Enhancing Safety Management Practices in the Malaysian Oil and Gas Industry: Challenges, Strategies, and Future Directions

Enhancing Safety Management Practices in the Malaysian Oil and Gas Industry: Challenges, Strategies, and Future Directions

Babudass M. Naidu¹, Amily Fikri², Irwan Ibrahim², Ahmad Rais Mohamad Mokhtar ², Veera Pandiyan Kaliani Sundram^2,3*

¹Bumi Sendayan Sdn. Bhd., Petaling Jaya, Selangor, Malaysia

²Faculty of Business and Management, University Technology MARA, Selangor, Malaysia

³RIG – Sustainable Supply Chain Logistics / Institute of Business Excellence, University Technology Mara, Shah Alam, Malaysia

^*Corresponding Author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.909000133

Received: 22 August 2025; Accepted: 28 August 2025; Published: 01 October 2025

ABSTRACT

The oil and gas industry in Malaysia plays a crucial role in national economic development, yet it remains one of the most hazardous sectors due to its complex and high-risk operations. This study examines safety management practices throughout the Malaysian oil and gas value chain, with a focus on regulatory frameworks, organisational behaviour, and technological adoption. Using a qualitative, desktop research design, over 35 peer-reviewed articles, government regulations, and industry reports published between 2018 and 2024 were thematically analyzed. Four major themes emerged: (1) uneven implementation of Safety Management Systems (SMS), especially among SMEs and subcontractors; (2) weak safety culture and limited leadership engagement; (3) inconsistent enforcement of safety regulations across regions; and (4) limited adoption of digital safety technologies, with most innovations confined to top-tier firms. The findings reveal a digital and cultural divide in safety maturity, driven by structural, financial, and knowledge barriers. To address these challenges, the paper recommends five key strategies: promoting transformational safety leadership, enhancing regulatory enforcement through smart inspection tools, incentivizing technology adoption among SMEs, institutionalizing contractor integration, and fostering cross-sector research and benchmarking initiatives. These insights contribute to the ongoing discourse on occupational safety in emerging economies and offer practical policy directions for enhancing systemic safety performance in Malaysia’s oil and gas sector.

Keywords: Safety management, oil and gas, Malaysia, safety culture, regulatory enforcement, Industry 4.0, HSE

INTRODUCTION

The oil and gas industry has always played a significant role in Malaysia’s economic story. It contributes to national revenue, supports exports, and ensures energy continuity (Malaysian Investment Development Authority [MIDA], 2023). But behind that economic strength is a sector that operates in highly volatile conditions. Activities like offshore drilling or refining aren’t just technically complex—they also involve serious risks. When something goes wrong, whether it’s a gas leak or a fire, the consequences can be severe for workers, the environment, and company operations (Rahim et al., 2021).

To manage these risks, Malaysia has developed a fairly comprehensive legal framework, anchored by instruments such as the Occupational Safety and Health Act 1994 and the CIMAH Regulations 1996. These laws, enforced by the Department of Occupational Safety and Health (DOSH), provide the structure for workplace inspections, training, and compliance (DOSH, 2022). Still, on-the-ground outcomes don’t always reflect the intent of these policies. In many cases, especially among smaller players and subcontractors, safety measures appear more reactive than preventive (Hamid et al., 2020).

One of the things researchers have continued to emphasise is that technical compliance isn’t enough. Real safety comes from culture—how leaders behave, how workers are encouraged to speak up, and whether safety is viewed as everyone’s responsibility (Zainal et al., 2023). In recent years, some firms have started exploring new technologies to help them do this better. Tools like IoT sensors and predictive analytics can offer earlier warnings and more accurate monitoring (Abdullah et al., 2022). But adoption remains uneven. For many, the costs, skills, or organisational inertia are still barriers.

Figure 1. Process Safety Management (PSM)

Figure 1 depicts the core elements of Process Safety Management (PSM) as the organizing lens for Malaysian O&G safety: a visual prompt that links technical risk controls (procedures, integrity, MoC, emergency response) with cultural enablers (leadership, learning, contractor integration) to shift practice from compliance to prevention.

This study looks at how these dynamics are playing out in Malaysia’s oil and gas sector today. By examining policies, leadership, and the state of technology use, it hopes to offer a grounded view of where we are—and where improvements could be made. The goal is not just to critique, but to provide ideas that can realistically support safer, more resilient operations.

LITERATURE REVIEW

2.1 Overview of Safety Management in Oil and Gas Industry

The oil and gas industry is globally recognized as a high-risk sector due to the complexity of operations, the presence of hazardous substances, and exposure to extreme environments. Effective safety management systems (SMS) are therefore essential to minimize the occurrence and severity of occupational accidents. According to Aven and Vinnem (2023), safety in this industry is not merely a compliance issue but a strategic component that affects long-term sustainability and operational resilience.

In developed countries, integrated Health, Safety, and Environment Management Systems (HSE-MS) have been widely adopted, guided by international standards such as ISO 45001 and the IOGP (International Association of Oil & Gas Producers) guidelines. These systems promote risk-based thinking, top management involvement, and continuous improvement. However, in many developing countries—including Malaysia—the application of such frameworks varies significantly between large multinational corporations and smaller domestic firms (Rahim et al., 2021).

2.2 The Malaysian Regulatory Landscape

Malaysia’s regulatory framework for occupational safety in the oil and gas sector is anchored by the Occupational Safety and Health Act (OSHA) 1994, the Factories and Machinery Act (FMA) 1967, and the Control of Industrial Major Accident Hazards (CIMAH) Regulations 1996. These laws empower the Department of Occupational Safety and Health (DOSH) to enforce compliance and investigate incidents. However, studies such as those by Hamid et al. (2020) have shown that enforcement alone does not guarantee safety performance, particularly in smaller enterprises that lack resources for comprehensive risk assessments or structured training.

While major international oil companies (IOCs) have established rigorous internal HSE policies aligned with global best practices, the fragmented implementation among subcontractors and SMEs reflects systemic weaknesses in regulatory monitoring and capacity building (Zainal et al., 2023).

2.3 Safety Culture and Human Factors

Safety culture—a shared set of values, beliefs, and practices around safety—is widely recognized as a key determinant of safety outcomes in hazardous industries. Mohamed et al. (2022) emphasize that in the Malaysian oil and gas sector, the presence of a top-down compliance mentality often overshadows efforts to build a proactive safety culture. Furthermore, employee engagement, safety leadership, and peer accountability are frequently lacking, particularly among contract workers and site-level operations.

Human error continues to be a dominant contributor to incidents in upstream and downstream activities. This is compounded by factors such as language barriers, fatigue, and insufficient hazard perception training. Empirical studies have demonstrated that cultivating a high-reliability organizational culture—where individuals are trained to expect the unexpected—can significantly reduce near misses and accident rates (Zohar, 2020).

2.4 Technological Innovations and Safety

Recent advancements in Industry 4.0 technologies have begun to transform safety management in high-risk sectors. Tools such as real-time gas detection sensors, AI-driven incident prediction models, drones for visual inspections, and digital twins are reshaping how companies approach hazard identification and mitigation (Abdullah et al., 2022). However, adoption in Malaysia is still at a nascent stage, constrained by high implementation costs, digital skill gaps, and organizational inertia.

Despite the growing awareness of these technologies’ benefits, their integration into existing systems remains patchy. Companies are often reactive rather than preventive in safety investments. There is also limited research on how digital technologies specifically improve safety outcomes in the Malaysian context, presenting a clear gap in the current literature (Zainal et al., 2023).

2.5 Gaps in Existing Literature

Although numerous studies have examined safety management frameworks in Malaysia, most have focused on policy compliance or incident analysis post-failure. Few have investigated the strategic integration of technology, leadership behaviour, and organizational learning as a combined force to improve safety maturity. Additionally, limited empirical research has been conducted on contractor safety practices, despite their significant presence in the Malaysian oil and gas value chain. Moreover, the Malaysian context lacks longitudinal studies that explore how safety culture evolves over time with digital transformation, regulatory change, and organizational restructuring. This suggests an urgent need for mixed-method or case-based research to fill these empirical and theoretical gaps.

METHODOLOGY

3.1 Research Design

This study employs a qualitative research design based on desktop research and systematic literature review to investigate safety management practices in the Malaysian oil and gas industry. Desktop research refers to the collection and analysis of existing data from credible secondary sources such as peer-reviewed journal articles, industry reports, government publications, and regulatory guidelines (Snyder, 2019). This approach is suitable for developing a conceptual understanding of current practices, identifying research gaps, and synthesizing existing knowledge without the need for primary data collection.

3.2 Data Collection Sources

The literature reviewed in this study was sourced from major academic databases including Scopus, ScienceDirect, Emerald Insight, and Google Scholar. Relevant industry documents were retrieved from:

1. The Department of Occupational Safety and Health (DOSH), Malaysia
2. Companies’ Sustainability and HSE Reports
3. International Association of Oil & Gas Producers (IOGP)
4. Malaysian Investment Development Authority (MIDA)
5. Occupational Safety and Health Act (OSHA) 1994 and CIMAH Regulations

The search focused on documents published between 2018 and 2024 to ensure recency, using keywords such as “safety management,” “oil and gas Malaysia,” “occupational health,” “HSE practices,” and “safety culture.” Inclusion criteria emphasized relevance to Malaysian context, empirical or theoretical grounding, and English-language availability. Articles were excluded if they lacked methodological rigor or were outdated in regulatory context.

3.3 Data Analysis Method

A thematic analysis was conducted to identify key themes and patterns across the literature. Following the method outlined by Braun and Clarke (2006), the analysis involved:

1. Familiarization with literature content
2. Coding of relevant data (e.g., regulations, practices, challenges, and trends)
3. Identification of recurrent themes such as regulatory gaps, technological adoption, leadership commitment, and safety culture
4. Synthesizing findings into critical discussions relevant to Malaysia’s oil and gas sector

This approach allows the study to critically interpret the existing body of knowledge and to propose conceptual linkages between regulatory practices, safety performance, and industry challenges.

DATA ANALYSIS AND FINDINGS

Based on the thematic analysis of over 35 recent academic journal articles, regulatory documents, and industry reports published between 2018 and 2024, four key themes emerged regarding safety management practices in the Malaysian oil and gas industry. These themes reflect systemic challenges and opportunities for improvement across organizational levels, regulatory enforcement, and technological readiness.

Table 1: Summary of Key Themes Identified from Thematic Analysis

This table provides a synthesized overview of the key findings, linking each theme to its root issues and relevant sources. It demonstrates how the literature consistently highlights the need for systemic safety integration, especially among subcontractors and smaller players, while also emphasizing the role of leadership and digital transformation in driving improvements.

4.1 Theme 1: Uneven Implementation of Safety Management Systems (SMS)

While large organizations such as PETRONAS and Shell Malaysia have implemented structured and integrated Health, Safety, and Environment Management Systems (HSE-MS) aligned with ISO 45001 and IOGP standards, many local contractors and smaller operators exhibit only partial compliance. According to a report by DOSH (2022), only 58% of Malaysian oil and gas contractors had fully documented safety management systems, with many relying on generic risk assessments or outdated SOPs.

For example, Hamid et al. (2020) reported that several mid-sized service providers lacked consistent permit-to-work systems or formal job hazard analyses, contributing to increased incident rates, especially during turnaround and maintenance operations.

4.2 Theme 2: Gaps in Safety Culture and Leadership Commitment

The reviewed literature consistently highlighted a compliance-driven safety mindset rather than a proactive culture of risk awareness. In a survey synthesized from multiple sources, including Zainal et al. (2023), it was estimated that over 40% of frontline supervisors perceived safety responsibilities as top-down directives rather than shared accountability.

Moreover, Mohamed et al. (2022) found that foreign workers, who make up a substantial portion of offshore labour, often lacked the confidence to report unsafe conditions due to cultural and language barriers. This indicates an underdeveloped “reporting culture” that weakens overall hazard identification.

4.3 Theme 3: Regulatory Frameworks Exist, but Enforcement Is Inconsistent

Malaysia’s OSHA 1994 and CIMAH Regulations provide a robust legal foundation. However, actual enforcement remains inconsistent across regions and project types. The DOSH Annual Report (2021) noted that while there were over 10,000 inspections conducted, only 24% led to follow-up actions or improvement orders, particularly in East Malaysia.

In comparison to international benchmarks, Malaysia lacks a publicly accessible incident database or mandatory safety performance disclosures, which limits transparency and sector-wide learning. This was also critiqued in Abdullah et al. (2022), who argued for greater digitalization of compliance tracking and inter-agency coordination.

4.4 Theme 4: Emerging but Limited Use of Safety Technologies

The analysis found that the application of digital and Industry 4.0 technologies—such as IoT gas sensors, digital twins, and AI-based risk modeling—is increasing, but remains confined to Tier 1 operators. According to insights from Abdullah et al. (2022), less than 20% of SMEs in the oil and gas supply chain had integrated any form of real-time hazard detection or predictive analytics into their operations.

PETRONAS has made notable progress by launching its “Digital HSE Blueprint,” but diffusion to smaller industry players remains slow due to high initial costs and digital literacy challenges. This creates a technological divide in safety management capabilities across the industry.

SUMMARY OF KEY FINDINGS

These findings suggest that while Malaysia has established a strong regulatory and corporate framework for safety in oil and gas, gaps in enforcement, safety culture, and technology diffusion continue to hinder systemic safety performance improvement.

DISCUSSION

The analysis of existing literature and regulatory documents highlights several critical challenges that continue to impede the maturity of safety management practices in Malaysia’s oil and gas industry. While efforts by government regulators and major firms have shown progress, the sector’s safety landscape remains uneven and reactive, particularly among contractors and small-to-medium enterprises (SMEs).

First, the fragmented adoption of Safety Management Systems (SMS) signals a maturity gap in the sector’s approach to hazard prevention and control. This reflects broader findings in the literature, where SMS implementation has been observed as inconsistent across organizational sizes in the Asia-Pacific energy sector (Hollnagel, 2022). A significant contributing factor is the limited organizational capacity in SMEs, which lack both the expertise and financial resources to adopt comprehensive systems like ISO 45001 or IOGP standards. This leads to a superficial compliance mindset, often limited to paperwork rather than embedded safety processes.

Second, the weak safety culture and limited leadership engagement reflect structural and psychological barriers within organizations. Leaders often treat safety as a regulatory obligation rather than a core business value. According to Yule (2018), transformational safety leadership—characterized by active engagement, communication, and trust—is a critical factor in developing high-reliability organizations. In Malaysia, however, hierarchical workplace cultures, reliance on contract labour, and language diversity further dilute the effectiveness of top-down safety messaging.

Third, although Malaysia has well-established laws like OSHA 1994 and the CIMAH Regulations, enforcement remains inconsistent, particularly in remote regions and among subcontractors. This is not unique to Malaysia. Hohnen and Hasle (2019) observed similar patterns in other developing economies, where regulatory enforcement is hindered by resource limitations and inspector training gaps. Moreover, the absence of publicly accessible incident data in Malaysia impedes sector-wide learning and transparency, reducing the pressure for continual improvement.

Finally, the emerging use of safety technologies remains concentrated in large players like PETRONAS, while most SMEs have yet to integrate even basic digital tools. This mirrors the global “digital safety divide” in industrial sectors, as noted by Oesterreich and Teuteberg (2019), where the benefits of Industry 4.0 in occupational safety are not evenly distributed. In Malaysia, barriers such as digital illiteracy, cybersecurity concerns, and lack of incentives further delay adoption. As such, safety innovation remains aspirational rather than operational for the majority of the industry.

In toto, it’s clear that improving safety practices in Malaysia’s oil and gas industry isn’t just about fixing one thing—it depends on a few important elements working together. First, organisations need the structural capacity to actually implement and sustain safety systems. Second, there has to be a genuine shift in how safety is led and lived—meaning stronger leadership and a workplace culture that prioritises safety beyond just ticking boxes. And third, enforcement needs to be consistent and supported by practical incentives, especially when it comes to encouraging technology use. Unless all three of these areas are addressed in a coordinated way, progress will likely remain slow and uneven across the industry.

RECOMMENDATIONS

To address the systemic challenges identified in Malaysia’s oil and gas safety landscape, this section outlines strategic and evidence-based recommendations targeted at industry practitioners, regulators, and policymakers, along with real-world or hypothetical examples to illustrate each point.

6.1 Promote Safety Culture Through Transformational Leadership

Shifting from a mindset of basic compliance to one rooted in genuine commitment to safety doesn’t happen overnight—it demands visible, ongoing leadership. Leaders can’t afford to be distant figures who only sign off on procedures; they need to be present, involved, and genuinely invested. One effective way forward is through leadership development programmes that focus on practical, human-centred skills—such as how to model safe behaviours, encourage workers to speak up without fear, and build real trust within teams. When leadership is engaged at this level, the results can be substantial. Clarke (2013), for example, found that organisations with active, safety-conscious leaders tend to experience far fewer lost-time injuries.

Example: Some companies have already put this into action. Shell Malaysia, for instance, runs a programme called “Visible Felt Leadership”, where senior managers are expected to visit worksites regularly—not to inspect, but to connect. They walk the floor, talk to workers, listen to their concerns, and highlight good safety practices. It’s a simple concept, but one that’s made a noticeable difference in how safety is perceived and reported on the ground.

6.2 Strengthen Regulatory Enforcement with Smart Inspection Tools

To enhance the consistency and impact of enforcement, DOSH and other regulators should adopt risk-based inspection models supported by digital analytics. By using predictive tools to prioritize high-risk sites, regulatory bodies can allocate resources more effectively and shift from reactive inspections to data-driven compliance oversight (Robson et al., 2018). Additionally, making aggregated incident and compliance data publicly available would increase transparency and motivate industry-wide learning.

Example: Singapore’s Ministry of Manpower (MOM) utilizes an e-inspection platform to target high-risk workplaces and track compliance issues digitally. A similar model can be piloted by DOSH in Malaysia’s offshore rigs, especially in Sabah and Sarawak, where logistics and risk levels pose enforcement challenges.

6.3 Incentivize Safety Technology Adoption Among SMEs

Given the slow uptake of Industry 4.0 tools among smaller firms, the government could implement subsidy schemes, tax relief, or matching grants to encourage investment in safety technologies such as IoT-based gas detectors, AI-powered risk modeling, or wearable sensors. These incentives should be paired with training and digital literacy programs to build internal capabilities. As indicated by Zhang et al. (2020), technology adoption in high-risk industries is more successful when accompanied by structured knowledge transfer and peer learning opportunities.

Example: An SME that provides scaffolding services for offshore platforms in Johor could apply for a grant from MIDA to invest in wearable sensors that monitor worker fatigue and heat stress. With proper training, this could significantly reduce incident risk during turnaround projects in high-temperature environments.

6.4 Institutionalize Contractor and Subcontractor Safety Integration

Large oil companies must go beyond compliance audits and establish collaborative safety frameworks with their contractors and subcontractors. This includes joint safety planning, integrated training sessions, shared incident databases, and common safety KPIs across all tiers of the supply chain. As highlighted by Suraji et al. (2021), safety performance in complex projects is only as strong as its weakest link—usually the small subcontractors.

Example: ExxonMobil Malaysia requires all contractors to participate in quarterly joint HSE meetings and uses a shared digital platform to track safety performance metrics for all project tiers. This ensures alignment of safety expectations from headquarters down to subcontracted labour providers.

6.5 Foster Cross-Sector Safety Research and Benchmarking

There is a need to build stronger ties between academia, industry, and regulators to generate local safety knowledge. Universities and research centers should be funded to conduct longitudinal studies on safety culture evolution, digital safety innovations, and post-incident organizational learning. Creating a national safety benchmarking platform—similar to those used in Norway and Australia—would help Malaysian firms compare performance and share good practices.

Example: University Technology PETRONAS (UTP), in partnership with PETRONAS and DOSH, could lead the development of a National Oil and Gas Safety Index. This platform would allow companies to anonymously benchmark their performance in terms of TRIR (Total Recordable Incident Rate), audit compliance, and safety training hours per employee.

CONCLUSION

Safety in Malaysia’s oil and gas industry is not a new concern, but it remains a complex and evolving challenge. What this study has shown is that the conversation around safety cannot be limited to regulations and checklists—it’s much broader and deeper than that. Despite having the right laws in place, and despite some companies showing clear commitment, gaps in practice, leadership, and technology still hold the sector back.

What stood out most from the review is the imbalance between the larger, more established players and the smaller contractors. While the former tend to have the means and structure to implement proper safety systems and technologies, many of the latter are struggling to even meet the minimum standards. This is not necessarily due to neglect, but often due to a lack of resources, awareness, or consistent support.

Figure 1: Structured Safety Systems addressing Malaysian O&G safety

Figure 1, provides a practical bridge from these insights to execution. Its twelve elements operationalize the four gaps identified in this study—uneven SMS adoption, weak safety culture/leadership, inconsistent enforcement, and limited technology diffusion—into day-to-day controls that reduce risk across the value chain. In particular: PSI, Operating Procedures, Safe Work Practices/Permits, Training & Competence, Contractor Management, and Safe Operation Management target the SMS maturity gap; Incident Reporting, Investigation & Learning and Emergency Response Management reinforce learning culture; MoC and Transport Safety Management lend themselves to risk-based inspections and smarter, fairer enforcement; and Asset Integrity Management (AIM) plus Project HSE Management are natural anchors for phased digital/Industry 4.0 uptake among SMEs.

This paper argues that improving safety in the oil and gas sector calls for more than compliance. It requires cultural change, better leadership on the ground, smarter and fairer enforcement, and above all, a shift in how we treat safety—not as a cost or a box to tick, but as something embedded in every part of the operation. The recommendations offered here aim to move the conversation in that direction.

It’s important to acknowledge that real change takes time. But if Malaysia can build stronger collaboration between government, companies, and academic institutions—if it can back that with practical tools and incentives—it stands a good chance of closing the safety gap. More importantly, it can begin to rebuild a culture where safety is not a burden, but a shared value.

ACKNOWLEDGEMENT

This research was supported by the project “Safety Management in the Oil and Gas Industry,” funded by Bumi Sendayan Sdn. Bhd., Petaling Jaya, Selangor, Malaysia, in collaboration with University Technology MARA under the Industrial Research Grant Scheme (Grant No: 100-TNCPI/PRI 16/6/2 [013/2025]).

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