Petronas’ 5,000-Job Cuts Signal Restructuring, Not OSV Market Slowdown

With profits under pressure, Petronas, Malaysia’s state oil giant, is tightening its belt—it said on June 5 it would cut 5,000 jobs, mainly contract staff, or 10% of its global workforce. The reduction will mainly affect support roles such as human resources and finance, where staffing levels have reportedly exceeded industry norms. Investors may wonder: Will this mean lower charter rates for Offshore Support Vessels (OSVs) in Malaysia? "Our checks with OSV players suggest that Malaysian-flagged OSVs remain in severe deficit. This in turn will support the elevated charter rates in 2025, although growth may be marginal or flattish.” -- Hong Leong Investment Bank (Mar 2025) Petronas is slowing down but the core work of producing oil rolls on, ensuring that demand for OSVs stays strong.  Petronas' own 2025-2027 Activity Outlook says: "A steady demand trend is projected from 2025 to 2027 attributed to the stability in production activities during this period." So, while there might be fewer new exploration jobs, the day-to-day work of keeping oil flowing—and the OSVs needed for that—remains strong.

Singapore-listed CH Offshore, one of the region’s established OSV owners, recently held an Extraordinary General Meeting (EGM) and shared some candid thoughts about the state of the market.

When asked about the outlook for charter rates, management was upbeat:

The regional OSV market’s been tight for a while. Here’s why:

1. Not Enough Vessels to Go Around:
The OSV fleet is getting old, and hardly anyone’s building new ones. Years of oversupply and low returns have made shipowners wary.

Simply put, there just aren’t enough boats for all the jobs out there.

Petronas' 2025-2027 Activity Outlook says: "The high number of ageing vessel servicing production operations is a concern if there are insufficient newbuilds coming into the market within the next three years."

An upcoming Petronas tender, called Safina Phase 2, seeks to ensure vessel supply in the years ahead: 

2. Production Needs Don’t Stop:
Even if exploration slows, the oil that’s already being pumped out still needs support.

According to Kenanga Research, demand for production-related OSVs is expected to remain stable at 118 vessels, while drilling-related OSV demand is projected to decline to 220 vessels in 2025, down from 250 in 2024.

Source: https://theedgemalaysia.com/node/747495

3. Competition From Abroad:
It’s not just Malaysia. OSVs are in demand all over Asia—and even further afield.

4. Obstacles to newbuildings:
High newbuild prices, uncertain alternative fuel choices, and banks’ reluctance to finance new vessels pose significant challenges.