Malaysia-listed offshore services provider UMW Oil and Gas Corporation expects competition for oil and gas contracts to heat up because of fewer tenders.
Rohaizad Darus, president of UMW O&G, noted there was around “30% reduction” in tendering activities for drilling contracts in the upstream oil and gas sector. This means firms “cannot be too choosy” in bidding for the same pools of reduced tenders.
Currently, UMW O&G is bidding for 18 new tenders worth MYR18 billion (USD5 billion), comprising eight new bids in Malaysia and 10 bids overseas, including three bids in the Middle East.
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The company is aiming to maintain its current orderbook of MYR1.8 billion by year-end and has adopted a strategy of increasing its capacity by adding more assets, while expanding its geographical coverage and client base to maximise the use of assets.
“In some markets, the competition is less intense and there is a tendency for short-term contracts of less than a year. We are also looking at cost-reduction measures involving travel and inventories,” said Darus, highlighting the company’s intention to expand oversea for higher rates.
UMW O&G has a fleet consisting of seven drilling rigs, including UMW Naga 7, and five hydraulic workover units. Meanwhile, the company’s premium jack-up drilling rig UMW Naga 8 is scheduled for delivery in September 2015.
“We will be comfortable if all the rigs are utilised. One tender or contract per rig is good enough,” added Darus.