Sunday, 14 September 2008

Vastalux slips 30% on market debut

KUALA LUMPUR: Vastalux Energy Bhd dipped below its initial public offer price (IPO) of 75 sen on its debut on the Bursa Malaysia second board yesterday.

Its share price hit 58 sen at the opening bell with 900 shares transacted and closed at 52.5 sen, down 22.5 sen or 30%.The total volume of the day stood at 5.5 million shares.

Executive director Azman Abd Ghafar said the opening price was expected due to the soft equity market.

“We are confident that our value would be reflected after the market recovers and supported by the company’s good fundamentals,” he said after the listing ceremony.

Vastalux chairman Tan Sri Zainol Abidin Abd Rashid hitting the gong to mark the company listing on the second board. With him are Azman Abd Ghafar and other company directors

He said the company would acquire two or three workboats or workbarges by next year at the cost of RM40mil to RM60mil each.

“We want to grow our revenue contribution from overseas markets to 30% in the next three to five years from about 5% currently,” he said.

Azman said the company would invest RM10mil, that was raised from its IPO, for its business expansion in the next 24 months.

He said the company intended to expand into key growth markets such as the Philippines, the Middle East and North Africa from next year, and India and Myanmar by 2011.

“We are now in Indonesia and Vietnam,” he said.

He said the company was currently bidding for contracts worth RM700mil in the domestic market, of that about 60% was from Petroliam Nasional Bhd and its subsidiaries.

On Vasalux’s public shareholding, he said: “We are confident of fulfilling the requirement within the next six months and are involved in talks with a merchant banker to explore a private or other placement to placees who are deemed public now.”

The company has been given until March 11 to comply with Bursa’s listing requirements of having a minimum 1,000 public shareholders.

It has only 698 public shareholders holding no less than 100 shares each.

DNV to class 10 Nam Cheong offshore support vessels

OSLO: Det Norske Veritas has signed a contract with Nam Cheong Dockyard Sdn Bhd in Malaysia to class 10 new offshore support vessels (OSV) and provide Certification of Materials and Components for the Rolls Royce UT755LN and UT755CD design vessels due for completion by 2011.

The agreement resulted from Nam Cheong’s decision to partner a classification society that can ensure the OSVs will be fit and acceptable for any trade in any part of the world. Valued at €200 million (US$290 million), these vessels will either be put into trade by the yard’s own management company or sold on the spot market.

“Within the shipping industry in Southeast Asia, DNV sees a trend towards the high-end offshore market,” says Knut Ording, Country Manager for DNV Maritime in Malaysia. “We also observe that companies in this region are keen to work with DNV for the added value we can provide, based on our vast experience in offshore markets such as the North Sea. In this regard, DNV is delighted to team up with Nam Cheong Dockyard, a quality shipbuilder with over 40 years of success.”

Says Nam Cheong executive director Leong Seng Keat, “As a class society reputed for innovation and high work standards, DNV understands our requirements for the strictest reliability in all the vessels built by us. We are very confident that DNV can fulfil our expectations for the 10 OSVs to perform optimally in the toughest conditions.”

Construction of the Nam Cheong OSVs will begin in the first quarter of 2009, with the completion due in mid-2011. DNV’s classification of these newbuildings will include plan approval of design drawings and onsite follow-up. The Norwegian class society will also provide the Certification of Materials and Components to be installed onboard.

The project comprises two UT755LN vessels with Dynamic Positioning II (DP II) notation and eight UT755CD vessels with Dynamic Positioning I (DP I) notation. The UT755CD vessels will also have DNV’s high environmental performance Clean Design notation and NAUT-OSV bridge design notation.

DNV’s NAUT notations, in particular, have been proven to significantly reduce the risk of collisions and groundings by optimising the design and layout of bridge equipment and the volume of information to be handled by bridge personnel during different operational situations.
Sustained growth in the market has led to a current OSV order book of over 600 vessels globally and DNV is supporting the growing demand for such high specification vessels through industry collaborations that have contributed innovative solutions such as the X-bow. More than 300 new OSVs have been contracted to DNV class over the past two years, half of which will also have the DNV Clean Design notation.

05 September 2008

Friday, 22 August 2008

KNM close to acquiring Brazilian firms

Oil and gas services company KNM Group Bhd entered into three sale and purchase agreements to buy 80% stakes in Brazilian companies HZM Industrial Ltda, HZM Servicos Ltda and HZM S A Industria e Comercio de Equipmentos for a total of RM55.3 million cash.

KNM first announced its intention to acquire stakes in the Brazilian companies last December but asked for an extension earlier this month.

The acquisition is being concluded via two of its wholly-owned units, KNM International Sdn Bhd and KNM Process Systems Sdn Bhd, taking over the equity from three individuals — Joao Ronaldo Pereira, Jose Maria Vieira de Novaes and Rozimiro Ferreira Lopes.

The three companies specialise in areas such as fabrication of steel structures, pressure vessels and stainless steel plates for engineering, procurement and construction contracts, and assembly, erection and maintenance of industrial plants.
“The proposed acquisition will allow KNM to enhance its presence through the design and manufacturing of process equipment for the oil, gas, petrochemicals and minerals mining industries, and enables KNM to have immediate manufacturing capacity in Brazil, access to clients in the oil, gas, petrochemicals and minerals mining industry and enhance its presence in South America,” KNM said in an announcement.

The acquisition is expected to contribute positively to KNM’s earnings for FY2008. The vendor’s original cost and dates of investment in HZM are not publicly available.

For the first three months of FY2008, KNM posted a 41% jump in net profit to RM54.1 million on the back of a 26% rise in revenue to RM331.2 million, compared to a year earlier.

KNM’s shares had been actively traded over the past few days. Yesterday, the stock closed at RM1.55, a gain of nine sen, with 2.3 million shares changing hands.

Overseas ambition

VASTALUX Energy Bhd (VEB), which is en route to a listing, plans to expand its oil and gas-related business in the Philippines, India and Myanmar as well as the Middle East and North African regions from next year.

Its executive director Azman Abd Ghafar said the company is looking at Qatar, Oman and Saudi Arabia in the Middle East and Libya in North Africa.

"We expect our international business to contribute significantly to revenue. It is still too early to see much impact since we just started our overseas business last year.

"Our aim is to become a preferred engineering company for oil and gas and petrochemicals in the region," he told Business Times in an interview.

VEB, incorporated in 1995, has been making inroads into Indonesia and Vietnam.

Its Indonesian subsidiary, PT Vastalux Energy, secured its first job in February this year to instal a gas pipeline for the Greater Jakarta Distribution main line.

In May, it secured another contract to procure steel products and pipes in Indonesia.

In Vietnam, Vastalux Sdn Bhd has entered into a 10-year contract with Swedish MacGregor Oy and Alpha Co Ltd for the fabrication of steel products, specifically hatch covers.

Azman said VEB and Alpha also plan to form a joint-venture company to undertake offshore and onshore oil and gas supporting services, including fabrication operations, hook-up and commissioning, topside maintenance and underwater structural inspection.

VEB hopes to list on the second board of Bursa Malaysia next month. Its prospectus will be launched today.

Its initial public offering (IPO) involves the issuance of 57.23 million new shares, an offer for sale of 26 million shares and a restricted offer of seven million shares.

Azman said the company expects to raise some RM52 million from the IPO, of which 20 per cent will be used for its acquisition of at least two vessels, 40 per cent to repay loans and the rest for working capital.

He said the oil and gas sector still offers great potential, adding that VEB's strong track record of continuous growth holds the promise of good returns for investors.

Azman noted that in terms of revenue, VEB is ranked ninth out of 20 players in Malaysia. It posted RM143.23 million revenue last year.

The company is bidding for contracts worth close to RM750 million in the country, Azman said.

"Of this, 15-20 per cent are onshore jobs and the rest offshore," he added.

VEB's secured order book stands at RM900 million. Forty per cent has been completed, while the balance will last the company until 2010.

Its main customers include Petronas Carigali Sdn Bhd, Murphy Sarawak Oil Co Ltd and Malaysian Refining Co Sdn Bhd.

VEB operates three fabrication yards in Kemaman, Terengganu; Bintulu, Sarawak; and Labuan.

"We are developing our fourth fabrication yard in Teluk Kalong, Terengganu. We are spending some RM6 million on the yard, which is expected to be completed by the middle of next year," Azman said.

Thursday, 21 August 2008

Tanjung Offshore lands RM50m job from Murphy

Tanjung Offshore Bhd has secured a RM50 million contract to provide operations and maintenance support services for Murphy Sarawak Oil Ltd's oil and gas production operations in the country over a four-year period from August 2008.

The contract, awarded to its subsidiary Tanjung Offshore Services Sdn Bhd on Aug 14, would contribute positively to Tanjung's earnings and net assets for the financial years ending Dec 31, 2008 to 2012, the company told Bursa Malaysia yesterday.

Thursday, 7 August 2008

KNM bags RM463m worth of orders

KNM Group Bhd has secured overseas and local oil and gas-related orders totalling RM463 million from international clients.

In a statement yesterday, KNM said its wholly-owned subsidiary KNM Process Systems Sdn Bhd and its indirect wholly-owned subsidiaries FBM Hudson Italiana SpA and HEA Australia Pty Ltd had secured orders from Canada, New Caledonia, Algeria, Portugal, the United Arab Emirates, Egypt and Australia.

Those orders include providing refrigeration/demethanisers/deethanisers for the Skikda New LNG project in Algeria, plate heat exchangers for the Tangga Barat Cluster Development project from Petronas Carigali Sdn Bhd and plates for precipitation tanks for the Worsley Efficiency and Growth project in Australia.

It added that the orders from Canada such as the modularisation of DSU heaters and FSU settlers and high-pressure slop drums were the first projects to be undertaken at its new manufacturing plant in Tofield, Alberta in Canada.

KNM said the orders were expected to contribute positively to its earnings and net tangible assets for the financial years ending Dec 31, 2008 and 2009.

Source : The Edge

Tuesday, 5 August 2008

New shareholders control 20% of Kejuruteraan Samudra Timur

A group of new shareholders at oil and gas company Kejuruteraan Samudra Timur Bhd (KSTB) has amassed about 20% equity in the company, shareholding changes to Bursa Malaysia show.

The new group, linked to security company Safeguards Corp Bhd, control vehicles such as Virtual Sphere Sdn Bhd, Trance Equity Sdn Bhd and Central Portfolio Sdn Bhd, which collectively have about 20% equity in KSTB.

Privately held Virtual Sphere has 7.9% equity in KSTB. Virtual Sphere’s shareholders are Green Bondage Sdn Bhd, Wong Chiew Har and Lee Fong Chor.

Green Bondage has 80% equity in Virtual Sphere. Green Bondage’s shareholders include Lisa Khong May May and Lee Fong Chor, while its board includes Leong Chee Keong, who was appointed to KSTB’s board in November last year. Leong is also the chief executive of haulage and transportation company Safeguards Oceanic Holdings Sdn Bhd, in which Safeguards has 60% equity.

Virtual Sphere made an announcement of its substantial shareholding at the end of July, as did another company, Trance Equity, which announced a substantial stake of 7.2% in KSTB.

Trance Equity’s shareholders are once again Khong and Lee and one Mohd Yusuf Nurin. Mohd Yusuf was also a director of Safeguards.

According to KSTB’s annual report, another company, Central Portfolio Sdn Bhd has about 4.9% equity in KSTB.

Source : The Edge

Monday, 4 August 2008

Petronas unit buys more African assets

The acquisition of Shell's downstream business in Lesotho and Zimbabwe by Engen will provide it with an additional 200 million litres of refined petroleum products a year, says an Engen spokesperson

ENGEN Petroleum Ltd, an 80 per cent unit of Petroliam Nasional Bhd (Petronas), is buying the Royal Dutch Shell's downstream business interests in Lesotho and Zimbabwe, fuelling the South African energy company towards realising its vision to become an African champion by 2016.

Currently, the company operates retail and other commercial downstream businesses in 15 countries, while its parent company, Petronas, has interests in some 13 countries in the African continent.

An Engen spokesperson said the acquisition of Shell's downstream business interests in Lesotho and Zimbabwe will provide the company an additional 200 million litres of refined petroleum products a year, and push up its market share in Lesotho to 35 per cent.

"The Lesotho and Zimbabwean markets will make a significant contribution to Engen's vision of becoming an African champion in downstream business by 2016," the spokesperson told Business Times.

According to a statement posted on Engen's website, the company and Shell signed a sale and purchase agreement early July, but the deal is still subject to regulatory approval from the countries' governments and central banks.

In the case of Zimbabwe, the spokesman said the deal is subject to pre-emptive rights.

A Shell official, who confirmed the sale of the group's business interests in Lesotho and Zimbabwe, said the move is consistent with its global strategy known as "more upstream and profitable downstream".

However, the official said Shell remains committed to its downstream business in Africa and is seeking to focus its portfolio on markets where it can deliver maximum value for customers and shareholders.

For Zimbabwe, the official said, Shell's interests in that country were a non-consolidated joint venture covering 50 per cent of Shell Zimbabwe and 50 per cent of BP Zimbabwe, a 50-50 joint venture operated by BP.

"Shell has licensed its brand to the joint venture, therefore half of the retail network is Shell-branded. This joint venture sells 172 million litres of retail and commercial fuels, lubricants and aviation products, mainly through retail sites," the official said.

Elaborating, Engen's spokesman said its Lesotho operation currently boasts annual volumes of 36 million litres of fuel through seven retail sites, and via commercial and lubricant arrangements, for just under 21 per cent of the market.

"Engen already has interests in Lesotho, and the acquisition will see it secure 35 per cent of the market," the spokesman said.

In the case of Zimbabwe, the spokesman said Shell's Zimbabwe business, run in a joint venture with BP as the manager, sells 172 million litres of retail and commercial fuels, lubricants and aviation products, through 226 retail sites and other arrangements.

"While Zimbabwe's economy has declined sharply over the last decade, it still has good infrastructure which could form the basis of renewed economic growth, once the political crisis is resolved," the spokesman said.

The spokesman explained that under the proposed acquisition, Engen's Zimbabwe holding will be in a 50-50 joint-partnership form.

Besides Petronas' share, the remaining 20 per cent stake in Engen is held by Worldwide African Investment Holdings (Pty) Ltd.

Petronas' interest in Engen encompasses a refinery in Durban and more than 1,300 service stations across Africa.

Source : Business Times

UMW to set up O&G fabrication yard in Lumut

UMW Holdings Bhd is acquiring three parcels of leasehold land measuring a total of 24.56 acres in Lumut, Perak, for RM40 million for the development of an oil and gas fabrication yard.

In a statement yesterday, UMW said its JV company UMW Fabritech Sdn Bhd (UFSB) had entered into two separate sale and purchase agreements with Pro-Expert Sdn Bhd for the land.

UFSB, formed between UMW and DKLS Industries Bhd, was set up to undertake the fabrication of oil and gas offshore structures in Malaysia.

UMW said the new construction and fabrication facility in Lumut was expected to further strengthen UMW’s growing reputation as a leading provider of ancillary products and services to the oil and gas industry in the region.

Source : The Edge

Sunday, 3 August 2008

Shell developing cutting-edge green technologies

GLOBAL energy company, Shell, is rigorously developing cutting-edge technology to meet increasing challenges in the sector.

Shell Global Solutions, for one is developing innovations to promote efficient use and reduction of carbon emissions around the world.

While the emissions of greenhouse gases may not be totally eradicated but the worst impacts of climate change can be substantially reduced if their levels in the atmosphere can be stabilised at between 450 and 550ppm (parts per million) C02 equivalent.

The current level is 430ppm C02, and it is rising at more than 2ppm each year. Stabilisation at this range would require emissions to be at least 25 per cent below current levels by 2050, and more in the future.

Regional head of Carbon and Energy Management of Asia Pacific Shell Global Solutions, Dr Ir Oscar Piepers said in a recent paper that the group is pursuing several C02 mitigation and technology development activities to improve management of C02 emissions from its hydrocarbon businesses.

Activities include energy efficiency projects, potential large-scale C02 sequestration demonstration projects and alternative fuels.

The International Energy Agency has forecast energy demand to rise by 50 per cent over the first 30 years of this century and believes that most of this increase will be met by hydrocarbons.

The ability to manage C02 is therefore a vital for the future development and growth of businesses.

Piepers said Shell launched an initiative several years ago to improve the energy efficiencies of refineries and chemical plants.

The energy efficiency programme being undertaken at the liquefied natural gas plant in Malaysia is an example.

Malaysia LNG expects an overall LNG production increase of up to one per cent as a result of improvements made with minimal capital expenditure.

Shell Global Solutions' tailored energy-efficiency programme was originally designed for refineries; this was its first implementation at an LNG facility in Malaysia.

The programme can be used across a wide range of industries and is particularly appropriate for energy-intensive businesses.

The energy efficiency programme is helping Shell facilities and plants to cut energy consumption, reduce emissions and is being implemented by clients in the manufacturing and processing industries.

In 2004, the Deer Park chemical complex in Texas, US, reduced its energy consumption by 2.1 per cent to give annual savings of 90,000 tons of associated C02 emissions.

"Typically, we see most savings made in our energy efficiency programmes are through the effective application of successful practices, technology and economics. For example, capturing carbon dioxide means it can be stored (sequestered). This comes at a cost. However, there are novel ways you can recycle carbon dioxide," Piepers said.

For instance, the Shell Pernis refinery in The Netherlands is capturing part of the carbon dioxide it produces and provides it to a third party who then supplies it for horticultural use.

Shell is also developing a number of alternative energy sources, and is the largest distributor of bio-fuels and one of the biggest investors in wind energy, investing in new technology such as second generation biofuels, thin film solar and hydrogen.

Source : Business Times

Friday, 1 August 2008

Dayang in talks on maiden acquisition

DAYANG Enterprise Holdings Bhd is in talks for its maiden purchase, a local company involved in niche product fabrication and installation for the oil and gas industry.

Dayang, which provides oil rig maintenance and marine charter, may take a controlling stake or buy all of the company's shares, managing director Tengku Yusof Tengku Ahmad Shahruddin said.

"We have been talking since June. The company wants to grow its business and needs funding. If the price is right and it can complement Dayang, we will buy it by early next year," Tengku Yusof told Business Times at a briefing in Kuala Lumpur yesterday.

Tengku Yusof said Dayang will probably invest less than RM50 million for the purchase and it will be a profitable venture.

At the briefing, Tengku Yusof said that Dayang, which owns four workboats and a supply boat, may expand its chartering business by buying more vessels.

It has long-term charters with Petronas Carigali Sdn Bhd for its first three vessels until 2010.

The fourth vessel, Dayang Nilam, worth RM22 million, is being upgraded and will start operations from August. The fifth vessel, Dayang Zamrud, worth RM51.5 million, will be delivered by mid-2009.

"Long-term charter rates range from RM50,000 to RM100,000 a day. It's a good business. We are buying also to reduce third-party dependency," he said.

Dayang is optimistic of achieving 15 per cent growth in revenue and net profit for financial year 2009, based on current projects, new jobs it hopes to get, and charter contracts for its two new vessels.

Dayang has bid for RM1 billion worth of contracts from Talisman, Petronas Carigali and US-based Murphy Oil in the last three months.

The company hopes to get at least 30 per cent of the jobs, which will keep it busy for two to three years.

"We will know the results for some of the contracts by the end of this year," Tengku Yusof said.

Source : Business Times

Shell profit surge 33 pc

Anglo-Dutch energy giant Royal Dutch Shell said yesterday that net profit jumped by a third to US$11.56 billion dollars (7.41 billion euros) in the second quarter owing to record high oil prices.

Net earnings, excluding fluctuations in the value of inventories, rose five per cent to 7.9 billion dollars in the three months to the end of June, compared with the same period of 2007, Shell added in a results statement.

Production fell 1.6 per cent during the reporting period to 3.13 million barrels of oil equivalent per day, with output hit by unrest at facilities in Nigeria.

Europe’s biggest oil company said its income jumped by 55 per cent to 131.42 billion dollars during the second quarter.

Energy majors like Shell were boosted by rocketing world oil prices that scaled record heights in the period and struck historic peaks above US$147 per barrel earlier this month.

“This is another set of competitive earnings for Shell shareholders,” said chief executive Jeroen van der Veer in comments accompanying the earnings release.

“Good operating performance, combined with increased oil and gas prices, offset the impact of weaker downstream conditions in the second quarter 2008.

“Shell is making substantial, targeted investments to grow the company for shareholders and help ensure that energy markets remain well supplied.” Investors welcomed the results, sending Shell’s ’B’ shares 0.94 per cent higher to 1,822 pence in morning trade on London’s FTSE 100 index, which was down 0.29 per cent at 5,405.20 points.

Royal Dutch Shell is the world’s second biggest energy company in terms of stock market capitalisation behind number one ExxonMobil.

BP, the third largest, said yesterday that its net profit leapt 28 per cent to US$9.47 billion in the second quarter.

Crude futures have spiked to a series of record highs this year as the dollar weakened, and amid geopolitical worries about key oil exporters Iran and Nigeria.

Oil prices hit a record high of US147.50 per barrel at the start of the third quarter, on July 11.

They have since fallen heavily on concerns that the global economic slowdown will weigh on energy demand, particularly in key consumer the United States.

At the same time, production outages in Nigeria have slashed Shell’s output from the African country.

On Tuesday, Shell said it was suspending some crude deliveries after militants sabotaged a pipeline in Nigeria.

The firm warned it may not be able to meet some supply contracts at its major Bonny terminal before the end of September.

Shell’s move followed an attack last Monday by rebels from the Movement for the Emancipation of the Niger Delta (MEND) on Shell pipelines in southern Rivers state, Nigeria’s main oil producing region.

The past two years have seen an upsurge in violent attacks by armed gangs in the Niger Delta, cutting Nigeria’s output of 2.6 million barrels per day of crude by a quarter.

Source : AFP

Exxon posts record profit again

Exxon Mobil Corp said yesterday soaring oil prices pushed its second-quarter earnings up 14 per cent, again breaking its own record for the highest-ever profit by a US company.

Net income in the quarter rose to US$11.68 billion, or US$2.22 a share, from US$10.26 billion, or US$1.83 a share, last year. Exxon both produces oil and refines it to make gasoline, and profit margins for gasoline were weak during the quarter, holding back earnings slightly.

US oil prices averaged slightly less than US$125 a barrel in the quarter, nearly double prices from a year earlier.

Source : Reuters

Thursday, 31 July 2008

Baneng moves into oil sector with Atmos buy

GARMENT maker Baneng Holdings Bhd has bought an engineering and fabrication company for RM800,000 to diversify into the oil and gas sector.

Executive director Albert Lim Meng Hong said Atmos Engineering Sdn Bhd, the firm that it is buying, has secured jobs worth a combined RM20 million from various oil majors, which will bolster Baneng's earnings. Atmos is also bidding for contracts that are worth up to RM200 million in total, he said.

With a paid-up of RM500,000, Lim said, Atmos has had limited resources and needed to tap onto Baneng's access to the capital market as a public-listed company to raise funds for its projects.

He did not elaborate on Baneng's plan to raise money, but said that it is talking to bankers.
"Atmos will contribute to our earnings from next year. We are still negotiating and there will be more acquisitions to come," he told reporters after signing with Atmos in Kuala Lumpur yesterday.

Baneng will still retain its core business of manufacturing, knitting and dyeing of fabrics and other apparels, he said.

"We will position ourselves in garment manufacturing and oil and gas for now, but will still look for any other businesses that can bring in more income," he added.

Baneng has been on the lookout for strategic purchases in the last three years, he added.

Shares of Baneng have risen 59.1 per cent this year, a stark contrast to the 19.7 per cent fall in the Kuala Lumpur Composite Index over the same period.

The usually thinly-traded stock has also seen some active transactions recently.

Baneng closed 1.4 per cent lower at 70 sen yesterday.

Source : Business Times

Dayang bids for RM900m oil&gas jobs

UPSTREAM oil and gas services provider, Dayang Enterprise Holdings Bhd, is bidding for oil and gas-related services jobs in Malaysia worth RM900 million from various oil majors.

In a statement yesteday, the company said it now has an order book of RM677 million, which is set to last until 2012.

Dayang is also confident of exceeding its 15-month net profit forecast of RM46 million for the financial year ending December 31, 2008.

The company’s year to date net profit stands at RM43.3 million.

Its managing director, Tengku Yusof Tengku Ahmad Shahruddin, said given the bright industry outlook, the company is positive of achieving further growth, both operationally and financially.

In its filing to Bursa Malaysia, Dayang said it recorded a pre-tax profit of RM19.8 million on the back of RM41.6 million in revenue for the third quarter period ended June 30, 2008.

For the quarter, offshore topside maintenance services operations, which include hook-up commissioning and minor fabrication services, continued to be the major contributor to the company, contributing 81 per cent to revenue and 84.5 per cent in profit, it said.

Source : Bernama

Scomi Oiltools unveils plant in Scotland

SCOMI Oiltools (Europe) Ltd has unveiled its new quayside plant in Scotland yesterday.

Located in Aberdeen Harbours Pocra Quay, Scotland, the new facility is part of a £10 million investment in its north-east business, the company said in a statement yesterday.

Scomi Oiltools, a subsidiary of Scomi Group, is one of the world's leading providers of innovative, high performance drilling fluids solutions and state-of-the-art drilling waste management services.

The company said the 10,000 barrels capacity storage facility marked the launch of the company’s fluids division in the United Kingdom and underlined its commitment to the North Sea energy sector.
The facility would provide a seamless, integrated package of well fluids and drilling waste management.

Scomi Group’s oilfield services division president Chris Pianca said:

“With the dynamic market conditions in the recent years, we have been growing internationally at a phenomenal rate.”

He said the new project was a significant development for the group as drilling fluids and the international markets offered a huge growth opportunities.

Since 2005, Scomi’s drilling fluids markets have expanded from three countries to 15 countries.

Source : Bernama

Uzma close to finalising talks on drilling contract

Oil and gas services provider Uzma Bhd hopes to conclude talks with a Mongolia-based company on an exploration and drilling contract by year-end, said managing director and chief executive officer Datuk Kamarul Redzuan Muhamed.

”We cannot disclose the value of the contract for the time being. Discussions are currently at the advanced stage with details of the contract being finalised. We hope to conclude talks by year-end,” he said at the company's listing on the Bursa Malaysia second board yesterday.

Uzma opened 20 sen below its offer price of RM1.90.

Commenting on the opening price, Kamarul said the company was pleased with the stock's performance despite the lacklustre trading on Bursa Malaysia.

“Our fundamentals are still strong and our plan is on track. There are exciting things ahead for the group,” he said.

Uzma, which has a presence in more than 30 countries, has an order book of RM129mil. It recently secured a US$100,000 contract in Iran for a software job.

“We have close to about 70% of the order book that we forecast for 2008,” Kamarul said, adding that the group was tendering for about RM450mil worth of jobs.

He said the success rate of the tenders depended on the type of jobs pitched for.

“For our core businesses of geoscience and reservoir engineering, and drilling services, we have been looking at 35% to 40% success rate.

“On project and operation sites which is something new for us, the success rate is 15% to 25%,” he added.

Uzma also planned to set up operation offices in India by year-end and in North Africa by end-2009, Kamarul said.

“Uzma will also strengthen its international presence by expanding its business coverage in existing overseas markets such as Indonesia, the Middle East, Thailand and Australia by end of this year,” he added.

He said the company was expecting a 35% year-on-year growth this year.

Source : The Star

Wednesday, 30 July 2008

Indonesia's makes 'sovereign' decision to withdraw from OPEC

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, while acknowledging that Indonesia has played an important role since joining the organization in 1962, said its plan to withdraw from the group is a "sovereign" decision.

Khelil also indicated that several options were available, saying that Indonesia could either suspend its membership or remain in the organization as an observer once its membership expires at yearend.

"All the options are open, but it is up to Indonesia to the make the decision," Khelil said.

Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro repeated his country's aim of leaving the group when its membership expires at the end of the year, saying that, "We have become a net oil importer."

Indonesia's future
Indonesia turned a net oil importer in 2003 on declining production of oil together with increasing domestic consumption. However, government officials have said Indonesia could rejoin OPEC in the future if its oil production and exports pick up again.

The discussion over Indonesia's future in OPEC coincided with reports that—due to continued low domestic production and spiraling consumption—the country's oil and fuels trade balance has been in deficit for the first half of this year and is likely remain in deficit for the remainder of 2008.

Economist Faisal Basri of the University of Indonesia (UI) said the deficit stood at $5.5 billion as of the end of May, with oil and fuel imports reaching $13 billion while exports earned just $7.56 billion.

"We are heading toward a very critical situation if we don't formulate a proper energy policy. The deficit is predicted to be $15 billion at the end of this year," said Faisal at a discussion on the energy crisis held by UI.

The big gap between the fuels import and export shows the country has poor production but massive consumption, said Faisal, who added that inefficiencies at state-owned Pertamina have contributed significantly to the wide gap between imports and exports.

Faisal offered a comparison to illustrate his point, saying, "Pertamina's cost recovery in 2007 was $36.10/bbl, while Chevron's [Corp.] was only $6.80/bbl."

Investors needed
Meanwhile, Indonesia's recent efforts to attract new investment into the oil and gas sector have not been as successful as government officials had hoped.

According to Evita H. Legowo, the newly appointed director general of oil and gas in the ministry of energy and mineral resources, half of the 21 oil and gas blocks offered by the government last year failed to attract investors.

"We don't know exactly why some blocks didn't attract any investors. It could have been that investors had doubts about the data or maybe they needed more advanced technology to operate the blocks on offer," said Evita.

In a renewed effort to attract investment, the government plans to open a new auction for oil and gas blocks in October or November, and may include those blocks leftover from the last round.

"We are still formulating which blocks we will offer. We are also still deciding whether the unsold blocks would be offered again or not," said Evita, who did not disclose which blocks remained unsold.

In May 2007, the government put up 21 oil and gas blocks for auction: North X Ray Block in West Java; N. E Lombok I and N.E Lombok II blocks in Nusa Tenggara; Semai I, Semai II, Semai III, Semai IV and Semai V blocks in West Papua; South East Tual block in Arafura; Cakalang block in Natuna; Kerapu, Baronang, Cucut, and Dolphin blocks in Nautana; Bawean II, East Bawean I, Gunting and Situbondo blocks in East Java; Buton II block in Buton; Rangkas block in Banten; and West Timor block in Timor.

Source : Oil & Gas Journal

Sunday, 27 July 2008

Seized Nigeria oil workers freed

Eight foreign oil workers, kidnapped by Nigerian militants, have been freed unharmed, an army spokesman says.

In the early hours of Saturday, a group of gunmen in a speed boat attacked a petroleum tanker on the Bonny river in the south of the country.

Two people were shot and injured while eight oil workers, believed to include a number of Russians, were seized.

"They have been released," about 2030 (1930GMT), said Lt Col Sagir Musa. "I doubt any ransom was paid."

The nationalities of those seized have not yet been confirmed, and no group has claimed responsibility.

More than 200 foreign oil workers have been kidnapped in the Niger Delta over the past two years but often released after payment of ransom.

It is believed the tanker which came under attack belongs to Global Gas and Refining Ltd, a Nigerian subsidiary of US-based Global Energy Inc, which has been stationed along the Bonny river for more than two years.

Lt Col Musa, military spokesman in the eastern Niger Delta, said earlier: "Around six heavily armed bandits attacked an LPG (liquefied petroleum gas) tanker, shot two civilians and abducted eight of the expatriates, whose identity is not yet ascertained."

He said the two civilians had been wounded but not killed during the attack, which took place between 0100 and 0400 (0000-0300 GMT).

Late on Thursday, 12 people were kidnapped from a boat near the Niger Delta. Seven of them were later freed but five people remain captive.

Source : BBC News

Saturday, 26 July 2008

Nigerian militants kidnap expats

Five eastern European oil workers have been kidnapped by Nigerian militants, security officials have told the BBC.

Twelve workers from Ukraine and Russia were on board a boat that was attacked while in international waters off the Niger Delta, but seven have been freed.

The boat, which belongs to the Saipem oil services company, was attacked about 85 nautical miles from the coast, after it had left its naval escort.

A spate of attacks on the oil sector has cut Nigeria's production by 25%.

The boat has also been freed and is on its way back to the region's main city, Port Harcourt, the officials say.

This is one of the attacks carried out furthest from Nigeria's coast, correspondents say.

Until recently, they have usually operated on land or in the creeks of the Niger Delta.

Nigeria's oil militants say they are campaigning for more of the country's oil wealth to be used to benefit residents of the Niger Delta.

But correspondents say there are also many criminal gangs motivated by the ransom money often paid by oil companies to secure the release of their workers.

Earlier this week, the head of Nigeria's state-owned oil company told a parliamentary enquiry it had paid $12m to oil militants to prevent them attacking a pipeline.

Source : BBC News

Cameroon kills Bakassi attackers

Cameroonian soldiers have killed 10 gunmen who attacked them in the disputed oil-rich Bakassi peninsula, officials say.

Nigeria is transferring the peninsula to Cameroon under a World Court order, despite opposition from locals.

A little-known armed Nigerian group opposed to the handover of the territory, said only four of its men had been killed in the raid.

At least one Cameroon soldier was also killed during the clashes.

It was the second attack on Cameroonian positions in Bakassi within a week.

Cameroon's defence ministry said its men had fought off an attack men in three speed boats.

Ebi Dari, a spokesman for the Niger Delta Defence and Security Council (NDDSC), confirmed its fighters were behind the raid.

"It is true our men came under intense gunfire from the Cameroon military, but only four of them were killed and two taken hostage. They also seized one of our speed boats and the arms that were inside," he told Reuters news agency.

The Nigerian forces are due to complete their long-delayed full withdrawal from Bakassi in mid-August to comply with a 2002 court order by the International Court of Justice, which ruled in favour of Cameroon.

Most of the area's inhabitants are Nigerian fishermen and many are opposed to the handover. Some Nigerian politicians also voiced their opposition to the handover last year.

Nigeria reinforced troops on its side of the border after 21 Cameroon troops were killed in Bakassi in November 2007.

Nigerian troops withdrew in August 2006 but the peninsula will remain under Nigerian civil administration until 2008.

Nigeria and Cameroon sought arbitration after a series of bloody clashes in the 1990s.

Bakassi juts into the Gulf of Guinea, an area which may contain up to 10% of the world's oil and gas reserves. It is also rich in fish.

The peninsula has been administered by Nigeria since independence from Britain in 1960.

However, Cameroon based its claim of sovereignty over the region on maps dating back to the colonial era.

Source : BBC News

Technip to build region's 1st flexible-pipe plant in Johor

MALAYSIA will be at the forefront of high technology in flexible-pipe making in the Asia-Pacific region when French engineering group Technip starts its plant in Tanjung Langsat near Johor Baru in 2010.

The RM600 million plant will be built by its local unit, Asiaflex Products Sdn Bhd. Technip group president and chief operation officer Bernard Di Tullio performed the groundbreaking ceremony in Johor yesterday.

"This is our third manufacturing facility after Le Trait, France, and Vitoria, Brazil, and it will be the only plant to manufacture flexible pipes in the Asia-Pacific region," he said.

Technip caters to the oil and gas industry, and the new plant is part of plans to strengthen its presence in the sub-sea segment and reinforce its worldwide leadership in the flexible market.

Technip currently holds about 60 per cent of the flexible-pipe market in the world, supplying major oil companies.

Asiaflex Products will focus on the needs of the emerging deep-water oil and gas markets in the Asia-Pacific and Middle East region.

The plant has also been designed with an expansion in mind, should the need arise.

It is expected to provide jobs for around 300 people once it starts operations, with an expected annual capacity of 200km of flexible pipes. This will bring Technip's total annual capacity to 1,000km.

Source : Business TImes

Friday, 25 July 2008

Kencana unit gets RM48m Murphy Sarawak job

KENCANA Petroleum Bhd’s unit Kencana HL Sdn Bhd has secured a RM48 million contract from Murphy Sarawak Oil Co Ltd.

The contract comprises the provision of mechanical and piping installation works for Bintulu Onshore Receiving Facilities (BORF).

It also forms part of Phase 1 of SK309/SK311 gas field development located offshore Bintulu, Sarawak, said Kencana in a filing to Bursa Malaysia.

The scope of works include project management and construction engineering activities for mechanical equipment installation/erection works including unloading and storage at BORF, electrical and instrumentation equipment installation, plant piping works, tank fabrication and erection, flare structure, onshore export gas and dry gas pipelines and safety system including equipment supply.

The contract is expected to be fully completed by March 15, 2009.

The contract is expected to contribute positively to the earnings of Kencana Petroleum Group for the financial year ending July 31, 2009

Source : Bernama

Petronas Dagangan not taking over Esso stations

PETRONAS Dagangan Bhd, the listed subsidiary of Petroliam Nasional Bhd (Petronas), has not ruled out the possibility of acquiring service stations operated by other oil companies.

However, it dismissed talk that it would take over Esso's retail assets.

Chairman Datuk Anuar Ahmad said the company had not engaged in any talks with Esso, a unit of the US-based ExxonMobil Inc, to acquire the latter's service stations in Malaysia.

"I am surprised when you ask the question. As far as I know, Esso has sold off 20 service stations in Sarawak to a company called Excel. We did not have any discussions with Esso to acquire its remaining service stations," he said.

Nevertheless, the acquisition of service stations is part of Petronas Dagangan's strategies to sustain growth and profitability in addition to organic growth, he added.

"We may look at the acquisition of service stations if the offer is on the table," Anuar told reporters after Petronas Dagangan's annual general meeting in Kuala Lumpur yesterday.

On another development, Anuar said Petronas Dagangan was looking at spending some RM500 million to open 50 service stations during the financial year ending March 31 2009.

At present, Petronas Dagangan operates 903 service stations, of which four are hyper-stations and 82 stations that offer both petrol and diesel fuels and natural gas for vehicles (NGV).

"Depending on the location of the proposed new stations, we expect to spend up to RM10 million for a station. It would cost us more to build a hyper-station as it needs larger land.

"For NGV, the planning and assets are handled by a different subsidiary, namely Petronas NGV Sdn Bhd," Anuar said.

Petronas Dagangan registered pre-tax profit of RM908.4 million on revenue of RM22.3 billion in the financial year ended March 31 2008.

Its retail business accounted for 42 per cent of total revenue, with commercial industrial business contributing the remaining 58 per cent.

In view of its sound financial performance, Petronas Dagangan is recommending a final dividend of 33 sen per share to its shareholders.

Together with the interim dividend of 12 sen per share paid in December last year, total dividend for the financial year is 45 sen per share.

Source : Business Times

Ranhill said close to being taken private

RANHILL Bhd is close to being taken private by controlling shareholder Tan Sri Hamdan Mohamad in a deal that can be worth about RM420 million, says a source.

The source told Business Times that Hamdan, who controls the engineering firm and is also the group's president and chief executive officer, is working out the details to take it private within the next three to four months.

Hamdan and Ranhill executive director Datuk Chandrasekar Suppiah could not be reached for comment.

Analysts said the controlling shareholders of Ranhill had toyed with the idea to take it private as the stock has relatively underperformed.

Ranhill shares have dipped by some 70 per cent this year trading as low as 79 sen in the last few weeks from a RM2.65 high in January.

Yesterday, the stock closed five sen higher than the previous day's closing of 91.5 sen, with 77.7 million traded shares.

"Even if we assume there is no value attached to its construction and EPCC business and only assigned value to its 100 per cent stakes in Ranhill Utilities Bhd (RUB) and Ranhill Power Bhd (RPB) based on their respective privatisation valuations of RM1.1 billion and RM258 million respectively, coupled with debts of about RM100 million at holding company level, Ranhill's theoretical sum or parts fair value works out to about RM1.98 apiece," the analysts said.

"This is very close to its net tangible asset of RM1.91 a share as at March 31 2008," they added.

For the 12-month period to June 2007, Ranhill posted a profit of RM117 million and revenue of RM1.47 billion.

Last September, Ranhill announced plans to take its power arm, Ranhill Power Bhd (RPB, private by buying the rest of its shares for RM35.4 million, or RM2.15 apiece, and consolidating the power company under the group to maximise returns.

Business Times reported in January that Hamdan was mulling to take Ranhill and RUB private and re-list the shares in London, Dubai or India to command a higher valuation.

Ranhill responded saying that they would always seek proposals to improve shareholder value.

Five months later on June 6, Ranhill announced to Bursa Malaysia that Hamdan was taking RUB private under a RM305.11 million takeover offer.

Hamdan and partner Ahmad Zahdi Jamil are offering RM3.50 each for the remaining 87.17 million shares, or a 29.60 per cent stake, in RUB.

The offer price represents a 38 sen premium to RUB's share price of RM3.12 at the time the announcement was made.

Source : Business Times

Thursday, 24 July 2008

ExxonMobil takes over Mitra's stake in oil block

EXXONMOBIL Corp is taking over the 50 per cent stake in an oil block in the Philippines' Sulu Sea, previously held by Malaysia's Mitra Energy.

Exxon is buying the stake in the block, known as Service Contract 56 (SC 56) for an undisclosed price, a government official said.

A government official with the Philippines' Department of Energy said the US company has just bought a huge three dimensional (3D) seismic survey over SC 56.

It is due to start drilling a well next year.

Originally, Mitra was awarded the Camago-Malampaya field, but the contract was withdrawn as the Philippines government said it was not given according to procedure.

"Mitra's development of the Malampaya oil leg was cancelled because it (SC 56 block) was not bidded out. Mitra's SC 56 was awarded on August 5 2005," the official told Business Times.

The Philippines National Oil Corp (PNOC) had clarified that the company has not signed an agreement with Mitra to look for oil in the Camago-Malampaya field off western Palawan.

Subsequently, fresh bids were invited late last year.

Mitra, which has exploration projects in the Philippines and Indonesia, had initially estimated that the Malampaya field may yield a total of 41 million barrels of oil over four years.

The total project cost of the Camago-Malampaya field is expected to be about US$684 million (RM2.22 billion).

Mitra and PNOC are already partners in the Calamian oil exploration project in the Philippines.

Mitra's investors comprise international financial institutions and individuals including from the UK.

Source : Business Times

'500km gas pipeline project on track'

The estimated RM390 million gas pipeline project to channel gas from Kimanis in Sabah to Bintulu in Sarawak is on schedule, says Petronas president

THE 500km gas pipeline project linking Sabah and Sarawak and 300-megawatt gas-driven power plant in Sabah are on, the chief of national oil corporation Petroliam Nasional Bhd (Petronas) says.

"At the moment, it (gas pipeline project) is on schedule," Petronas president and chief executive officer Tan Sri Mohd Hassan Marican told reporters after Petronas Gas Bhd's (PetGas) annual general meeting in Kuala Lumpur yesterday.

A Sabah Barisan Nasional component party had asked the state government to insist that Petronas call off the project to channel gas from Kimanis to Bintulu in Sarawak.

United Pasokmomogun Kadazandusun Murut Organisation president Tan Sri Bernard Dompok said it should be stopped to encourage downstream processing of gas pumped from offshore fields along Sabah's west coast.

Prime Minister Datuk Seri Abdullah Ahmad Badawi had reportedly told Sabah BN component party leaders at a meeting on May 31 that the project would be stopped.

On June 11, however, Petronas vice-president of gas business Wan Zulkiflee Wan Ariffin was quoted as saying that the estimated RM390 million project would proceed and that it was due for completion by March 2011.

Hassan said Petronas would operate the pipeline, while the project would be carried out by production-sharing contractors.

The gas would be channelled to Petronas' liquefied natural gas complex in Bintulu.

Hassan also said that the power plant in Kimanis would be jointly built with Yayasan Sabah.

"It is very much in line with the gas pipeline project," he said, adding that the plant's development cost could not be deter-mined as yet.

On another note, Hassan (pic) said he did not foresee the gas price hike as having any major impact on PetGas since it is both a supplier and a user.

He said PetGas would talk to its customers to defray some of the impact of costlier gas.

PetGas expects things to be a bit more challenging financially as, according to Hassan, its effective tax rate is now on par with everybody's.

The company enjoyed tax incentives in recent years, but its tax expense increased ninefold to RM301.2 million in the financial year ended March 31 2008 from RM34.2 million the year before.

Source : Business Times

Inflation hits 26-year high on costlier petrol, diesel

MALAYSIA'S inflation level followed regional trends in June, with the Consumer Price Index (CPI) recording a 7.7 per cent hike as a result of the petrol and diesel price adjustments during the month.

The CPI soared to a 26-year high in June with the index reading 113.4 from 105.3, beating market expectations and a Business Times poll which had expected 6.74 per cent year-on-year growth.

The Statistics Department said the CPI for the first half of the year increased by 3.7 per cent compared to the same period last year.

The index for food and non-alcoholic beverages for June increased 10 per cent, while the index for non-food rose by 6.7 per cent.

Between January and June this year, the index for food grew by 6.1 per cent compared to non-food which grew by 2.6 per cent.

Bank Islam Malaysia senior economist Azrul Azwar Ahmad Tajudin said going forward, the CPI may stay above the seven per cent year-on-year level until the first half of 2009 before trending downwards to around three per cent and below if there are no more revisions in fuel price and electricity tariffs.

However, he expects a 50-50 chance of a raise in the key benchmark interest rate from 3.50 per cent as Bank Negara Malaysia may want to ascertain the knock-on effects of the review in retail fuel prices.

"Should Bank Negara stand pat in its monetary policy meeting tomorrow, I expect it to commence its mild monetary tightening cycle, just to send signals to markets that it is not behind the curve in the combat against inflation."

HSBC Bank economist Robert Prior Wandesforde said the headline rate must now have reached a level that the central bank simply cannot ignore, fearing second-round effects on inflationary expectations.

He said the main contribution to the June CPI came from the jump in transport price inflation (from 0.9 per cent to 19.6 per cent), which added 2.9 per cent points to the headline rate.

The big jump in food price inflation from 8.2 per cent to 10 per cent accelerated the growth as the component suggests that the country's food subsidies can only go some way to disguising the jump in international food commodity prices.

"Food prices will also have been impacted by the strength of energy as well as demand-pull factors, bearing in mind that real consumer spending in Malaysia has been growing at a double-digit for four quarters now," he added.

Source : Business Times

Kencana deputy chairman buys 25m shares

Kencana Petroleum Bhd deputy chairman Chong Hin Loon acquired 25 million Kenanca shares from the major shareholder Khasera Baru Sdn Bhd on July 16.

A filing with Bursa Malaysia showed Chong’s shareholding increased to 101.3 million shares or 11.23% after the acquisition of the 2.77% stake.

A separate filing showed Khasera’s stake was reduced to 383.53 million shares or 42.52% after the disposal of the shares.

The share price closed at RM1.89 on that day. Its 52-week high was RM3 on July 26 last year while its 52-week low was on March 18 when it fell to RM1.20.

At the current price of RM1.90, Kencana is trading at a trailing price-to-earnings of 21.06 times.

Kencana provides integrated engineering and fabrication of production facilities for the oil and gas industry.

Source : The Star

Wednesday, 23 July 2008

Tabung Haji buys 14m Ramunia shares

Lembaga Tabung Haji accumulated 14.23 million shares of Ramunia Holdings Bhd from July 10 to 16.

A filing with Bursa Malaysia showed the national pilgrimage fund’s shareholding in Ramunia increased to 18.06% or 99.74 million shares after the recent acquisitions.

It acquired 517,000 shares on July 10 and 9.7 million shares the next day. It bought two million shares on July 14 and 2.02 million shares on July 16. The share price was trading between RM1.54 and RM1.59 during that period.

Ramunia’s share price rose to a 52-week high of RM1.95 on Feb 13 this year while its 52-week low was 76 sen on Aug 17.

At the current price of RM1.60, it is trading at a historical price-to-earnings of 38.28 times.

MISC Bhd is taking control of Ramunia in a reverse takeover and the corporate exercise is expected to be completed by the fourth quarter.

Ramunia is involved in the fabrication of offshore oil and gas related structures and it is also involved in engineering and offshore marine services.

Source : The Star

New Oil Field Discovered In Southern Iran

A new oil field was discovered in the city of Abadan in the Persian Gulf province of Khuzestan, Minister of Oil Gholam-Hossein Nozari said on Tuesday.

He made the announcement on the sidelines of a national seminar on petrochemicals in Tehran, Iranian National News Agency, IRNA, reported.

According to Nozari, the deposited oil in the new oil field, 'Arvand,' is estimated as 500 million barrels.

Iran sits on the world's second largest proven oil reserves worldwide and is the number four crude producer and the second in the OPEC.

It also has the second biggest proven global gas reserves after Russia but so far has played only a minor role on the gas export market.

Source : Bernama

Tuesday, 22 July 2008

Perisai in talks to buy navy vessel for FSO conversion

Perisai Petroleum Teknologi Bhd is looking to finalise the purchase of a supply tanker that the company plans to convert into a floating storage offloading vessel (FSO) to support production in marginal oil fields.

In June, Perisai entered into an exclusive option agreement for the vessel purchase with FPSO Shiraz Pty Ltd, a special purpose company owned by Helix ESG and AGR.

FPSO Shiraz Pty Ltd was formed for the purpose of converting the former Royal Australian Navy supply tanker, Westralia into a floating production storage offloading vessel.

Source : Energy Current

KNM down on financing concerns

Fast-expanding oil and gas player KNM Group Bhd continued to slide, shedding 25 sen yesterday to close at RM5.10 on concerns of its proposed exchangeable bond issue, in the current difficult period. At its lowest in intra-day trading, KNM fell to RM4.96.

The company’s shares were among the most active with 11.9 million shares traded. Since end- May this year, the company’s share has tumbled by about 27% and during the period in review, under-performed the sluggish Kuala Lumpur Composite Index by 13.5%.

According to Goldman Sachs, the dip in KNM’s shares is a result of fears as to whether the company’s proposed exchangeable bond issue will proceed, with the current weak market likely to be a dampener. KNM had taken a €350 million (RM1.8 billion) bridging loan to finance the acquisition of German-based Borsig Beteiligungsverwaltungsgeselschaft mbH, last month, and has since partially pared down some of these loans, by utilising proceeds from a RM1.1 billion one-for-four rights issue, which was completed end of last month.

KNM had proposed raising another US$350 million (or its equivalent) in exchangeable bonds to settle the remaining amount of the outstanding debts taken for the purchase.

Goldman said that checks with the company revealed that in line with the widening global credit spreads the indicative yield for their proposed exchangeable bond has risen by 100 bps to 4.8% now (30%-35% conversion premium) against the existing bridging loan’s 5.2%.

“Given the significant increase, KNM is exploring other options, including the possibility of issuing plain vanilla debt, which the company says has indicative yields of 5.5%-6%,” Goldman Sachs says in report recently.

The research house stated that KNM may launch the exchangeable bonds when market conditions improve and that it views the alternative plan positively.

Foreign funds such as FMR LLC and FIL Ltd have been trading KNM’s shares heavily, which could explain its high trading volumes. The two funds emerged as substantial shareholders in end July last year, with 5.2% or 54 million shares. Since then, the funds have upped their shareholding to above 10.7% or about 141.4 million shares.

Another fund, which has been actively trading KNM’s stock, is the Employees Provident Fund (EPF). The EPF has about 6% in KNM now.

Early last week, about 11 million shares in KNM were traded off market in 22 block trades of above half-a-million shares crossing at RM5.85 a share. This occurred in about a 10-minute span of time in the later part of morning trade.

For its first three months of FY08, KNM posted a net profit of RM54.1 million on the back of RM331.2 million revenue. In contrast to a year ago, net profit improved by about 41%, while revenue increased 26%.

In a short span of three years, KNM has grown to become one of the top oil and gas players providing a wide spectrum of services. In March this year, the company proposed to buy the German-based Borsig to expand its reach in Europe.

Source : The Edge

Vietnam fuel prices up 36%

Vietnam raised domestic fuel prices by as much as 36% yesterday, the first increase in five months, raising the spectre of even higher inflation, more interest rate rises and slower economic growth.

The steep increase in the price of petrol and diesel in Asia's second largest importer of these products came as a shock to consumers, many of whom were seen thronging gas stations before the new prices came into effect at 10am.

Analysts predicted inflation would hit 30% next month, the highest level in Asia.

The dong fell 4.5% against the US dollar in the black market as Vietnamese rushed to protect their money from being eroded by rising inflation. The Ho Chi Minh Stock Exchange fell 2.5%.

“Retail fuel price increases would be a very bad news for the stock market as the inflation rate could be worse in the months to come,” said Vo Quoc Khanh, head of research at FPT Securities.

Vietnam has been slower than its neighbours such as China, Malaysia and India in cutting subsidies and bringing domestic prices closer to international levels.

Yet, less than two weeks ago, the government had ruled out rises in fuel prices for the rest of the year, suggesting it preferred to bear the cost of subsiding petroleum rather than pushing consumer prices any higher.

Source : Reuters

Monday, 21 July 2008

Petra Energy likely to win Shell job

PETRA Perdana Bhd’s 60%-owned subsidiary Petra Energy Bhd stands a good chance of winning the bid for Shell Sarawak/Sabah’s new topsides major maintenance (TMM) contract due to its experience and fleet, said RHB Research.

The company had a track record with Shell and Petronas Carigali, as well as a fleet of accommodation and work barges that would become available at the end of its newly secured Shell contract alongside the new vessels to be delivered to both Petra Energy and Petra Perdana.

The research house said Petra Energy was at the tail end of the current four-year contract estimated to be worth over RM1 billion that expires in early-2009.

Petra Energy recently announced that it had been awarded a RM40 million contract for the maintenance, overhaul and repair of gas turbines on Shell Sarawak’s gas platforms. The contract is for a period of two years commencing June 23, 2008.

“While this is positive for Petra Energy, we believe the company’s earnings outlook is still dependent on the award of the new TMM contract for Shell Sarawak/Sabah,” RHB Research said.

The research house reiterated its outperform recommendation on the counter at RM3.58 with an indicative fair value of RM5.31 based on 11.5 times FY09 price earnings ratio (PER).

“We believe the shortage of offshore support vessels will not be alleviated until FY10 at the earliest, which underpins the cyclical up trend in rates,” it said.

RHB Research said Petra Energy still had over RM300 million worth of jobs for operations and maintenance and equipment repackaging, over the next two years.

“The company also would be able to charter out its two work barges at a profit of around RM18 million each.

“Including cost savings from the 2,000 contract engineering staff, the company would still be able to record a minimum pre-tax profit of around RM60 million to RM70 million versus our current forecasts of RM78 million to RM83 million for FY08 to FY09,” it said.

“For Petra Perdana, we have assumed average charter rates to rise 10% per annum from US$2.44 (RM7.98) per horse power per day in FY08, and utilisation rates to rise from 78% in FY08 to 81% by FY10,” it said.

Petra Perdana added two sen to close at RM3.60 last Friday.

Source : The Edge

Tanjung Offshore expands fleet

TANJUNG Offshore Bhd is on an expansion mode with nine offshore support vessels (OSVs) valued at RM418mil scheduled to be delivered in stages until early 2010.

Managing director Omar Khalid told Starbiz that the fleet expansion was propelled by high demand from the local as well as international oil and gas (O&G) industry.

“There is demand from oil majors all over the world, but operating in Malaysia is more cost-efficient,” he said, adding that six of its seven OSVs were in Malaysian waters while one was in Vietnam.

Under the fleet expansion plan, Tanjung Offshore will receive two anchor handling tug and supply (AHTS) vessels, Tanjung Puteri 1 and Tanjung Puteri 2 valued at RM48mil each next month.

The company expects the delivery of a well-testing vessel and a tug and utility boat valued at RM48mil and RM32mil respectively in the fourth quarter of the year.

An AHTS costing RM42mil will join its fleet in the third quarter of next year while four AHTS worth RM50mil each are scheduled for delivery in January 2010.

“We plan to have more AHTS vessels as it can tow oil rigs to location and anchor them up in shallow and deepwater fields.

“With the rampant oil exploration and production today, the demand is going up,” said Omar.

On its oil rig business, Omar said its jack-up drilling rig, THE 208, supplied to Murphy Oil would start operation in September. The rig is on a two-plus-two year contract worth RM500mil.

In March, the company commissioned its self elevating relocatable facility that is also on a two-plus-two year contract worth RM200mil.

Omar said the company's contract with Petrofac Ltd for the supply of its mobile offshore production unit (MOPU) has been extended for another five years and would end in 2013.

The MOPU has resume full operation this year after difficulties in unexpected cost increases and repairs last year.

The MOPU, which is a cheaper alternative to conventional platforms for smaller and marginal oil fields is now working at Chendor field, off the coast of Terengganu.

“All these investments and developments are expected to support stronger earnings for the company from the second half of the year,” Omar said.

Established in 2005, the Tanjung Offshore group is involved in the provision of integrated services to both upstream and downstream activities in the O&G industry.

Source : The Star

Bumi Armada expanding despite declining demand

BUMI Armada Bhd is on an aggressive fleet expansion drive despite concerns of declining global demand for vessels.

The company, which is Malaysia's largest owner and operator of offshore support vessels (OSV), launched its 46th offshore support vessel – the Armada Firman 2 – last week.

Bumi Armada executive director and chief executive officer Hassan Basma said the company was targeting to have over 70 vessels by 2009.

He added that the vessels would be financed via internal funds and bank borrowings.

“We are looking to be the largest OSV operator in South East Asia by 2009,” he told reporters after the unveiling of the Armada Firman 2 at the Drydocks World Shipyard in Tuas, Singapore recently.

The 6,000 brake horse power Armada Firman 2 is equipped with dynamic positioning capabilities, allowing the vessel to remain in a fixed position with the use of propellers and thrusters rather than physical moorings or anchors.

Construction works on the Armada Firman 3 – which is due to be completed by year end – are currently ongoing at the Drydocks World Shipyard,

Hassan said both the vessels (Armada Firman 2 and Armada Firman 3) would be deployed to Angola.

He is still optimistic about acquiring more vessels despite confirming a report by Bloomberg last week that the global demand for vessels was expected to slow down in the next two years due to rising oil prices.

According to Hassan, the lower demand for vessels would not be an issue for Bumi Armada as the company was providing newer, more powerful and better-equipped vessels for charter compared with their competitors.

Apart from OSVs, Bumi Armada's fleet comprises floating production, storage and offloading (FPSO) vessels, anchor handling tug and supply vessels and workboats and barges.

Bumi Armada serves clients in Malaysia and countries within South East Asia, the Middle East and West Africa.

Hassan said 65% of annual revenue came from operations in the domestic market while the remaining 35% were from overseas.

“Going forward we expect this ratio to reverse,” he said, adding that 25% of its business currently comprised doing fleet work associated with Petroliam Nasional Bhd.

Hassan also said Bumi Armada had plans to acquire at least one FPSO a year. The company currently has two – the Armada Perkasa and Armada Perdana.

Source : The Star

Oilcorp’s proposal to remove auditor keenly watched

OILCORP Bhd management's proposal to shareholders at the company's EGM today to remove Baker Tilly Monterio Heng (BTMH) as its external auditor and to appoint Messrs Horwarth as its new auditor will be keenly watched by investors, regulators and the public.

While the proposal is within management's right, engaging a new auditor would require shareholders' approval as stipulated under the Companies Act.

Observers, including fund managers and analysts say while the sudden need for a change of auditors was one issue, which Oilcorp's management has to explain, there was also an issue of integrity at stake.

A foreign analyst said the motion in favour of one accounting firm over the other could leave the “loser” to be perceived as less competent and professional in carrying out its duties in compliance with proper accounting standards of financial reporting.

“You've got to understand. Both parties (accounting firms) have their reputations at stake,” he said.

The foreign analyst said the presumption here is that both accounting firms should have applied similar procedures in accounting practice to derive their reports.

“But why is there a substantial difference in their valuations over the biodiesel plant project in Kuantan?” he said.

To recap, BTMH had refused to amend Oilcorp's annual audited accounts (AAA) for 2007 pertaining to the construction of the biodiesel plant stipulated by the company to be worth RM110mil.

Moreover, the accounting firm refuted Oilcorp's allegations that its action not to issue any AAA would be detrimental to the company's shareholders.

Oilcorp decided to hire Horwarth, another auditing firm, for an independent verification report, which valued the total contract based on two stages of work done, with the first phase valued at RM90mil and additional work at RM20mil.

Interestingly Horwarth, which conducted the independent review on the biodiesel project, was also the current external auditor for Plant Biofuels Corp Sdn Bhd (PBC) and other parties related to the biodiesel plant project.

In a filing to Bursa Malaysia on Friday, Oilcorp said Horwarth had informed the company that it had no professional conflict of interest in taking up the independent verification report.

Oilcorp added that it was puzzling as to why this point was ever raised by BTMH in the first place.

In the latest reply from BTMH, the accounting firm defended its decision not to issue any AAA on the basis that the confirmation letter from PBC dated April 29 confirming the biodiesel contract worth RM110mil was deemed not acceptable as audit evidence.

“We cannot rely on Horwarth’s report as they have not performed an investigation audit report as requested by us,” said BTMH.

Moreover, the accounting firm said during the finalisation of the 2006 audited accounts, the contract of RM90mil was not made available to the auditors.

Otherwise the issue would not have been raised last year.

A senior accountant with a local audit firm said the earlier appointment of Horwarth as PBC auditor and later also hired by Oilcorp to provide an independent verification report on the biodiesel plant might raise some doubts as to how “independent” the verification report was.

“This is especially so if the contracted value in dispute audited by two accounting companies hired by Oilcorp differs substantially for the same project,” he said.

He said at this juncture it was important for shareholders and especially regulators such as the Securities Commission and the relevant authorities to look at this matter closely as the issue had everything to do with transparency, good corporate governance and the integrity of accounting firms.

“We in the accounting fraternity are definitely keen on this landmark case and will be looking at how the issue is interpreted as well as the outcome,” he added.

Source : The Star

Octagon ceburi sektor tenaga hijau

Octagon Consolidated Bhd. (Octagon) yang dulunya hanya dikenali sebagai syarikat cat tetapi kini aktif mengembangkan perniagaannya dalam bidang baru iaitu sektor tenaga hijau.

Pengarah Urusan dan Ketua Pegawai Eksekutifnya, Mazlan Ali berkata, berdasarkan kepada perkembangan memberangsangkan itu, syarikat optimis untuk menjadikan sektor tenaga hijau yang baru diceburi sejak empat tahun lalu sebagai perniagaan terasnya bagi menggantikan sektor saduran perindustrian dan cat.

Octagon menceburi bidang saduran perindustrian dan cat sejak 25 tahun lalu adalah peneraju dalam bidang berkenaan ekoran kejayaannya membekalkan produk kepada pelbagai syarikat multinasional dalam industri elektrik dan elektronik.

Menurut Mazlan, sektor tenaga hijau yang membabitkan operasi menjana tenaga bersih dari sumber tenaga yang diperbaharui itu kini menyumbang kira-kira 10 peratus kepada pendapatan kumpulan manakala bakinya daripada saduran perindustrian dan cat.

''Sektor ini dijangka menjadi perniagaan teras kumpulan menjelang empat tahun akan datang tetapi ini bukan bermakna kami akan meninggalkan perniagaan saduran perindustrian dan cat.

''Sektor perniagaan tersebut tumbuh secara organik tetapi sektor tenaga hijau ini naik begitu mendadak sekali malah permintaan terhadapnya semakin menggalakkan kini,'' katanya kepada Utusan Malaysia, di sini baru-baru ini.

Mazlan menjelaskan, Octagon yang disenaraikan di Papan Utama Bursa Malaysia pada tahun 2002 telah melabur sebanyak RM160 juta untuk sektor tenaga hijau sejak empat tahun yang lalu.

Bagi tempoh berkenaan, pelaburan tersebut dibuat untuk operasi di dalam dan luar negara.

''Kini kami sedang berbincang dengan dua pihak di luar negara untuk melaksanakan projek tenaga hijau dan 10 buah syarikat asing telah berminat terhadap projek tersebut.

''Bagaimanapun, kami akan umumkan secara terperinci dalam tempoh dua bulan akan datang selepas ia dimuktamadkan,'' jelasnya.

Mengenai perkembangan di Malaysia pula, Mazlan berkata, Octagon dijangka melancarkan loji kitar semula tayar terpakai berteknologi tinggi di Pulau Indah, Pelabuhan Klang yang bernilai RM120 juta dalam tempoh sebulan.

Loji yang menggunakan teknologi pirolisis aliran terus itu adalah loji aliran terus pertama di dunia yang mempunyai kapasiti 120 tan atau 12,000 biji tayar terpakai sehari.

Menurutnya, loji berkenaan akan menghasilkan minyak dan gas yang mampu menjana tenaga elektrik.

Mengulas lanjut, minyak yang dihasilkan daripada loji berkenaan akan digunakan untuk kegunaan industri seperti dandang, termasuk kapal korek, manakala baki 10 peratus daripadanya adalah gas yang digunakan untuk menjana tenaga elektrik.

Menurutnya, melalui bahan mentah sebanyak 120 tan tayar terpakai yang diproses di loji tersebut, tenaga elektrik yang dihasilkan secara maksimum adalah dua kilowatt tetapi buat masa ini ia hanya menjana satu kilowatt untuk kegunaan sendiri.

Pelaburan''Kami bercadang untuk mengembangkan lagi projek loji tersebut kepada fasa kedua yang memungkinkan membabitkan pelaburan kira-kira RM120 juta di tempat yang sama pada tahun depan.

''Kapasiti loji itu boleh mencapai sehingga 240 tan tayar terpakai sehari yang mana jumlah tersebut bersamaan dengan 50 peratus daripada tayar terpakai di negara ini yang diperolehi daripada 12.6 juta kenderaan di Malaysia,'' jelasnya.

Menurut Mazlan, berdasarkan kepada perkembangan memberangsangkan itu, Octagon yakin ia akan menyumbang dengan ketara kepada pendapatan syarikat bermula tahun kewangan 2009.

''Malah kami mampu mengeksport kemahiran kami dalam bidang ini kerana syarikat sudah ada loji yang akan beroperasi tidak lama lagi maka model perniagaan itu dapat dibawa ke peringkat antarabangsa dengan mudah dan cekap,'' ujarnya.

Mengenai bidang saduran perindustrian dan cat pula, beliau berkata, Octagon akan terus mengekalkan kedudukannya sebagai peneraju dalam bidang tersebut pada masa kini dan akan datang di pasaran domestik dan rantau Asia Tenggara.

Source : Utusan Malaysia

Ramunia Mahu Jadi Pusat Bagi Fabrikasi Laut Dalam Serantau

Ramunia Holdings Bhd berhasrat menjadi pusat fabrikasi laut dalam serantau.

Pengurus kanan operasinya, Khadrishah Khalid, berkata syarikat itu yakin dapat mencapai visi ini berikutan langkah menaik taraf limbungan dan kemudahannya di Teluk Ramunia, Johor.

"Langkah naik taraf ini adalah sebahagian daripada usaha syarikat untuk meningkatkan kecekapan dan menggunakan kemudahan dengan lebih baik bagi memastikan ia boleh melaksanakan sebarang tugasan laut dalam pada masa akan datang," katanya kepada Bernama semasa lawatan media ke limbungan itu.

Beliau berkata sejak suku ketiga 2006, Ramunia membelanjakan 80 peratus daripada RM200 juta perbelanjaan modalnya bagi menaikkan taraf limbungan itu.

Khadrishah berkata projek dalam tangan syarikat itu kini bernilai RM500 juta dan jumlah itu akan meningkat dengan siapnya kerja-kerja menaik taraf limbungan itu bulan depan.

Beliau berkata syarikat itu akan memberikan tumpuan kepada kerja-kerja kejuruteraan, pemerolehan, penugasan, pemasangan dan pembinaan (EPCIC).

"Kami tidak akan menceburi perniagaan lain kerana kerja-kerja EPICIC menawarkan margin terbesar bagi syarikat itu," katanya.

Tentang penggabungan dengan MISC Bhd, Khadrishah berkata cadangan itu dikemukakan kepada Bursa Malaysia lewat Jun dan kelulusan dijangka diperoleh tidak lama lagi.

Ramunia pada asasnya terlibat dalam perniagaan pembuatan bagi struktur, pembinaan dan penugasan bagi syarikat besar minyak dan gas.

Source : Bernama

Saturday, 19 July 2008

FY2008 Petronas Financial Report

Media Realease 2008

Result Announcement Presantation Slides 2008

Consolidated Figures (USD)

Half Year Figures (RM)

Half Year Figures (USD)

Source : Petronas Group website

Petronas gets greenlight for GLNG

ADELAIDE, AUSTRALIA: Petronas has secured Foreign Investment Review Board approval for its US$2 billion investment in the Gladstone LNG project with Santos Ltd.

Petronas will initially pay oil producer Santos US$2 billion for a 40 percent stake in the LNG project that will be situated along the Queensland coast.

A further US$500 million will be paid to Santos upon reaching a final investment decision for a second LNG production train of a three million tonne (3.3 million ton) a year capacity.

The project is scheduled to enter FEED (front end engineering and design) in late 2008, with final investment decision planned for end 2009. First LNG shipment is expected in 2014.

Source : Energy Current

MMC wins rights to build UAE power plant

MMC Corporation Bhd’s subsidiary MMC Utilities Ltd had obtained exclusive rights to build a power plant in the Emirate of Ajman, UAE, with a potential capacity of up to 1,000 megawatts.

In a statement yesterday, MMC said the agreement, which was signed in Dubai yesterday with the Ajman government, conferred it exclusive rights to conduct feasibility studies on the plant, which is aimed at meeting the rising power demand of new residential and commercial projects.

Once approved, MMC Utilities would establish a concession company that would manage, operate and maintain the plant for 20 years. The Ajman government will commit to purchase the electricity produced throughout the concession period.

“This project marks MMC International’s maiden success in the UAE and is a reflection of MMC’s commitment to expanding our core businesses in the international arena. This project follows our successes in power and water projects in Saudi Arabia, Oman, Jordan and Algeria,” said MMC International chief executive officer Feizal Ali said.

“I’m optimistic that our cross-border investments, such as this power plant project in the UAE, will go a long way towards ensuring sustainable earnings for MMC for many years to come,” added Feizal.

MMC Utilities is a wholly-owned subsidiary of MMC International.

MMC is the joint master developer of the US$30 billion (RM98.1 billion) Jazan Economic City in Saudi Arabia, with the Saudi Binladin Group. MMC International has also invested in a new container terminal at Jeddah Islamic Port.

Source : The Edge

Friday, 18 July 2008

Oil can actually be sold at US$20 a barrel, says Jala

Crude oil price is “commercially viable” to be sold at US$20 (about RM66) a barrel, judging from the existing reserves of oil majors in the world, according to Malaysian Airline System Bhd managing director and chief executive officer Datuk Seri Idris Jala.

The airline chief, who previously worked with Shell for more than 20 years, said the current oil price hovering around US$140 per barrel was “absolutely unfair” to the world economy.

“If you take a look at the oil companies’ portfolios, most of their existing reserves and productions — probably 90% of them — are commercially viable at US$20 per barrel.

“I was kind two months ago when I said the oil price should be US$40 a barrel. I believe that the US$100 on top of the US$40 is actually purely and highly speculative,” he said.

Jala was speaking as one of the panellists at the 2008 Leadership Forum Malaysia here yesterday.

“I don’t blame them. That is the nature of the market. If you have a free market, the speculation instruments are out there. Layers upon layers of speculative instruments are put on top of the real value.

“The question you have to ask is, what is the fair price of crude oil?” he added.

Jala said the world would likely go into recession if oil prices hit US$200 a barrel.

He noted that it would still take a long time for biofuel to be seriously considered as an alternative to fossil fuel.

Earlier at the forum, General Electric Co Southeast Asia president Stuart Dean said: “We talked to oil and gas companies. They don’t believe the price is reasonable. So, it’s truly a speculative aspect. It’s going to correct at some point but we don’t know when.”

Source : The Edge

Petronas still keen on Iran’s LNG project

Petroliam Nasional Bhd (Petronas) is still assessing its liquefied natural gas (LNG) investment in Iran’s South Pars after its partner, French oil firm Total pulled out from the US$11.2 billion (RM36.6 billion) gas project.

Petronas president and chief executive Tan Sri Mohd Hassan Merican said: “We continue to be interested in operating in Iran. I have read the announcement by Total, but Petronas remains interested in the country.”

Petronas said it had yet to make a final investment decision as a result of spiralling costs. “Because of the increase, the economic viability of the project as previously proposed is affected… we also have not completed our discussion with the Iranian government,” Mohd Hassan said.

Asked if Petronas would commence the projects without Total, Mohd Hassan said: “As a company capable of developing LNG projects, we have the technological capabilities as proven in Malaysia and Egypt. But there are other factors, so we have to make an assessment.”

Total, together with Petronas, had planned to develop Phase 11 of the South Pars field to produce LNG.

Total, which holds 40% of the South Pars development, froze its project as it was “too politically risky to invest in Iran at present”, its chief executive Christophe de Margerie said earlier this month. Petronas, which was part of the South Pars consortium, holds 10%.

Iran has the world’s second-largest reserves of natural gas after Russia, and the South Pars field in the Gulf has about 500 trillion cubic feet or 14 trillion cubic metres of gas, representing some 8% of world’s reserves.

Total’s pullout came after Iran’s missile test last week raised political tensions between the country and the West. Other European companies that withdrew from the country included Royal Dutch Shell, Spain’s Repsol and Statiol of Norway.

Petronas’ total LNG production increased to 24.1 million tonnes from 23.3 million tonnes on higher production from its LNG plant in Bintulu. Almost 60% of the Bintulu’s production was exported to Japan, 28% to South Korea and the remaining 12% to Taiwan.

Meanwhile, Mohd Hassan said that the proposed reverse takeover of Ramunia Holdings Bhd would be completed in the fourth quarter this year. MISC Bhd had proposed to sell its subsidiary Malaysia Marine & Heavy Engineering Sdn Bhd (MMHE) to Ramunia for RM3.2 billion via a share swap. Once the takeover is completed, MISC would hold more than 70% in Ramunia.

MISC, a 62% unit of Petronas, is the world’s largest shipper of LNG.

Thursday, 17 July 2008

Malaysia oil and gas outputs rise 3.9 per cent

Malaysia's total average production increased by 3.9 per cent to 1.67 million BOE/d from 1.61 million BOE/d despite maturing fields and increasing cost pressures. Two new oil fields and one gas field, including the Kikeh deepwater project, were brought on stream during the year, increasing the total number of producing fields in Malaysia to 88 fields.

A total of MYR 21.54 billion (US$6.7 billion) was spent in Malaysia's upstream sector during the year, about 12 per cent higher than the previous year's expenditure of MYR 19.24 billion (US$6 billion). Of this, MYR1 2.06 billion (US$3.7 billion), or 56 per cent, was spent on development and production projects, MYR 1.52 billion (US$472 million), or 7.1 per cent, was spent on exploration activities, and the balance was spent on operations.

The country's total reserves, however, declined slightly, as compared to previous year, due to the downward revisions of in gas reserves offshore Sarawak and higher crude and gas production during the year despite additions through new discoveries. Total reserves stood at 20.13 billion BOE as of Jan. 1 2008, down from 20.18 billion BOE the previous year.

Petronas' share of outputs accounted for 69.2 per cent of the total average national production including Petronas Carigali's production.

Source : Energy Current

Wednesday, 16 July 2008

Petronas pays govt RM67.6b in bumper year

Petroliam Nasional Bhd (Petronas) is paying a record RM67.6 billion to the government this year, up from RM52.3 billion previously, its president and chief executive Tan Sri Mohd Hassan Merican said.

Of the total, the federal government gets RM62.8 billion, which includes RM30 billion in dividends, RM6 billion special dividend, RM4.7 billion royalty and RM26 billion in petroleum and corporate taxes. Royalty payments to the state governments of Terengganu, Sabah and Sarawak amount to RM4.8 billion.

“The higher profits have enabled Petronas to provide higher payment to the government. Therefore we have decided to declare a special dividend of RM6 billion to the government this year,” Mohd Hassan said, adding that the special dividend would be paid in phases during the year.

The RM67.6 billion payment represents 63.1% of the RM107.1 billion profit before tax, royalty and export duty at the holding company level. Mohd Hassan said since its incorporation in 1974, Petronas’ payments to the government amounted to RM403.3 billion.

At the group level, the state oil company recorded its best performance in the financial year ended March 31, 2008 (FY08), with a 31.5% jump in net profit to RM61 billion from RM46.4 billion. Group revenue rose 21.2% to RM223.1 billion from RM184.1 billion due to higher crude oil prices and increased revenue contribution from its international operations.

For the first time, overseas operations were the biggest contributor to the group’s revenue, surging 33.1% to RM90 billion, surpassing contributions from the domestic exploration and production (E&P) operations, which rose 7.4% to RM46.3 billion from RM43.1 billion, Mohd Hassan said at its FY08 financial results briefing here yesterday.

Petronas’ export revenue rose 18.3% to RM86.8 billion and accounted for 14% of Malaysia’s total exports.

The national oil company’s earnings were boosted significantly by rising crude oil prices. “Even if there were a correction in crude oil prices, it would not be a sharp one. Assuming that oil trades around US$110 a barrel, Petronas would still stand to gain as a number of their PSC contracts are based on a benchmark of US$40 per barrel of oil and it is not possible that oil would come down to such levels,” an analyst told The Edge Financial Daily.

Crude oil prices on the New York Mercantile Exchange touched US$145.20 at 2.30pm yesterday in electronic trading. Concerns about oil production disruptions in Iran, Nigeria and Brazil, coupled with a weaker US dollar saw oil prices surge to a high of US$147.27 a barrel last Friday.

The rise in crude oil prices had driven up the price of Malaysian Crude Oil (MCO), said Mohd Hassan. The weighted average price of MCO rose to US$86.81 per barrel, up 26.7%. The country’s Tapis oil rose 26.9% to US$87.57 per barrel.

Petronas’ total oil reserves fell 0.5% to 26.37 billion barrels and its reserves replacement ratio (RRR) slipped to 0.9 times during the year to Jan 1, 2008, from 1.8 times previously. Its domestic reserves declined slightly to 20.13 billion barrels from 20.18 billion last year. It replaced its reserves at 0.9 times, from 1.4 times a year earlier.

“The ratio reflects the maturity of our acreages. It also shows that it is more difficult to replace production of resources,” Mohd Hassan said.

Petronas’ entitlement to the country’s oil and gas production rose 3.4% to 744,000 barrels a day of oil equivalent in the year to March 31, 2008 from 719,800 barrels previously. Its domestic share accounted for 44.5% of a daily output of 1.67 million barrels a day.

However, rising costs pushed up Petronas’ capital expenditure (capex) by 33.3% to RM37.6 billion, with some RM20.7 billion or 55.1% of the total directed towards E&P.

Mohd Hassan said that the country’s E&P sector remained vibrant despite increasing challenges and costlier operating environment, and it continued to attract production-sharing contractors (PSC).

“Our PSC terms and conditions are tough and we have not changed the rules of the game… because of the stable geopolitical environment, we continue to generate economic activity in Malaysia,” he said.

On its refining activities, Mohd Hassan said output for the group’s refineries rose to 150.9 million barrels a day from 148.8 million barrels previously. Its three domestic refineries — Petronas Penapisan (Melaka) Sdn Bhd , Petronas Penapisan (Terengganu) Sdn Bhd and Malaysian Refining Company Sdn Bhd — were built with a capacity of 323,300 barrels a day. Utilisation rates at the refineries rose to 91.6% from 91.4% on measures taken to improve efficiencies.

Source : The Edge

Analysts continue to be bullish on Dialog Group Bhd based on its proven ability to replenish its order book

Dialog last week told Bursa Malaysia it had secured two contracts totalling RM132mil from Malaysian Refining Co Sdn Bhd (MRC), a joint-venture company between Petroliam Nasional Bhd and Conoco Asia Ltd, to provide mechanical and maintenance services to its Malacca refinery.

OSK Research estimated in an update report that these contracts would boost Dialog’s current order book to RM1.5bil and contribute to its earnings for the financial year ending Dec 31, 2009.

“We believe the profit margins for these maintenance contracts are better than the margins for a typical engineering, procurement, construction and commissioning project as the latter is normally more sensitive to cost fluctuations, particularly amid the prevailing high steel raw material price environment,” OSK said. It anticipated a gross margin of 10% to 15% from the MRC contracts.

RHB Research said in a report that while the new maintenance contracts were positive for Dialog's earnings, the company remained focused on longer-term recurring income from specialist businesses of advanced catalyst handling and tank terminals.

“However, the maintenance business provides an important inroad for Dialog’s specialist services. For example, we believe the MRC project puts Dialog in a stronger position to provide advanced catalyst handling services to the refinery,” it said.

The bank-backed brokerage foresaw significant organic growth for Dialog over the next two years due to the global expansion of its advanced catalyst handling services to the US and Europe, and its Tanjong Langsat tankage development project.

“In the shorter term, Dialog’s RM1bil-plus contracts will underpin earnings growth,” RHB Research noted.

Technically, the stock is tracing a widening wedge formation. Having recently rebounded from a low of RM1.15, it is however, on the decline again.

Dialog is expected to trade in a choppy manner with current support at RM1.10 with resistance at RM1.40. A break in either direction will likely set its subsequent move.

However, with its overbought/oversold indicators in position of weakness below the neutral line, Dialog is more likely to stay under selling pressure.

OSK said the recent weakness in Dialog's share price provided a good opportunity to accumulate, hence the research house was maintaining its “buy” rating with a target price of RM2.35.

RHB Research maintained its “outperform” recommendation with a target price of RM1.93.

Source : The Star