Oil and gas (O&G) firms in Singapore are shifting base to Malaysia, where overall cheaper costs has become a huge lure in an industry ravaged by falling oil prices.
According to the Financial Times, at least three such firms — McDermott, Technip and Subsea 7 — have uprooted their Singapore operations in favour of cheaper rentals and cars in Malaysia as well as the added benefit of closer proximity to their clients.
Another factor encouraging the shift is the Malaysian ringgit’s currently depressed value, now hovering at 4.0 against the US dollar, making it even cheaper to make the transition.
“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,” the French firm said in a statement announcing the move.
The oilfield services firm explained that consolidating its operations in Malaysia was both to reduce costs as well as to allow it to operate more efficiently from a single location in the region.
McDermott said it was taking advantage of favourable conditions in Malaysia while Subsea 7 was “streamlining processes and finding efficiencies”.
The latest departures signal a further deterioration of the O&G sector in Singapore, which is home to the regional offshore marine sector.
Depressed oil prices have also hurt the industry in Malaysia, which is similarly retrenching workers in response.
State oil firm Petronas announced at the start of the month that its ongoing cost cuts will lead to nearly 1,000 positions becoming redundant over the next six months.