Many local banks and financial institutions are eyeing to promote Islamic and conventional banking and financial instruments to the oil and gas industry.
“We like gas, and the important trend is the rise of gas consumption as an electricity feedstock. Growth in Asia is something like 6.3 percent per annum and in places like Indonesia, demand for electricity is up 10 percent annually,” said CIMB Investment Bank Bhd chief executive officer Datuk Charon Wardini Mokhzani.
He said demand for gas was very clear as coal was increasingly difficult to extract while gas was far more easily available and easy to transport.
He added that carbon footprint for gas was also twice as good as coal.
“We are bullish about gas and the industry as a whole,” he said at a cocktail reception organised by Petroleum Resources Corp and Bank Negara.
However, he said, it was not easy to provide financing to the oil and gas industry as most players in the industry were flushed with much more money than the banks.
“The history and connection between Islamic finance and the oil and gas industry goes back a long way with the first Malaysian corporate sukuk issued by Shell back in the 1990s. We are a leader in the sukuk market and 70 percent of all sukuk issued last year were issued out of Malaysia,” he said.
Charon said the local market did not just appeal to Islamic investors but also to foreigners who came to Malaysia to take advantage of the country’s investor base.
HSBC Amanah global chief executive officer Mukhtar Hussain said that as far as Islamic finance was concerned, there was a reason why HSBC had chosen to centralise its global financing activities in Malaysia.
“Malaysia has the ability to attract financing offshore and onshore and also using onshore liquidity to facilitate offshore transactions. One learning of the oil and gas sector in the future may well be the ability to access diversifying mechanism through diversified channels and institutions,” he said.
Mukhtar said Malaysia’s most important attraction was its ability to provide access to diversified funding sources, not only in conventional banking but also Islamic markets.
“The broad message is that Malaysia is open for business and we are proud to play a prominent role along with many other financial institutions represented here. You should have confidence in what this country can provide in terms of people and funding sources,” he said.
He added that as the oil and gas industry grew and diversified geographically, access to many different funding sources could only be a sensible solution to develop and diversify access to financing sources.