Kuala Lumpur: The government’s RM1.1 billion injection into Sapura Energy Bhd (SEB) is proving to be a significant relief for vendors facing severe cash flow challenges due to outstanding payments. This financial boost is expected to support the local oil and gas ecosystem, which has been grappling with overdue payments amounting to more than RM10 million.
According to BERNAMA News Agency, Mohd Erwan Ahmad, Chief Operations Officer of Keyfield International Bhd, emphasized the dire cash flow situation caused by unpaid debts, particularly as the non-payment from SEB occurred during the peak of the COVID-19 pandemic in the latter half of 2021. Mohd Erwan expressed relief that the company managed to avoid layoffs and maintained project timelines despite the financial strain.
He expressed confidence that the government’s intervention in SEB would help vendors survive the financial turmoil, given the large number of vendors affected. He believes this injection will restore confidence in the supply chain, encouraging continued collaboration with SEB to advance the local oil and gas industry.
Meanwhile, Muhammad Khairul Rijal Khalid, Managing Director of Classic Marine and Services (M) Sdn Bhd, acknowledged the widespread impact of the COVID-19 pandemic on industries, including SEB. He noted that SEB still owes about RM11 million for a vessel lease period from 2021 to January 2022, but fortunately, the vessel’s owner from Singapore did not impose a penalty for late payment.
On March 11, SEB secured the RM1.1 billion investment from Malaysia Development Holding Sdn Bhd (MDH), a special purpose vehicle of the Minister of Finance (Incorporated). The funds are earmarked exclusively for settling SEB’s debts with Malaysian service providers in the oil and gas sector. Prime Minister Datuk Seri Anwar Ibrahim emphasized that this funding aims to support local SMEs and preserve the local oil and gas industry.
Mohd Erwan noted that trust in SEB was initially shaken when the company sought court protection and halted payments in early 2022. However, with a new management team and the fulfillment of commitments in 2023, confidence has been restored. Keyfield International plans to continue its partnership with SEB.
Muhammad Khairul described the investment as crucial for the survival of the local oil and gas industry, acknowledging SEB’s significant role in his company’s growth. Despite a decrease in the percentage of contracts from SEB over the years, he emphasized the high-risk nature of the industry, pointing out that the government’s intervention was essential as other investors were reluctant to take risks.
Captain Rajendra, General Manager of Ruhm Marine Sdn Bhd, highlighted the operational disruptions caused by outstanding dues, which affected cash flow and necessitated cost optimization measures. He stressed the importance of government intervention in maintaining the resilience of Malaysia’s oil and gas ecosystem.
Rajendra also noted that while the investment injection could restore confidence and stabilize vendor operations, concerns about long-term financial stability and systemic issues in the sector may persist. He urged SEB to learn from past challenges to strengthen future operations.