Labuan: The unresolved conflict involving Iran is expected to indirectly drive more active oil drilling activities in Sabah waters, said Labuan Chamber of Commerce (LCC) Oil and Gas Bureau chairman Masnawi Nawe. He said the prolonged instability in the Gulf region, including disruption risks to global oil supply routes, had pushed operators to reassess upstream planning and accelerate exploration and production activities in relatively stable producing areas.
According to BERNAMA News Agency, Sabah waters are strategically positioned within Malaysia's offshore oil and gas landscape, and any prolonged uncertainty in West Asia will naturally increase attention on producing regions such as Borneo (Sabah). This does not mean activities are triggered overnight, but the pressure on global supply security will create stronger justification for more drilling, maintenance, support, and production-related works. Global energy markets have been affected by the Iran conflict, with the International Energy Agency warning that oil supply could fall short of demand this year due to disruptions involving Iran and the wider Gulf region.
Masnawi said the impact would not only be seen in Sabah waters but also in Labuan, which continues to function as an important support base for offshore oil and gas operations in the South China Sea region, including waters linked to the West Philippine Sea corridor. He said Labuan's role as a logistics, crew change, marine support, and offshore services centre had become increasingly visible, with more oil and gas drilling-related service crews seen moving through the island.
Labuan is not only supporting nearby offshore fields; it is also part of the wider offshore support chain for vessels, drilling contractors, and service providers operating in regional waters. We can already see the presence of more oil and gas-related personnel in Labuan, especially those involved in drilling support, marine services, logistics, and offshore maintenance. Masnawi said any increase in drilling activities around Sabah would have a direct spillover effect on Labuan's economy, particularly for marine logistics, accommodation, transport, food and beverage, workshops, manpower supply, and port-related services.
He said Labuan must position itself more aggressively as a reliable offshore support hub by improving port efficiency, vessel turnaround, logistics coordination, manpower readiness, and supporting infrastructure. Labuan has the advantage of location, experience, and an existing oil and gas ecosystem. What is important now is to ensure that the island is ready to capture the next wave of upstream and offshore support opportunities.
Petronas' latest activity outlook has projected stronger upstream activities, with Malaysia expected to see an increase in the number of wells to be developed and explored in 2026 compared with 2025, in line with efforts to strengthen domestic energy security. He said Sabah's oil and gas services and equipment sector has also been reported to be heading for stronger offshore activity over the next few years, while Labuan's Asian Supply Base remains a key logistics hub supporting offshore exploration, development, and production activities.
Masnawi said the expected rise in offshore activities should be viewed as an opportunity for Labuan-based companies to strengthen their competitiveness and participate more actively in the regional oil and gas value chain. He said local companies should not remain as passive observers but must prepare their assets, workforce, and compliance readiness to meet the requirements of major oil and gas operators and contractors. The opportunity is there, but readiness is key. Labuan must ensure that its local industry players are able to meet operational standards, safety requirements, and delivery expectations.