Let's face the reality. Malaysia's oil reserve is running dry. Soon we will have no oil. And the energy transition is real. 

The future is bleak for oil and gas companies. More companies are struggling to find oil and gas economic opportunities in Malaysia.

In fact, Economic Minister YB Rafizi Ramli had called for Oil and Gas, Services & Equipment (OGSE) players to pivot towards energy transition during the OGSE Blueprint launch in February 2023.

EV will replace combustion vehicles by 2050 and OGSE players such as Petrofac, SapuraKencana, KingTime International, and others are struggling to compete in Malaysia.

This presents two options: innovate, or find ways to kill your competition in order to survive. 

OGSE dependency on PETRONAS's contract

Malaysian-based OGSE players love PETRONAS. It was the main source of income for OGSE players for many decades and the drive for innovation to compete in the international market was non-existence.

Whilst PETRONAS Vendor Development Programme (VDP) fueled the growth of Malaysian owned OGSE players, success is a double-edged sword for some the OGSE companies.

As they grow, complacency sets in. At least for some.

Malaysian-owned OGSE companies are now struggling to compete internationally beyond Malaysia's shores after 20 years due to high capital structure, efficiency and competitiveness compared to other known international OGSE players. 

Malaysian owned KingTime International is an example besides loss-making SapuraKencana, as both were dependent on PETRONAS' contract for decades in its early years.

Desperate Measures Calls For Desperate Actions

What if there is no rope to hang on to your hope?

Politically connected Malaysian OGSE players are no longer grabbing the limelight due to the rapid political changing landscape in the last decade. 

As Malaysian oil reserves dry up, desperate attempts to pivot calls for desperate measures, albeit a technical one.

Some companies are beginning to lose billions, whilst some OGSE companies opt to sue one another as an alternative source of income. And it is perfectly legal.

Here is one example of a recent debacle.

OGSE company Kingtime International Ltd is the registered owner of two Malaysian patents (Patent 898 and Patent 500), related to the Mobile Offshore Production Unit which was installed for offshore oil production activities.

Now, Kingtime licensed Patent 898 and Patent 5004 to Gryphon Energy (Asia-Pacific) Sdn Bhd. The fact the owners of Kingtime and Gryphon Energy are the same person begs bigger questions on its business strategy and ethics.

In the High Court, Kingtime and Gryphon commenced a suit against Petrofac E&C Sdn Bhd (“Petrofac”) for patent infringement of Claim 1 and 13 of Patent 5004, as well as Claim 1 of Patent 898. Petrofac counterclaimed to invalidate the three patent claims.  

Petrofac, which has been proven to violate two patents of Kingtime International Ltd (Patents Act 1983: MY-144898-A and MY-145004-A), resulted in a settlement.

Kingtime won the case, but the owner of KingTime is not happy. Maybe he wants more.

Now, Kingtime is filing a suit against PETRONAS, who is the project owner of the Sepat Field. 

The debacle of who is the winner or loser in the judgment by the Federal Court is now out in the open and continued to spark curiosity as the story was filled with character assassination against the PETRONAS President, Tan Sri Taufik. 

Fact Tells. Story Sells

The fact is, the story sells and the Malaysian OGSE industry continues to be tainted with office-politics and its endless political drama amidst political instability. Strategic interventions of half-truths are deployed to reinforce public perception and hide growing economic problems in Malaysia. 

While PETRONAS is internationally recognized, the National Oil Company (NOC) is operating in a rather toxic race-based politically linked economy in its own turf.  

Whether we choose to ignore it or not, PETRONAS is the nation's golden goose. It has laid eggs for the prosperity of the nation with its involvement in nation-building that we all could thank for.

But again, there will always be bad apples. OGSE players will continue to find opportunistic ways to abuse the NOC to fuel their self-interest.

When facts tell, a story sells. 

Kingtime-Petrofac-PETRONAS billion-dollar suit is a glimpse of the current landscape as the oil reserves in Malaysia is depleting, signaling reduction in economic opportunities for OGSE players. Here is a quick take away.

Desperate times call for desperate actions.