer basis. This is probably the future of the Malaysian economic landscape.
"From the government's point of view it is good for smaller entities to work with each other and at some of point of time merge.
"But the reality of business is that - people want to be on their own. We cannot force them but to encourage them," he said at a press conference after launching the industry blueprint here yesterday.
With the blueprint, Mustapa said more OGSE companies would come out much stronger by merging with each other.
Mustapa said the OSGE sector would continue to provide jobs for 60,000 talents, adding that the oil and gas (O&G) industry had long been a significant contributor to Malaysia's economy, accounting for 5.0 per cent to 8.0 per cent of the country's GDP.
Thecblueprint allows players to adapt to the rapidly evolving requirements of the global market such as energy transition to remain competitive.
The blueprint is part of the government's initiatives to support and accelerate innovation among local oil and gas players, particularly to help them embrace high-technology and sustainable solutions.
"Malaysia is also supportive for green economy or low-carbon economy to decarbonise. We have a role to play. We believe O&G will continue to play an important role in Malaysian economy such as job creation, revenue to the government," he said.
Efforts and progress of the blueprint will be coordinated by Malaysia Petroleum Resources Corp (MPRC), which is under the supervision of the Economic Planning Unit in the Prime Minister's Department.
MPRC president and chief executive officer Mohd Yazid Ja'afar encouraged local OGSE industry to incorporate environment, social and governance (ESG) standards in their operations to tap into the vast funding opportunities.
"We look at options not limited to only conventional financial institutions but we also look at venture capital and other ways to raise fund," he said.
Mohd Yazid said the revenue aspiration would be for 10 years period and the blueprint was timely and important as it set for the future.
"We need to guide the sector as it undergoes turmoil and transition of energy. Consolidation is driven by the market. Our role is to let them discover their way it operates and services.
"We have 4,000 registered companies in OSGE locally. But only 1,500 active companies. We end up with a lot more dormant companies," he added.
Meanwhile, MPRC has introduced the OGSE development grant to assist high potential companies in increasing its competitiveness.
The grant came after when OGSE companies were reeling from the effects of low oil prices in 2020 due to oversupplied market and destruction in oil demand as governments globally imposed travel restrictions and lockdown orders to combat the Covid-19 pandemic.
The RM25 million grant is part of the 12th Malaysia Plan to assist and facilitate high potential OGSE small medium enterprises and mid-tier companies to move and develop their technology and innovation along the complex stages of the commercialisation process.