The long shadow of the 2014 oil price crash in Malaysia

Sapura Energy, once one of Malaysia's petroleum powerhouses, was stabilized in an intervention that demonstrates how ASEAN's largest oil exporter is still feeling the aftermath of last decade's price crash.

In 2012, Sapura merged with Kencana Petroleum amid high energy prices and economic optimism. The 2014 oil price crash, however, altered the industry and its economics. The bulked-up Sapura had planned projects based on sustained high prices; instead, it found itself burdened with debt and diminishing revenues; oil prices did not return to the "old normal" until Russia's invasion of Ukraine in 2022.

To stabilize the nation's energy ecosystem, Malaysia injected MYR 1.1 billion into Sapura in the form of convertible debt. This move aims to protect vendors and domestic banks, rather than merely rescuing the company itself, but has still proven politically controversial.

The oil price decline had broader economic consequences for Malaysia, particularly impacting the ringgit. The currency fell below 4 MYR/USD and has never fully recovered.

We've added several more charts examining the dynamics of 2014-16. To counteract the early 2010's surge in US shale oil production and its resulting market-share increase, Saudi Arabia drove a sustained output increase by OPEC. The result was prolonged oversupply and suppressed prices.