--- title: "Is the Malaysian Oil & Gas Industry Finished?" description: "Exploring the future of Malaysian Oil and Gas - How will the industry adapt to sustainability and economic challenges? Gain insights on the evolving landscape." url: "https://www.mrmoneytv.com/articles/is-the-malaysian-oil-gas-industry-finished/" category: "Personal Finance" author: "Finlit" published: 2024-08-06 source: "Mr Money TV" --- # Is the Malaysian Oil & Gas Industry Finished? Exploring the future of Malaysian Oil and Gas - How will the industry adapt to sustainability and economic challenges? Gain insights on the evolving landscape. ## Key takeaways - Malaysia is Southeast Asia's second-largest oil producer, set to reach 679.38 thousand barrels per day in 2024. - Petronas' full-year profit fell 21% in 2023 versus 2022 on weaker energy prices, and its CEO warned of more volatility ahead. - The pressure is real: Dutch pension fund PFZW exited over 300 fossil fuel companies, including Shell, BP and TotalEnergies, over weak decarbonisation plans. - Petronas estimated clean energy investments would hit USD 1.7 trillion by the end of 2023, surpassing spending on fossil fuels. - Deleum Berhad uses its strong balance sheet to fund growth, targeting acquisitions of financially struggling firms in Indonesia and Thailand. - The industry is not finished, but survival depends on balancing sustainability with profitability while absorbing the high upfront cost of the energy transition. Flipping on your gas stove to cook dinner seems like a simple everyday task. This simple act is fuelled by Malaysia's thriving oil and gas industry, which has powered many homes and driven the economy for decades. As the [second-largest oil producer in Southeast Asia, Malaysia is set to reach an impressive 679.38 thousand barrels per day in 2024](https://www.offshore-technology.com/data-insights/malaysia-natural-gas-production/?cf-view). However, with the world moving towards a more sustainable future, [the Malaysian oil and gas industry faces significant challenges in adapting to greener energy sources](https://www.nst.com.my/business/2023/09/951570/tough-period-ahead-og-firms#google_vignette). This article dives into the challenges and opportunities Malaysian oil and gas companies face as they navigate a shift towards a more sustainable future. ## Challenges Faced by Malaysia’s Oil & Gas Industry ### Energy Transition and Sustainability [Netherlands-based PFZW, one of the largest pension funds in Europe, has exited its investment in over 300 fossil fuel companies](https://www.esgtoday.com/dutch-pension-giant-pfzw-divests-98-of-oil-and-gas-companies-over-lack-of-climate-action/), including giants like Shell, BP, and TotalEnergies, due to insufficient decarbonisation plans. The global push for greener energy is placing immense pressure on traditional oil and gas companies. With the increasing adoption of renewable energy sources, there's a growing expectation for the industry to reduce its carbon footprint. This shift underscores the significant challenge for Malaysian oil and gas companies, as they must balance sustainability with profitability while meeting stringent environmental expectations. ### Economic Pressures Economic pressures are another major challenge. Maintaining a strong balance sheet while navigating fluctuating oil prices and market conditions is crucial for survival. A prime example is national oil giant [Petronas, which saw its full-year profit in 2023 drop by 21% compared to 2022](https://asia.nikkei.com/Business/Energy/Malaysia-s-Petronas-posts-21-annual-profit-drop-on-weak-energy-prices). This decline can be attributed to a significant decrease in energy prices. Petronas' CEO even warned of potential volatility in the remaining year, highlighting the uncertainty faced by the industry. ### Cost of Technological Advancements Beyond price fluctuations, companies also face the high upfront cost of transitioning to renewable energy infrastructure. This includes innovations in drilling techniques, data analytics, and emissions reduction technologies. Last year, [Petronas estimated that by the end of 2023, clean energy investments were expected to reach USD 1.7 trillion, surpassing those in fossil fuels](https://www.petronas.com/activity-outlook-2024-2026/assets/pdf/PETRONAS-Activity-Outlook-2024-2026-Navigating-Energy-Transition.pdf). Balancing these financial hurdles while navigating towards a greener future is a key challenge for Malaysian oil and gas companies. Keeping up with technological advancements is another important role for the oil and gas industry. As the sector evolves, companies must invest in new technologies to improve efficiency, reduce costs, and meet environmental regulations. ## Deleum Berhad’s Strategy in the Oil & Gas Landscape ![Deleum Berhad Logo](../../assets/articles/is-the-malaysian-oil-gas-industry-finished/img-1.webp) [Deleum Berhad](https://www.deleum.com/corporate-profile/about-deleum) stands out in the Malaysian oil and gas industry due to its solid financial background. The company holds a strong balance sheet, which allows them to invest and pursue strategic growth opportunities. In our recent podcast, [CEO Ramanrao Bin Abdullah](https://theedgemalaysia.com/node/662428) attributes this financial health to the company’s cautious yet forward-thinking approach. Growth in the oil and gas industry increasingly ties to technological advancement. Deleum Berhad invests in cutting-edge technologies that enhance efficiency and sustainability. Under the leadership of Ramanrao Bin Abdullah, Deleum focuses on innovations that reduce emissions and improve operational effectiveness. Deleum Berhad aims for regional expansion beyond its strong position in Malaysia. The company explores acquisitions in Indonesia and Thailand to broaden its market presence. By targeting companies facing financial difficulties, Deleum leverages its strong balance sheet to drive growth while maintaining financial prudence. ### Conclusion: Navigating the Future of Malaysian Oil & Gas The Malaysian oil and gas industry stands at a crossroads, facing significant challenges from global sustainability trends and economic pressures. However, companies that adapt to these changes position themselves to thrive in the evolving landscape. To gain deeper insights into Deleum and other small-cap stocks, check out the [RHB Small Cap Jewel e-book](https://www.mrmoneytv.com/mmtv-faq-rhb-small-cap-jewel). Watch our full interview with Deleum Berhad's CEO, Ramanrao Bin Abdullah, on [The FAQ Show podcast](https://youtu.be/RbN4PY8kibk?si=w2ifklGlQc9bBoB9). *Subscribe to our* ***financial newsletter*** *for the latest news, insights, and advice on personal finance, investing, and more. With every email, you’ll gather the confidence and knowledge to make informed decisions to achieve your financial goals.* ## Frequently asked questions ### Is the Malaysian oil and gas industry finished? No. The article argues the industry is at a crossroads rather than at its end. It faces real pressure from global sustainability trends and economic swings, including weaker energy prices and the high upfront cost of moving to renewable infrastructure. Companies that adapt, balancing sustainability with profitability, position themselves to thrive rather than fade. ### Why did Petronas' profit fall in 2023? Petronas' full-year profit dropped 21% in 2023 compared to 2022. The article attributes this mainly to a significant decrease in energy prices. Petronas' CEO also warned of potential volatility for the remainder of the year, pointing to the uncertainty the wider oil and gas sector faces as prices swing and the push toward greener energy adds pressure. ### How is Deleum Berhad growing its oil and gas business? Deleum Berhad relies on a strong balance sheet, which the article credits to a cautious but forward-thinking approach under CEO Ramanrao Bin Abdullah. It invests in technologies that cut emissions and improve operations, and it is looking beyond Malaysia for growth. The company explores acquisitions in Indonesia and Thailand, targeting firms in financial difficulty while keeping its own finances prudent.