The Malaysia Petroleum Resources Corp (MPRC) has signaled a buoyant outlook for the oil and gas services and equipment (OGSE) sector in the medium term, underlined by a record-breaking performance in FY2023. The OGSE100 FY2023 report shows a topline of RM83.9 billion in revenue, the highest since MPRC began tracking OGSE financial data in 2013. This strong revenue backdrop accompanies a notable swing to profitability, with profit before tax (PBT) totaling RM4.8 billion in FY2023 after a loss of RM3.5 billion in FY2022. When impairments are excluded, the PBT would have been approximately RM8.3 billion, underscoring a robust underlying performance once accounting adjustments are stripped away. The sector’s improvement comes as it emerges from the twin pressures of lower oil prices and the Covid-19 pandemic over the past decade, helping restore positive sentiment about the trajectory ahead. Asia is forecast to become a pivotal growth hub for the OGSE industry over the period between 2024 and 2028, presenting significant opportunities for innovation and investment. Malaysia is actively positioning itself to capitalize on this transformation, anchored by Petronas’ ambitious targets and the ongoing exploration of high-carbon-dioxide fields, carbon capture and storage (CCS) opportunities, and the enduring importance of Sabah and Sarawak for the industry’s ecosystem. While the energy transition introduces some uncertainties, the sector is increasingly moving toward emerging energies such as solar and hydrogen, creating avenues for OGSE players to diversify and grow in a more sustainable future.
FY2023 Performance: Revenue, Profitability, and Key Drivers
The MPRC’s OGSE100 FY2023 report provides a comprehensive view of how Malaysia’s OGSE landscape performed in the financial year ended December 31, 2023, captured from data involving 1,855 companies across the sector. The consolidated revenue of RM83.9 billion marks a historic high within the agency’s long-running dataset, reflecting a broad-based upturn in activity across drilling, offshore services, and related fields. This top-line performance is particularly notable because it stands out as the strongest result since the OGSE data series began in 2013, with the dataset extending to include historical data up to 2005. The scale of revenue growth signals a sustained revival in demand for OGSE services and equipment as global energy markets regained momentum following disruptions in the previous years. The revenue trajectory is also a barometer of the sector’s ability to mobilize resources and operational capacity across a wide array of projects and international engagements.
On the profitability side, the OGSE sector delivered a decisive reversal in PBT, moving from a negative outcome in FY2022 to a positive RM4.8 billion in FY2023. This improvement was driven largely by a reduction in impairment losses among public-listed companies (PLCs) within the sector. The IoP (impairment of projects) headwinds that weighed on the bottom line in the previous year eased notably, contributing to the overall PBT improvement. In a framing that highlights the underlying profitability, if impairments were excluded, the sector’s PBT would have reached RM8.3 billion, underscoring that the core operating performance was solid even before accounting adjustments. This distinction between reported PBT and pre-impairment PBT illustrates that much of the year’s net gain was tied to the reversal or reduction of impairment charges rather than solely to earnings growth.
Within the report, MPRC emphasizes that the OGSE sector has “recovered from the oil price and Covid-19 crises of the last decade,” with sentiment turning positive about the path forward. The agency notes that, beyond the aggregate numbers, the sector’s improvement is underpinned by multiple facets. The reduction in impairment losses, the continuation of drilling activities, the resilience of offshore support vessel operations, and the expansion of international business operations and contracts collectively propelled growth. This multi-pronged improvement is reinforced by favorable dynamics in charter rates and persistent vessel shortages, which historically support higher revenue per unit of capacity and reinforce the profitability picture for OGSE players. The report’s data and commentary together paint a picture of a sector that has not only recovered from recent downturns but is now positioned to sustain a higher plateau of activity over the coming years.
A closer examination of the data highlights the contribution of several drivers to the FY2023 performance. Drilling activities, offshore support vessels, and international business operations and contracts are identified as key growth engines, reinforcing the notion that both the domestic and global demand environments were supportive for Malaysia’s OGSE players. Higher daily charter rates, a hallmark of tight supply in offshore vessels, alongside ongoing contracts with local and international operators, helped lift revenue and reinforce the sector’s profitability trajectory. The combination of stronger demand, pricing firmness in the charter market, and supply constraints in vessel capacity provided a favorable backdrop for margins, even in the context of ongoing geopolitical and market uncertainties that influence energy markets more broadly.
The OGSE100 FY2023 report also contextualizes the sector’s performance within a longer historical framework. MPRC notes that the dataset has tracked OGSE financials since 2013, including data entries that go back to 2005, illustrating how the industry has evolved through cycles of price volatility, capital investment cycles, and the global shift toward energy transition strategies. This historical lens underscores the degree to which the 2023 performance represents a meaningful inflection point—the culmination of years of adjustment, strategic realignment, and renewed investment confidence. The fact that revenue reached a decade-high level in this context signifies a notable restoration of the OGSE value chain, including services, supply equipment, and the broader ecosystem that supports offshore exploration and development in Malaysia and the region.
The Driving Components: Drilling, Vessels, and International Expansion
In the report, MPRC highlights that several components contributed to the sector’s acceleration. Drilling activities constitute a central revenue pillar, reflecting ongoing exploration and development projects that require sophisticated rigs and support infrastructure. Offshore support vessels, which handle critical logistics, supply chains, and safety operations, also contributed meaningfully to the overall growth, a trend that is consistent with rising activity levels in regional offshore fields. International business operations and contracts capture the global dimension of Malaysia’s OGSE sector, signaling that Malaysian firms are competitively positioned to participate in offshore energy projects beyond local markets.
The signals of higher daily charter rates and vessel shortages further explain the improved profitability. In a market where fleet utilization and availability can constrain activity, higher rates translate into stronger earnings for vessel owners and service providers. These dynamics are important because they reflect a supply-demand balance that is tilting in favor of service providers during periods of heightened offshore activity. Taken together, these drivers illustrate a robust and diversified growth engine behind FY2023’s impressive numbers, reflecting both local capacity expansion and the ability to win and sustain international contracts.
Data Coverage and Historical Context
MPRC’s OGSE100 FY2023 data covers a substantial cross-section of the sector, with inputs from 1,855 companies operating in Malaysia’s OGSE space. The breadth of coverage ensures that the topline and profitability figures reflect a broad spectrum of activities—from drilling services and equipment suppliers to offshore support providers and related services. The 2013 baseline for OGSE financial tracking provides a context for understanding the magnitude of the 2023 milestone, while the note that data includes records up to 2005 adds a layer of historical depth to the interpretation of trends and cycles. This extensive dataset strengthens confidence in the reported revenue and PBT milestones and reinforces the reliability of the medium-term outlook offered by MPRC.
Taken together, FY2023’s revenue, profitability, and the drivers identified by MPRC form a compelling narrative about a sector that has not only recovered from significant shocks but has returned to a trajectory of growth supported by favorable market conditions, improved cost structures, and a diversified set of revenue sources. The reporting by MPRC underscores the resilience and adaptability of Malaysia’s OGSE ecosystem, which is central to sustaining energy industry activity domestically and in the wider region.
Medium-Term Outlook: Asia’s Growth and Malaysia’s Transformation
Looking ahead, MPRC emphasizes that Asia is positioned to become a cornerstone of growth for the OGSE industry between 2024 and 2028. The agency points to “significant opportunities for innovation and investment” in Asia, highlighting the region’s expanding offshore exploration and production (E&P) footprint and the increasing complexity of offshore projects that require advanced services and equipment. This regional shift aligns with broader global energy investment patterns, where Asia-based energy demand and infrastructure development are driving demand for OGSE solutions, from drilling rigs and offshore platforms to specialized support services and technology-enabled solutions.
Within this regional context, Malaysia’s trajectory is framed as a strategic transformation path aligned with national energy and industrial policies. The report notes that the country is gearing toward this transformation, anchored by Petronas’ ambitious target of two million barrels of oil equivalent per day (boe/d) by the current year. This target underscores the emphasis on sustaining and expanding Malaysia’s hydrocarbon production base while simultaneously pursuing diversification and efficiency gains to support long-term energy security and economic growth. The transformation is further anchored by strategic efforts to unlock fields with high carbon dioxide (CO2) content, a pathway that includes carbon capture and storage (CCS) opportunities. CCS is highlighted as a critical enabler for extending the life of mature fields and enabling a lower-emission offshore industry, fitting into broader global decarbonization narratives while maintaining Malaysia’s competitiveness in offshore energy.
The report also stresses the continued significance of Sabah and Sarawak as pivotal regions for the industry. These areas are highlighted for their continued importance within Malaysia’s energy landscape, with offshore projects and related services contributing to the OGSE value chain. The ongoing importance of these regions is consistent with the country’s geographic and resource endowments, as well as its strategic emphasis on sustaining a domestic supply chain that can compete for international projects. In this macro context, Malaysia’s OGSE sector is positioned to benefit from Asia’s growth surge, while continuing to leverage local strengths in engineering, fabrication, and offshore operations.
Energy Transition and New Energies
A central theme in MPRC’s outlook is the energy transition, which the agency frames as a shift within the oil and gas industry toward emerging energy vectors such as solar and hydrogen. This transition is not viewed simply as a risk but as an opportunity for OGSE companies to diversify their portfolios and capture growth in the evolving energy market. The move toward solar energy adoption, hydrogen technologies, and related storage and transport solutions creates new demand streams for OGSE players, including specialized equipment, service provision, and integrated project management capabilities. In this narrative, OGSE firms are encouraged to position themselves as catalysts for a more sustainable energy future by building capabilities that span traditional offshore engineering and the newer energy domains.
MPRC’s executive commentary highlights that this transition opens doors for OGSE companies to diversify and grow within a broader energy landscape. By expanding into solar installations, hydrogen infrastructure, and CCS-related services, Malaysian OGSE players could strengthen their market positions and reduce reliance on a single energy segment. This strategic pivot aligns with global trends toward cleaner energy while preserving jobs, sustaining industrial activity, and nurturing innovation within Malaysia’s technology and manufacturing ecosystems. The emphasis on diversification reflects a pragmatic approach to risk management amid evolving regulatory frameworks, rising sustainability standards, and the need to remain competitive in an increasingly decarbonized energy market.
Implications for Policy, Investment, and Industry Strategy
The Asia growth outlook and Malaysia’s transformation agenda carry significant implications for policymakers, investors, and industry stakeholders. As Asia emerges as a key growth node for OGSE, government support for innovation, technology adoption, and export-oriented capabilities will be crucial to sustaining the region’s competitive edge. For Malaysia, aligning regulatory frameworks, capital markets, and industrial policy with the needs of an evolving OGSE landscape will be essential to translate growth into long-term resilience. The combination of Petronas’ production targets, CCS potential, and the focus on Sabah and Sarawak suggests a need for targeted investment in offshore infrastructure, domestic supplier development, and training programs to build a skilled workforce capable of delivering advanced offshore solutions.
Investors will be watching to see how the sector’s improved profitability translates into capital expenditure, technology acquisition, and strategic collaborations with international operators. The energy transition narrative adds another dimension, as OGSE players can position themselves to win in markets that prize integrated solutions—combining traditional offshore capabilities with new energy technologies and emission-reduction services. From a policy perspective, this implies a balance between encouraging domestic capacity expansion and ensuring sustainable, cost-effective participation in regional and global offshore projects. In sum, the MPRC outlook highlights a strategic crossroads for Malaysia’s OGSE sector: capitalize on Asia’s growth and the nation’s transformation while proactively embracing the opportunities and challenges of the energy transition.
Operational Trends and Market Conditions
The 2023 performance and the medium-term outlook are underpinned by several operational trends shaping the OGSE market. Among these, the continued strength of drilling activities remains a critical driver. The demand for drilling services, equipment, and related support continues to be a key revenue stream for many OGSE players, reflecting a steady pipeline of offshore development projects across the region. Offshore support vessels (OSVs) remain essential for logistics, safety, and project execution, and the scarcity of available OSVs has contributed to higher charter rates. This pricing dynamic enhances the revenue generation capacity of vessel owners and service providers, especially for firms with modern, high-capacity fleets and the ability to secure international charters.
International business operations and contracts offer a global growth dimension for Malaysia’s OGSE sector. The ability to win and execute offshore projects outside domestic boundaries underscores the competitiveness of Malaysia’s engineering and services firms. This international footprint not only expands revenue streams but also diversifies risk across markets, which can be particularly valuable during localized market downturns or regulatory shifts. The combination of higher charter rates, continued demand for drilling and OSV services, and a robust international contract pipeline creates a favorable operating environment that supports continued profitability improvements for OGSE players.
Supply-side dynamics also play a crucial role. Vessel shortages and the need for reliable, well-maintained equipment can constrain project timelines and margins if not managed effectively. However, the 2023 data suggests that the market’s demand side has remained resilient enough to support higher rates and sustained activity levels. The macroeconomic environment—global energy demand, price cycles, and the investment cycles in offshore energy—continues to influence the OGSE market’s rhythm. Firms that adapt to these cycles, invest in efficiency improvements, and expand into allied energy services are better positioned to capture opportunities arising from Asia’s growth trajectory and Malaysia’s transformation agenda.
The Role of Innovation and Skills Development
A recurring theme across MPRC’s outlook is the importance of innovation and workforce development. As the OGSE industry near-term opportunities expand, firms that invest in technology-driven solutions—such as digital oilfield upgrades, data analytics for asset optimization, and advanced fabrication techniques—stand to gain competitive advantages. Simultaneously, workforce training and upskilling, particularly in specialized offshore activities and new energy applications, become critical for sustaining high levels of performance and safety standards. The integration of advanced technologies with traditional offshore capabilities can help OGSE providers deliver more efficient, safer, and cost-effective services, reinforcing Malaysia’s position in the regional and global OGSE ecosystem.
Strategic Implications for Malaysia and Petronas
Malaysia’s OGSE sector stands at an inflection point where strong FY2023 results, a positive medium-term outlook, and a broader transformation agenda intersect. The government and industry leaders recognize that a robust OGSE sector is central to sustaining energy security, supporting high-value manufacturing, and driving regional competitiveness. A key pillar of this strategy is Petronas’ target of two million boe/d by the current year, which signals an ambitious program to maintain Malaysia’s relevance in global energy supply chains while enabling downstream value creation and technology adoption across the sector. The two-million-boe/d objective is not just a production target; it is a signal of Malaysia’s intent to sustain a broad energy portfolio that includes a mix of conventional hydrocarbons and new-energy initiatives that reduce environmental impact and enhance resilience to price volatility.
Unlocking fields with high CO2 content is presented as a strategic priority, along with CCS opportunities that align with decarbonization goals and long-term asset viability. CCS projects can help Malaysia extend the life of mature fields, minimize emissions, and position the country as a regional hub for carbon management technologies. Sabah and Sarawak’s continued significance reflects their strategic geographic and resource positions, with their offshore basins contributing to the nation’s energy mix and the supply chain that underpins the OGSE ecosystem. The region’s importance is not only about resource extraction but also about the engineering and service capacity developed locally, which supports broader energy security and economic growth objectives.
Petronas and the National Energy Strategy
Petronas remains a central pillar of Malaysia’s energy strategy, with its output and investments shaping the demand for OGSE services and related equipment. The company’s upstream ambitions, including field development and optimized production strategies, drive demand for drilling, well services, and platform support—areas where the OGSE sector has shown resilience and growth. The two-million-boe/d target implies continued exploration, development, and optimization work that can extend the life of assets while pushing for efficiency gains and enhanced recovery techniques. OGSE players that align their capabilities with Petronas’ needs—especially in the domains of project management, engineering performance, and offshore logistics—stand to benefit from stable, long-duration contracts and repeat business from the national champion.
In parallel, the emphasis on high-CO2 fields invites a cross-disciplinary approach, combining traditional hydrocarbon expertise with CCS integration, CO2 capture, transport, and storage infrastructure, and carbon accounting expertise. Malaysian firms can leverage domestic knowledge and regional opportunities to participate in CCS pilots and full-scale deployments, expanding their addressable market and adding a sustainability dimension to their value proposition. The integration of CCS into field development plans could create new revenue lines in consultancy, project execution, and long-term operations and maintenance, reinforcing the OGSE sector’s evolution toward a more diversified and resilient portfolio.
Regional Collaboration and Investment Flows
As Asia emerges as a growth hub for OGSE, Malaysia can benefit from regional collaboration, sharing best practices in subsea engineering, remote operations, inflation management, and risk mitigation. Investment flows into offshore technology, digitalization, and flexible asset management will influence the competitive landscape, rewarding firms that demonstrate technical mastery, project delivery excellence, and the ability to operate safely under challenging offshore conditions. The regional dimension also implies potential partnerships with international operators seeking to expand in Southeast Asia, leveraging Malaysia as a strategic base of operations for exploring, developing, and sustaining offshore assets in the region.
From a policy standpoint, aligning incentives for research and development, local content, and export-oriented growth will be critical to sustaining momentum. The report’s emphasis on innovation and investment signals that Malaysia will benefit from a cohesive framework that supports OGSE players in upgrading capabilities, acquiring modern equipment, and expanding into new energy services. In a world where energy demand is increasingly dynamic and subject to technological disruption, Malaysia’s OGSE sector—underpinned by the MPRC’s findings and the Petronas-led transformation—appears well-positioned to capture value through a combination of domestic strength and selective international expansion.
Conclusion
The latest MPRC OGSE100 FY2023 findings depict a sector that not only recovered from the shocks of the oil price cycles and the Covid-19 pandemic but also achieved a decade-high revenue and a strong rebound in profitability. The improvement is broad-based, driven by a combination of lower impairment losses, higher drilling and OSV activity, and an expanding international contract footprint, all supported by higher charter rates and constrained vessel supply. The medium-term outlook is positive, with Asia identified as a key growth region between 2024 and 2028, and Malaysia actively pursuing a transformational path anchored by Petronas’ aggressive production targets, CCS opportunities, and the strategic importance of Sabah and Sarawak.
At the same time, the industry faces the reality of an energy transition that is reshaping the landscape toward emerging energies such as solar and hydrogen. This shift presents both risk and opportunity: OGSE players can diversify into new energy domains while leveraging their deep offshore capabilities to deliver integrated solutions that support a sustainable energy mix. The combination of a resilient domestic OGSE ecosystem, a growing Asian market, and a clear strategic direction for carbon management and low-emission technologies positions Malaysia to sustain growth in the OGSE sector over the medium term. Stakeholders—from policymakers and Petronas to service providers and equipment suppliers—should continue to prioritize innovation, invest in skills development, and pursue strategic collaborations that enable a competitive, resilient, and sustainable offshore energy industry for Malaysia and the broader region.
