Malaysia has the fourth largest oil and gas reserve in Southeast Asia and produces a whopping 30,000 megawatts of energy per year. The country continues to be hopeful about the prospects of its oil & gas industry and expects it to contribute meaningfully towards the growth of its economy. But then again, what does it mean for the employees who are working in the industry or plan to enter it? Is it a profitable industry in terms of salary growth and expectations? Let’s figure out what the industry holds for its employees and job seekers of oil and gas jobs in Malaysia.

What does the number say?

The best way to analyze the oil and gas job sector is to look at the recent studies and research conducted, which can give a substantial view into the future of the industry. As per the statistics department, Malaysia saw 8.1% growth in the salary in 2017 amounting to RM 2880 as compared to 2016, in which the average salary recorded was RM 2657. Additionally, the chief statistician of the department, Datuk Seri Dr Mohd Uzir Mahidin, said that an increase in the mean monthly salary and also the wages are in sync with the country’s economic performance. Even the exports indicated to grow by 20.3% which amounts to RM935.5bil. He made these observations based on the results of Salaries and Wages Survey 2017 of oil and gas professionals and entry-level oil and gas job seekers.

What the number means for prospects of oil and gas salary in Malaysia

If the above data is viewed on a sectoral basis, then the mining and quarrying sector indicated the highest monthly salaries as well as wages, which amounted to a mean of RM5,709 and a median of RM3,700.

Datuk Seri Dr Mohd Uzir Mahidin, further added that capital-intensive industries like the oil and gas, which is a major part of mining and quarrying sector, employs professionals, who are highly skilled and hence a bigger paycheck and higher mean and median salary.

The observation made by the chief statistician gets further backing by an online job site’s employment index. Although, it shows a decrease of 11% in May 2018 for the hiring activities in comparison to the previous year. However, it pointed towards a steep growth in the Oil & Gas sector. The hiring activity went up by 14% year-on-year in May 2018.

What can be the salary expectations for energy professionals?

The above studies and research indicate a positive outlook for both upstream and downstream players of this sector. However, it is important to note that a lot of factors help to determine your salary potential, which includes: education, years of experience, expertise, work ethics, job location, skill set and so on.

As per payscale.com, a Petroleum Engineer can earn on an average RM 104,343 per year. Which means an average salary of RM 99,803 with an estimated average bonus of RM 22,500 and profit sharing of RM 5120. Your experience and education play a major role in determining your salary. Similarly, in oil and gas industry, the average salary of a mechanical engineer amounts to RM 72,000 whereas the average salary of Account is RM 82,248 and for Project Engineer is RM 57,000 while a sales manager has the potential of RM 120,000.

Since the industry prefers professionals with high-level skills in the respective areas, it is advisable to enhance your overall employability factors to enjoy higher compensation and perks. And also use oil and gas professional networks to your advantage in getting the desired contacts and opportunities.

Market Watch

Headline crude prices for the week beginning 13 August 2018 – Brent: US$72/b; WTI: US$67/b

• Turbulence continues to buffet crude oil prices, which are being caught in between short- and long-term supply concerns and external turmoil.
• This week, the Turkish lira went into meltdown, with the contagion spreading over to other emerging currencies, including India and Indonesia; conversely, the dollar is also strengthening, placing pressure on barrels.
• With a full month of data after the OPEC+ resolution in June, OPEC crude production for July rose by 41,000 b/d to 32.32 mmb/d, despite declines in Libya, Iran and Saudi Arabia. That’s below its 1 mmb/d increase target, and with Iranian sanctions looming, meeting that target could be challenging.
• On the Iran situation, the US appears to have accepted that it will not be able to reduce Iranian crude exports ‘to zero’. Instead, the Trump administration is now aiming to cut Iranian volumes by half, which would be in the 700,000 kb/d to 1 mmb/d range.
• The Trump administration is also walking back on its previous hardline stance, announcing that it would consider partial exemption from oil sanctions against Iran for some countries, which could see Total not giving up its cherished stake in the South Pars 11 project to CNPC.
• Meanwhile in China, the new Shanghai crude futures launched in March seems to be marching to the beat of its own drum, advancing almost 5% over the first half of August against declines in Brent and WTI, the possible result of speculative activity that could diminish its potential to be a benchmark.
• In the US, a weak trend in prices did not dissuade American drillers from adding 10 new oil rigs and 3 new gas rigs – the single largest jump in the weekly active rig count since May. The EIA is also reporting increase output at major shale plays, expecting output to rise to 7.52 mmb/d in September and bringing the US closer to the 12 mmb/d mark.
• Crude price outlook: The persistence of a strong dollar is likely to mitigate any upward rise in oil prices, although uncertainty over trade, tariffs and Turkey could pull prices up. We expect Brent to trade at US$70-72/b and WTI at US$64-66/b.

Headlines of the week

Upstream

• India’s Ministry of Petroleum and Natural Gas has launched its DSF Bid Round II, with 60 discoveries clubbed into 26 new contract areas located in ‘large, commercially-producing basins’.
• Quadrant Energy and Carnarvon Petroleum has announced a major onshore oil find in Western Australia (WA), describing the Dorado as a ‘truly incredible’ reservoir that could hold some 150 million barrels of oil – which would make it the largest oil find in WA over the last 20 years.
• Pakistan is teasing a ‘big cache’ of oil discovered by ExxonMobil and Eni in the offshore Block G, located off the Indus Delta.
• Mozambique has finally handed out contracts for oil concessions that were awarded in 2015, allowing companies like Statoil, Eni, ExxonMobil and Sasol to begin exploring in the oil-rich Northern Zambezi basin.

Downstream

• Vietnam’s second refinery, the 200 kb/d Nghi Son site, expects to reach full capacity in September as it begins to apply for export permits to trim down Vietnam’s existing high levels of (imported) oil products.
• Faced with rising inflation, the Energy Ministry of the Philippines has asked oil companies to switch back to selling cheaper Euro II-standard diesel, backtracking from the Euro II standards implemented in 2016.
• Mexico’s largest oil refinery, Pemex’s 330 kb/d Salina Cruz site, managed to restart operations two days after a power outage halted production.
• The ambitious 650 kb/d Dangote refinery planned in Nigeria by Africa’s richest man is likely to miss its target start date of 2020, with sources stating that operations could only begin in 2022 at the earliest.
• A major fire broke out at BPCL’s 120 kb/d Maharashtra refinery, forcing the shutdown of a hydrocracker as 40 people were injured.
• India is aiming to save up to US$1.7 billion in oil imports by 2022 and reduce its carbon emissions through increased usage of biofuels, announcing plans to build 12 bio-refineries that will run on crop, plant waste and municipal waste.

Natural Gas/LNG

• Exports from Yamal LNG’s second train have begun with the first shipment leaving the port of Sabetta, doubling the project’s capacity to 11 mtpa.
• Cheniere and CPC have signed a 25-year long term deal where the Taiwanese firm will take 2 million tpa of LNG beginning 2021.
• American LNG firm Tellurian confirmed that it is on track to begin construction of its US$27.5 billion Driftwood LNG terminal in Louisiana in 1H19, with operations planned for a 2023 start.
• Santos is reporting a ‘significant gas field’ at its Barikewa-3 well onshore in Papua New Guinea, in the prodigious Toro and Hedinia reservoirs.
• Tanzania is planning to build a natural gas pipeline that would run through Uganda, delivering gas harvesting from offshore Tanzania through Dar es Salaam and Tanga, then crossing over to Uganda via Lake Victoria.

Corporate

• Apache and Kayne Anderson Acquisition Corp are forming Altus Midstream, a US$3.5 billion pipeline joint venture focusing on the Permian.
• Kosmos Energy has acquired Deep Gulf Energy for US$1.23 bn, expanding its presence in the Gulf of Mexico and doubling output to 70,000 boe/d.

Source: U.S. Energy Information Administration, Weekly Petroleum Status Report

For the week ending July 6, 2018, the four-week average of U.S. gross refinery inputs surpassed 18 million barrels per day (b/d) for the first time on record. U.S. refineries are running at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil.

Before the most recent increases in refinery runs, the last time the four-week average of U.S. gross refinery inputs approached 18 million b/d was the week of August 25, 2017. Hurricane Harvey made landfall the following week, resulting in widespread refinery closures and shutdowns along the U.S. Gulf Coast.

Despite record-high inputs, refinery utilization as a percentage of capacity has not surpassed the record set in 1998. Rather than higher utilization, refinery runs have increased with increased refinery capacity. U.S. refinery capacity increased by 862,000 barrels per calendar day (b/cd) between January 1, 2011, and January 1, 2018.

The record-high U.S. input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions, the Petroleum Administration for Defense Districts (PADDs) with the most refinery capacity in the country. The Gulf Coast (PADD 3) has more than half of all U.S. refinery capacity and reached a new record input level the same week as the record-high overall U.S. capacity, with four-week average gross refinery inputs of 9.5 million b/d for the week ending July 6. The Midwest (PADD 2) has the second-highest refinery capacity, and the four-week average gross refinery inputs reached a record-high 4.1 million b/d for the week ending June 1.

U.S. refineries are responding currently to high demand for petroleum products, specifically motor gasoline and distillate. The four-week average of finished motor gasoline product supplied—EIA’s proxy measure of U.S. consumption—typically hits the highest level of the year in August. Weekly data for this summer to date suggest that this year’s peak in finished motor gasoline product supplied is likely to match that of 2016 and 2017, the two highest years on record, at 9.8 million b/d. The four-week average of finished motor gasoline product supplied for the week ending August 3, 2018, was at 9.7 million b/d.

U.S. distillate consumption, again measured as product supplied, is also relatively high, averaging 4.0 million b/d for the past four weeks, 64,000 b/d lower than the five-year average level for this time of year. In addition to relatively strong domestic distillate consumption, U.S. exports of distillate have continued to increase, reaching a four-week average of 1.2 million b/d as of August 3, 2018. For the week ending August 3, 2018, the four-week average of U.S. distillate product supplied plus exports reached 5.2 million b/d.

In its August Short-Term Energy Outlook (STEO), EIA forecasts that U.S. refinery runs will average 16.9 million b/d and 17.0 million b/d in 2018 and 2019, respectively. If achieved, both would be new record highs, surpassing the 2017 annual average of 16.6 million b/d.