The Malaysian oil and gas player said in a press release that the oversupply of tonnage and cut in global oil production by OPEC in 2017 would continue to weigh on the petroleum shipping segment this year.
However things are set to improve as a smaller order book for tankers and robust oil demand projections amidst declining global crude inventory should help improve tanker supply-demand balance, MISC said.
The company, which is also a big player in the LNG shipping market, said the segment faces an ongoing tonnage oversupply situation and saw the difficult market continuing this year with a lack of short term positive indicators.
MISC noted that it is continuing to rely on its present portfolio of long term time charters to provide stability of profits and cashflow during the year. The addition of two new LNG carriers to the fleet during the year would also provide a source of income growth.
“2017 was a challenging year for the shipping and offshore sectors as growth opportunities were scarce while revenue was under constant pressure from weak freight rates and contract renegotiation risks,” said MISC president and group ceo Yee Yang Chien in summing up the year for the group.
“However, with a steady rise in oil price over the past two years, we are looking forward to better days and a healthier level of activities for the oil and gas markets in anticipation of a potential revival in investment spending for the global energy sector,” he added.
MISC expressed hope that the recovery would finally come in 2019. “Although the low level of project approvals in 2017 will not spell a greater level of activity for the offshore market in 2018, the recovery in oil price will likely drive the global revival of upstream projects. Assuming final investment decisions (FIDs) are taken during 2018, it will shape a robust and healthier outlook for 2019,” the group said.
Meanwhile, MISC’s key Heavy Engineering segment, conducted through its Malaysia Marine and Heavy Engineering (MMHE) unit, continues to focus on cost management and resource optimisation whilst staying committed to its key strategies which includes strengthening its position in existing markets as well as expansion into new markets.
“2018 marks our 50th year of operations and as the results of the many initiatives undertaken as well as the strong foundation we have laid for transformation, we are poised for a sustained and robust growth. As the market continue to change, our businesses will evolve in order for us to seize the opportunities and address the challenges that lie ahead,” Yee concluded.