Oil and gas worry in Labuan
Published on: Friday, January 23, 2015
Labuan: The continuing downtrend in crude oil prices which has dumbfounded even the industry's biggest players is causing an uncomfortable feeling among hundreds here depending on the sector.Especially now that the world's leading oil-field services company Schlumberger is laying off 9,000 workers and slashing its global workforce by seven per cent and Halliburton, another giant, laying off 1,000 workers in the "Eastern Hemisphere".Both these companies have a strong presence here and have been in operation for years. Halliburton even has its own warehouse and hundreds of workers under its payroll, most of whom are highly paid.
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There are about 5,000 people engaged in the oil and gas sector with the Asian Supply Base (ASB) alone having 9,000 direct staff and another 4,000 employees with supporting companies mostly using the base.Apart from Halliburton and Schlumberger, there are production sharing companies like Shell, Petronas, Murphy Oil, Nippon Oil, Armeda Hazz, Newfield and Petronas-Carigali.As for Shell, the talk is that it is reviewing operations and may shut down some units and have the services outsourced to cut cost under the weakened market conditions.The non-stop slide in oil prices seems heading to a new low of slightly more than US$ 40 per barrel.
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National Oil Corporation Petronas would have a clearer picture when it announced its final statement for last year. There had already been reports of Petronas sending an internal memo to cut capital expenditure by 30 per cent this year. Petronas CEO Tan Sri Shamsul Azhar Aziz was reported to have said every US$1drop in crude has an impact on Petronas crude.PAS Deputy Chairman here, Hadnan Mohd, a retired senior employee of an oil company, predicted a gloomy outlook for Labuan this year, saying lower crude prices would not encourage use of expensive technology for ultra-deep water drilling and other forms of explorations.
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He said even though Petronas financial statement did reveal some consoling figures it was unlikely that the national oil corporation would resort to laying off staff as a solution to present falling revenue. Petronas as a Malaysian company is unlikely to follow similar steps of others.Hadnan said what would likely happen is a freeze on new job intake, withdrawal or reduction of various allowances including overtime, review of bonuses and doing away with unnecessary expenses, all of which would impact the local economy.He said for some companies there could be a period of "Shut Down", a common term used to describe suspension or slowed operations, especially by service providers.One local worker of the industry said: "We hope those in the lower rung of employment would be spared as they are cheaper to maintain. We have loans to re-pay and families to support. For us to be suddenly jobless would be unimaginable because in a small island like Labuan with limited industries it is not easy to find another job".There are already signs that the local economy is feeling the pinch. One broker who asked not to be named said he had more than 10 houses available for rent. Before tenants would look for us. Now we have to look for them," he said.Another broker said terrace and small houses with lower rentals remained in demand. Hotels which once boasted of achieving highest national occupancy rate of 97 per cent based on latest figures from Tourism research unit had dropped to 67 per cent and the " full house" sign hung usually on the doors of budget hotels is now not a common sight. Stay up-to-date by following Daily Express’s Telegram channel.
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