Leveraging on its strategic location and natural geographical strengths, Malaysia has developed a flourishing oil and gas industry that offers numerous opportunities for local industry players to thrive.

As custodian of the nation’s petroleum resources, Petroliam Nasional Bhd (Petronas) recognises the importance of the domestic marine industry to its business operations as well as Malaysia’s economic growth. As such, the national O&G company plays a key role in supporting the services of shipbuilding and ship repair (SBSR) and a myriad of other marine-related subsectors.

In November 2020, Petronas, in collaboration with the Association of Marine Industries of Malaysia (AMIM), introduced the New Build Offshore Support Vessel Programme. This initiative aims to build new offshore support vessels (OSVs) to phase out old fleets reaching the 15-year age limit.

With a robust and diverse membership of 140 industry leaders, AMIM represents the vast sector of Malaysia’s SBSR and other marine-related fields. According to AMIM president Adren Siow, the association has forged a close partnership with Petronas since early 2020 prior to inking a memorandum of understanding (MoU) with the national energy corporation towards championing the growth of the local SBSR ecosystem.

The MoU for Petronas’ new build programme, now named the Safina Project, listed three primary goals, which are to:

(i) govern the expectations and collaborative efforts between AMIM and Petronas in developing fit-for-purpose OSV designs;

(ii) drive standardisation of equipment and materials for OSV shipbuilding under the programme; and

(iii) ensure the successful implementation and completion of the programme.

The project seeks to address pain points surrounding Malaysian OSV scarcity, the limited number of experienced seafarers, poor reliability and vessel performance due to maintenance and ageing vessels, an unsustainable ecosystem and a lack of fiscal incentives.

Safina Phase One involves the construction of 11 OSVs, whereby all 10 shipyards selected by Petronas for the project are AMIM members. Three vessels have been launched and handed over as of October 2023, with another to set sail in December.

“Most of the vessels were delivered ahead of the scheduled deadline,” Siow noted, adding that the remaining four vessels are to be delivered in the first quarter of 2024.

Moreover, he highlighted that vessel design under Safina Phase One fostered strong local involvement, with eight out of 11 vessels designed by local naval architects, while foreign suppliers were also encouraged to collaborate with local firms and establish support and service centres in Malaysia.

“Among the achievements of Safina Phase One was the dynamic partnership between two AMIM members: Twin Disc (Far East) Pte Ltd, a prominent manufacturer of marine transmission products and technology; and Fortune Access Marine Sdn Bhd, a distributor of marine equipment and engineering services.

“This collaboration provides training of local specialised technicians and the assurance of spare parts and after-sales service, bringing in-country support to fleet operators in Malaysia and reducing dependency on foreign service providers,” he added.

For the SBSR subsector to thrive, Siow said, it needs clear and consistent policies to stay strong and competitive, both locally and globally.

He said the government’s timely decision to extend the bona fide status incentive until Dec 31, 2027, would ensure the survival and competitiveness of the SBSR industry. This incentive offers tax exemptions on imported materials and equipment for domestic SBSR on a level playing field with neighbouring countries.

Safina Project has sparked a fresh wave of enthusiasm, bringing new hope after the long slump in the OSV market, with the SBSR industry greatly valuing the opportunity to construct new OSVs in local shipyards.

“This decision carries tremendous promise, not only for shipyards but also for the entire maritime sector in Malaysia. The Safina Project is a project that empowers our local talents and opens doors for designers, shipyards, equipment makers and vendors in our community. Together, we’re building a stronger supply chain and fostering growth,” Siow said.

Furthermore, he explained that the Safina Project also brings in new talent through recruitment and training, creating jobs for graduates from technical and vocational education and training institutions and universities.

“This project drives the OSV segment together with other areas of the SBSR industry. It is a step towards boosting Malaysia’s economic well-being by embracing more locally sourced materials and resources,” Siow said.

“AMIM firmly believes that our marine industries can truly thrive in the right environment. This setting not only fosters growth but also serves as a catalyst for substantial contributions to our nation's gross domestic product, job opportunities, import substitution, balance of payments, and increasing industrial capacity for the maritime industry,” he added.

Through continuous collaboration and development with partners and stakeholders, Petronas plays an active role in strengthening, revitalising and future-proofing Malaysia’s O&G services and equipment ecosystem for vendors to expand and become globally competitive while contributing to the nation’s economic growth.