OUTLOOK FOR THE OSV SECTOR IN MALAYSIA Malaysia’s Oil & Gas, Services and Equipment (“OGSE”) industry represents a substantial share of the national economy, contributing between 5.0% and 8.0% to the national GDP. Nevertheless, the industry is at a critical crossroad as a result of the urgent call for energy transition, which sees the energy industry moving towards a more sustainable model that is focused on renewables and less dependent on fossil fuels. (Source: National OGSE Industry Blueprint 2021 – 2030) While the longer-term trajectory points towards energy transition, in the shorter term between 2026 and 2028, PETRONAS remains steadfast in its target to sustain Malaysia’s oil and gas production at close to 2 million barrels of oil equivalent per day (MMboe/d), supported by continued investment in exploration activities, deepwater developments, enhanced oil recovery initiatives and the award of new production sharing contracts under the Malaysia Bid Round 2024. In particular, PETRONAS will focus on revitalising Malaysia’s exploration and production landscape to strengthen domestic energy security. These activities are expected to support increased offshore development activity, with demand for offshore support services likely to materialise from 2027 onwards, thereby presenting potential opportunities for service providers such as Keyfield. PETRONAS utilised 194 OSVs for offshore projects in 2025, below the earlier budget of 220 units due to weaker hook-up and commissioning (“HUC”) and maintenance, construction and modification (“MCM”) projects. The demand for OSVs is expected to remain subdued in 2026 and projected to decline by 2.1% to 190 vessels as a result of lower demand for AHTS and workboat/work barge. The downward revisions in planned drilling and project activities suggest a softer OSV demand environment through 2028. (Source: PETRONAS Activity Outlook 2026–2028; Kenanga Research Report) The OSV market also continues to face structural challenges arising from prolonged underinvestment and progressive fleet ageing. According to the Kenanga Research Report (citing Clarksons), 80.0% of the global OSV fleet will exceed 20 years old by 2035, indicating that a significant portion of global vessels may not be in optimal working condition if reinvestment in fleet does not occur. According to Bank Pembangunan Malaysia Berhad, Malaysia’s OSV fleet currently has an average age of between 12 and 15 years, which is still within the optimal age but would turn sub-optimal in a few years’ time. Typically, OSVs for longer-term charters exceeding GROUP CEO’S MESSAGE (CONT’D) 12 months are required to be not older than 15 to 20 years, while OSVs for shorter-term jobs may be acceptable with lifespans extending up to 30 years if the vessels are wellmaintained, subject to audit and insurance clearance. According to The Edge, the average age of Malaysia’s OSV fleet stands at 13.2 years, which remains acceptable until around 2027. Beyond that, without accelerated fleet renewal, a growing portion of vessels may only be suitable for short-term charters, reducing the pool of vessels eligible for longer-term contracts and potentially enabling younger vessels under 15 years to command premium rates. As such, Keyfield’s competitive position remains strong, supported by a relatively young fleet with an average age of 7.8 years. This positions us favourably to capture higher quality charter opportunities and potentially command premium DCR as market conditions recover. (Source: Kenanga Research Report) Leveraging this competitive positioning, our strategic focus remains anchored in the AWB segment, which continues to play an integral role in Malaysia’s upstream oil and gas industry. Our Group remains well positioned to support ongoing activities in maintenance, production optimisation and marginal field development, which are critical to sustaining output and extending the lifespan of existing offshore assets. Building on these core strengths, we have also diversified our geographical footprint by venturing into the Middle East market. While DCR in this region are generally lower than those in Malaysia, vessel utilisation tends to be higher due to the absence of seasonal monsoon disruptions. This diversification strategy is expected to help stabilise our overall vessel utilisation by broadening our customer base, while strengthening our resilience against cyclical fluctuations in any single market. 18 KEYFIELD INTERNATIONAL BERHAD 202001038989 (1395310-M)
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