Thursday, 30 December 2010

Saipem bags $700m double

Italian contractor Saipem has landed jobs worth a total of $700 million, for work in the Gulf of Mexico and off Kazakhstan.

Amberjack Pipeline has contracted Saipem to transport and install the 220-kilometre long Walker Ridge export pipeline, which will connect the Jack and Saint Malo fields in the deep-water Gulf of Mexico to a floating production, storage and offloading unit.

Offshore work will be carried out by the newbuild pipelay vessel Castorone, with the first phase scheduled for the first quarter of 2013. The contract marks the first job for Castorone, which is still under construction.

Meanwhile, Agip has extended an existing piles and flares contract covering work at the Kashagan development, in the Kazakh sector of the Caspian Sea, until December next year.

The workscope includes the fabrication, assembly, transport and installation of the flares and piles for the offshore structures, as well as the installation of 14 module barges.

Procurement, fabrication and installation of associated mooring, protection and interconnection structures is also included.

The Ersai 1 construction barge will be used to fulfil the contract.

The piles, flares and other structures will be fabricated in the Ersai’s Kuryk yard in Kazakhstan, in which Saipem has a 50% stake.

Wednesday, 29 December 2010

Petronas Carigali to be Bursa's big draw

Analysts have been told by Bursa Malaysia officials of a possible IPO for Petronas Carigali, says a head of research

Petronas Carigali Sdn Bhd, the exploration unit of Petroliam Nasional Bhd, may be listed on Bursa Malaysia next year and it is expected to attract a large number of foreign funds.

"The mother of all initial public offerings (IPO) next year will be Petronas Carigali. We need companies like this to make Bursa attractive," said MIDF Amanah Investment Bank Bhd senior vice president and head of research, Zulkifli Hamzah.

Petronas officials could not be reached for comment. Zulkifli said analysts have been told by Bursa officials of a possible IPO for Petronas Carigali.

OSK Research head Chris Eng said Petronas Carigali should be the largest IPO ever in Malaysia, with a potential market value of close to RM150 billion.

This would eclipse current leader Malayan Banking Bhd, with a market value of RM62 billion as at yesterday.

Zulkifli also expects foreign shareholdings in the local equity market to rise to more than 26 per cent next year from 21.7 per cent now.

This will be spurred by the reclassification of Malaysia as an Advanced Emerging Market effective June 2011 under the FTSE indices. It is estimated that foreign funds with some US$3 trillion (RM9.4 trillion) track these indices.

Zulkifli told reporters at a media briefing in Kuala Lumpur yesterday that MIDF is bullish about the 2011 economic outlook.

"We are bullish, but with a caveat. The caveat is how crude oil price is going to unwind. If it hits US$110 (RM343) per barrel, then fear factor will hit.

"If it goes beyond US$110, then the world could enter another economic crisis. People will move back to US dollars for safety," Zulkifli said.

On the eight short-term factors, Zulkifli said Malaysia can expect more mergers and acquisitions, while corporate earnings growth may hit 15.8 per cent from 14 per cent now on strong growth in banking, plantation and construction sectors.

"We also see bigger IPOs next year, a rally in crude oil and commodity prices and contribution from the Economic Transformation Programme," he said.

The benchmark FTSE Bursa Malaysia KLCI is expected to trade between 1,475 and 1,650 points next year, representing up to 18 times its 2011 earnings.

Tuesday, 28 December 2010

Halliburton and Saipem pay penalties in Nigerian bribery probe

Saipem Group and Halliburton have agreed to pay criminal fines totalling US$ 67.5 million to resolve an investigation into a consortium of construction firms which bribed Nigerian government officials in order to win construction contracts worth over US$ 6 billion on the Bonny Island LNG facilities.

Saipem Group subsidiary Snamprogetti Netherlands agreed to pay a criminal penalty of US$ 30 million plus US$ 2.5 million legal costs, while Halliburton - former parent of construction firm KBR, which had a 25% stake in the bribery consortium - agreed to pay US$ 32.5 million plus an additional US$2.5 million for legal costs.

The settlements are non-prosecution agreements with the federal government of Nigeria, and come on top of the US$ 1.28 billion that the four-company consortium has so far been fined for using bribery to secure the lucrative liquefied natural gas (LNG) contracts.

The other members of the consortium, known as TSKJ, were Technip, and JGC.

Under its agreement with the Nigerian authorities, Halliburton said it would provide assistance to help recover funds frozen in a Swiss bank account of a former TSKJ agent.

Snamprogetti was sold by its former parent Eni to Saipem in 2006, two years after the consortium's activities are said to have wound down. Eni agreed to indemnify Saipem for losses resulting from the criminal investigations into the Bonny Island contracts, and as a result Saipem said the settlement will not impact its balance sheet.

The news comes just weeks after former commercial vice president of KBR (UK) Wojciech Chodan admitted paying bribes to Nigerian government officials, including top-level executive branch officials, in order to obtain and retain the Bonny Island contracts.

Mr Chodan, who was extradited to the US on 3 December, pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act on 6 December, according to the US Department of Justice.

He faces up to five years in prison when he is sentenced on 22 February 2011.

Monday, 27 December 2010

Malaysia's Petronas doesn't plan exploration arm IPO-report

Malaysia's state oil company Petronas does not plan to list its exploration arm, a company spokesperson was quoted by The Star newspaper on Saturday as saying.

"We have no plans to list Petronas Carigali or any other unit," a Petronas spokesperson told the newspaper in response to comments by an investment bank analyst that the Petronas unit could be listed on the Malaysian stock exchange next year to attract foreign funds.

Analysts had said the IPO could be Malaysia's largest with a potential market value of close to 150 billion Malaysian ringgit, prompting a sharp jump in the ringgit currency on Friday.

Bursa Malaysia , the stock exchange operator, said it had not received any new listing application by Petronas.

Petronas had earlier listed its chemical manufacturing unit Petronas Chemicals. Its shipping arm MISC also listed its ship and rig-building unit Malaysia Marine and Heavy Engineering Holdings Bhd this year.

Sunday, 26 December 2010

Fire incident at Petronas aromatics plant

A fire incident occurred at about 11.35 last night at an aromatics plant within the Petronas Integrated Petrochemical Complex in Kerteh.

However, the fire was extinguished shortly after by the Complex's Emergency Response Team, with the assistance of the Fire and Rescue Department.

A statement from Petronas Chemicals Group Berhad released today said there was no human casualty in the incident and as a safety precaution, the operation at the plant had been suspended.

However, the operation at the other facilities within the complex is not affected.

The statement said all the relevant authorities had been informed and an investigation was underway to determine the cause of the fire and to assess the extent of the damage caused by it.

Friday, 24 December 2010


Malaysian conglomerate YTL Corporation, through its utilities subsidiary, YTL Power International Berhad (YTLPI), is investing in a 5.0 billion USD oil shale power project in Jordan through the acquisition of a 30 per cent equity stake in Eesti Energia's Jordanian project.

Eesti Energia of estonia, a world leader in the oil shale sector, and its Jordanian partner, Near East Investment (NEI), together with YTLPI, will develop an oil plant with an output of approximately 38,000 barrels per day, YTL said in a statement issued here Tuesday.

Construction will commence following further analysis of the resource and environmental studies. The plant will utilise Eesti Energia's leading proprietary oil recovery technology, which has more than 30 years of industrial production in Estonia.

As the new strategic partner, YTLPI will contribute its experience in developing and operating large energy production and trading assets in emerging markets. YTLPI operates electricity generating plants in Malaysia, Singapore and Indonesia as well as a water and sewarage company in Britain.

According to the new shareholding structure, Eesti Energia will own 65 per cent, YTLPI 30 per cent and NEI 5.0 per cent of the oil shale projects in Jordan. Eesti Energia, is the national energy company of Estonia, which is internationally known as Enefit.

"We are delighted to have the opportunity to invest alongside Enefit, with its leading expertise in oil shale-fired power generation and technology for oil recovery," said YTLPI executive director Yeoh Seok Hong, who declined to say how much the company is paying for its stake.

Enefit's chief executive officer, Sandor Liive, said YTL's presence would make a great contribution to the realisation of these projects which would put Jordan for the first time on the way to energy independence.

In May 2010, Jordan Oil Shale Energy Company, a subsidiary of Eesti Energia, signed a concession agreement with Jordanian government for the mining of oil shale from Attarat um Ghudrun oil shale deposit in Jordan.

This was the first surface mining oil shale concession to be awarded by the Jordanian government.

Thursday, 23 December 2010

WikiLeaks Reveals BP's 'Other' Offshore Drilling Disaster

A BP offshore oil platform suddenly shows signs of a potentially devastating leak. Bubbles form in the seawater. Alarms sound. Panicked oil workers flee the rig. That may sound like the moments that preceded last April's Deepwater Horizon explosion in the Gulf of Mexico, but it actually describes an event 19 months earlier, in the Caspian Sea waters of tiny Azerbaijan. There are uncanny echoes of the Azerbaijan incident in the Deepwater Horizon tragedy, including the likely cause — a faulty cement job. But there was one marked difference: While the Gulf explosion created an ongoing political firestorm, the Azerbaijan leak remained almost forgotten until last week, when another leak — this time of diplomatic cables, released by WikiLeaks — showed just how close BP had come to a major disaster in the Caspian.

A series of cables by then U.S. Ambassador in Baku, Anne E. Derse, chronicled a growing testiness between BP and the government of Azerbaijan, whose long borders with Russia and Iran and vast Caspian energy reserves give it strategic importance way beyond its small size. BP commands enormous clout in Azerbaijan, having invested $4 billion in gas and oil pipelines from Baku, which travel through Georgia to the Turkish port of Ceyhan, giving energy-hungry Western Europe a supply channel that bypasses Russia.

But the partnership with the Azeri state energy company SOCAR was strained to the limit one morning in Sept. 2008, when a blowout in a gas-injection well on BP's Central Azeri platform prompted the emergency evacuation of 212 workers, and shut down large parts of the offshore production in the Caspian's Azeri-Chirag-Guneshli (ACG) field. That accident deprived the Azerbaijan government of revenues of up to $50 million a day during the weeks when production plummeted, according to the leaked cables. "It is possible that BP Azerbaijan 'would never know' the cause of the gas leak," Ambassador Derse wrote to her bosses in Washington on Oct. 8, 2008, citing confidential talks with the American head of BP Azerbaijan, Bill Schrader. "BP is continuing to methodically investigate possible theories." A later cable says BP concluded that "a bad cement job" caused the leak. BP has not said which company was responsible for that cement work, and its 2008 annual report offered few details. The leak is mentioned on page 28 of the report, where it is stated only that production had resumed "following comprehensive investigation and recovery work."

The cables, first published in London's Guardian, demonstrate the sharp contrast between the saturation coverage of the Gulf blowout, and the Azerbaijan leak that was barely covered in the local press. "Unless you were on the inside you didn't know how serious it was," says Edward Chow, senior fellow at the Center for Strategic and International Studies in Washington. "It hit the trade press, so if you were reading Platts [a specialist oil newsletter] you would have seen it." BP said in a statement published in the Guardian that the company "enjoys the continued support and goodwill of the government and the people of Azerbaijan," and that its discussions with the government are confidential.

The pipeline project has always had a strong geopolitical undertone. A former aide to President Heydar Aliyev told TIME in an interview in Baku in 2006 that President Bill Clinton had urged the Azeri leader in 1994 to construct the pipeline link with Europe as part of "a very strategic plan" to bypass Russia and Iran. But the primary concern following the Caspian platform leak was less on potential diplomatic consequences in a region at the epicenter of energy-driven strategic contest but on the financial losses Azerbaijan suffered after BP's leak. "Schrader said although the story hadn't caught the press's attention, it had the full focus of the GOAJ [Government of Azerbaijan]," Derse wrote, "which was losing '40 to 50 million dollars' each day."

That loss seems trifling by comparison to the $40 billion or more in cleanup costs and legal liabilities that BP faced over the Gulf disaster, even before last week's Obama Administration decision to sue BP and eight other companies involved in Deepwater Horizon. And the revelations about the Caspian incident may have government lawyers picking over the details in search of a pattern of lax safety on BP platforms. In the Caspian leak, the gas did not ignite, and all the workers made it safely off the rig — a far happier outcome than in the Gulf. In what could be seen in retrospect as another portent of things to come, Ambassador Derse described the Azerbaijan government's annoyance over what they said was BP's secretiveness about the incident — a charge which would be repeated by President Barack Obama less than two years later, when he lashed out at BP for obfuscating over the Gulf blowout.

Chow also suggests that the suspicion that both accidents were caused by cement work around the wells could suggest a "systemic" problem with regard to BP's wells. "If you look at the larger picture, BP has had safety problems for more than five years now," Chow says. "It has been well documented, even before the Azerbaijan news."
In one cable from the embassy in Baku in October 2008, a U.S. diplomat says "BP has closed off a 'few suspect wells' from which they think a bad cement job caused the leaking gas." That, the diplomat says, "is actually good news, since had it been a reservoir leak the damage would have been potentially non-reparable, whereas now all BP has to do is fix the cement job." The repair work is "hard and expensive ... but preferable to losing the platform." By April 2010, that assessment would read like a gross understatement.

Wednesday, 22 December 2010

Total, Petronas join Natuna project

State oil and gas company PT Pertamina named two major international oil and gas companies — Malaysia’s Petronas and France’s Total SA — as its partners in developing the giant East Natuna gas project to go on stream by 2021.

“We expect to sign the PSC [production sharing contract] next year. The project is expected to be on stream 10 years after the PSC is signed,” Pertamina president director Karen Agustiawan said Friday.

On Friday, Pertamina signed a head of agreement (HoA) with Petronas and Total to jointly operate the block located in the South China Sea. Earlier on Dec. 2, Pertamina signed a similar deal with US-based ExxonMobil.

Karen said the HoA with ExxonMobil, Total and Petronas was still an early phase agreement to provide a basis for further cooperation.

“We will follow this with business-to-business talks. Afterward, the consortium will discuss the project’s terms and conditions,” she said.

Petronas’ advisor for the East Natuna project, Non Saputri, said the company was ready to contribute their technology.

“We have experience operating gas field with high degrees of CO2 in Malaysia,” she said. Asked about the size of the stake sought by the company in the project, Saputri said it was up to the Indonesian government to make that decision.

Currently, Pertamina and its partners have not declared the portion each company will get in the project, but Karen has repeatedly said Pertamina wanted majority share and to be the lead project operator.

She also said Pertamina required its partners to allow the state-owned company a share in their upstream assets.

Sealing the deal: Energy and Mineral Resources Minister Darwin Zahedy Saleh (second left), accompanied by oil and gas director general at the ministry Evita Legowo (left) and Upstream Oil and Gas Regulatory Agency chair R. Priyono (third left), witness the signing of oil and gas exploration contracts for South Sokang, Sokang and Wokam II in Jakarta on Friday. Agreements on the appointment of Petronas and Total were also signed. Antara/Yudhi Mahatma
Sealing the deal: Energy and Mineral Resources Minister Darwin Zahedy Saleh (second left), accompanied by oil and gas director general at the ministry Evita Legowo (left) and Upstream Oil and Gas Regulatory Agency chair R. Priyono (third left), witness the signing of oil and gas exploration contracts for South Sokang, Sokang and Wokam II in Jakarta on Friday. Agreements on the appointment of Petronas and Total were also signed. Antara/Yudhi Mahatma

Pertamina is in talks with Total for the acquisition of part of Total’s stakes in the Mahakam gas block in East Kalimantan. The Mahakam block has an estimated gas reserve of 11 trillion cubic feet. Total operates the block with a 50 percent share in partnership with Japan’s Inpex, which controls the remaining 50 percent.

Pertamina also expected a slice of ExxonMobil’s overseas upstream assets, Karen said Dec. 9. On Friday, Karen said a similar asset swap was also expected from Petronas.

The East Natuna gas field, formerly known as the Natuna D. Alpha, has been an important project for Indonesia due to its huge gas reserves. Located in the South China Sea, the Natuna D-Alpha block is estimated to contain 46 trillion cubic feet of gas, making it the biggest gas reserve in Asia.

While waiting for the East Natuna project to go on stream, Indonesia expects to tap another large offshore gas project, the Masela gas field in the Arafura Sea. Inpex owns 90 percent of the project, while local energy company PT Energi Mega Persada owns the remaining 10 percent.

Upstream oil and gas regulator BPMigas approved the project’s plan of development (POD). BPMigas chairman R. Priyono said the upstream development and the construction of the LNG facilities would require an investment of US$5 billion. He said the project was expected to go on stream by 2016.

Tuesday, 21 December 2010

Velosi accepts GBP87.8m Carlyle offer

Oil and gas services company Velosi Ltd has agreed to recommend a cash offer for its entire share capital from the Carlyle Group valuing the company at about GBP87.8m.

Velosi shareholders will receive 165p cash per share from Azul Holding 2 Sarl, representing a premium of 61.4% to the closing price yesterday (Dec 8).

Azul's sole shareholder is Azul Holding, which is also the sole shareholder of Applus Technologies Holding S.L.

The Applus Group, a leader in testing, inspection, certification and technological services, was formed in 2007 with the acquisition of Applus by Azul Holding on behalf of the Carlyle Group.

Carlyle's MD Alex Wagenberg said, 'As expected at the time of our investment in Applus, the Carlyle Group has been supportive of an accelerated growth and acquisition strategy to transform Applus into a global leader in its areas of competence.

'The acquisition of Velosi, with the additional financial support of the Carlyle Group and its partners, is the most important step to date in achieving that strategy. We are very excited about the combined prospects for the enlarged Applus Group as it works with Velosi and its highly regarded team in very attractive growth markets.'

Velosi shares rose 59.25p to 161.5p.

Monday, 20 December 2010

Oil platform fire to have little impact on Malaysia exports

A fire at an oil platform operated by Petronas Carigali, a unit of Malaysia's state oil firm Petronas , is expected to have little impact on the country's exports of Tapis crude, trade sources said today.

The Bekok C platform, located 200km off the coast of Terengganu, is one of several fields that produces the country's flagship grade Tapis, they said.

Petronas is expected to lose around 100 barrels a month of the light sweet crude for export due to the fire, one of the sources said, but how long this might continue is not clear.

The company could not be immediately reached for comment.

Tapis output is at around 190,000 bpd with most kept for refining by equity producers ExxonMobil and Petronas, leaving little for the spot market.

The fire at Bekok C started just after midnight early yesterday morning and injured six out of the 108 personnel on board.

"It's one of the fields linked to Tapis production, but it's not a major field," the source said.

A second source said there was no disruption in supply as the incident occurred during a planned maintenance.

Petronas was likely to ramp up output from other platforms while Bekok C is under repair, he said.

The company will start marketing February spot cargoes later today after it sold a Tapis crude cargo through tender at around US$$5 a barrel above Tapis APPI.

Saturday, 18 December 2010

The Carlyle Group and Applus+ Group launch a recommended cash offer for Velosi

Press release

Contact: Emma Thorpe / Rosanna Konarzewski
T +44 (0) 20 7894 1630


  • Velosi is listed on Alternative Investment Market (AIM) in London.
  • With a presence in Asia, the Middle East, Africa, Europe and North America, Velosi is a leading provider of inspection, quality assurance, certification and testing services to the oil and gas industry. Velosi reported revenues of $184 million for the year ended 31 December 2009.
  • As a result of the acquisition, the Applus+ Group will have reinforced its presence in emerging markets and broadened its service portfolio to the energy industry.
  • Following the acquisition, the Applus+ Group will generate revenues in excess of €1 billion with 70% of its revenues coming outside of Spain.

Friday, 17 December 2010

Six Petronas Carigali workers in stable condition

Six workers of Petronas Carigali Sdn Bhd who were admitted to Hospital Sultanah Nur Zahirah (HSNZ) for burns following a fire on the Bekok C platform early yesterday morning are now reported to be in stable condition.

According to a statement issued to the media, the company had provided all kinds of assistance necessary to ease the burden of the six victims and their families.

Meanwhile, another 102 workers on the platform who had been transferred to another platform nearby shortly after the fire yesterday, had been brought to shore in stages.

Thirty-two of them had arrived at the Kertih Airport yesterday while the rest were scheduled to be brought home today.

Petronas Carigali had already initiated investigation to identify the actual cause of the incident and the extent of the damage at the platform following the fire.

In the incident at 12.05am yesterday, six workers of Petronas Carigali Sdn Bhd were injured in the fire at the Bekok C oil exploration platform.

The victims were Alias Abdullah, 52, Mohd Hamzah Abdullah, 32, Mohd Fauzi Ibrahim, 37, M. Rishaudin Ismail, 32, Mohd Ariff Farimi, 28, and Zamri Wagiman.

Thursday, 16 December 2010

E&P deal ends Borneo border row

The deal, signed between Sultan of Brunei Hassanal Bolklah (right)
and Malaysian Prime Minister Najib Abdul Razak,
ends a disagreement between the two nations.

Malaysia and Brunei will jointly explore and produce oil and gas in two deep-water blocks off Borneo,ending a border dispute dating from 2003 which had held up exploration.

The agreement will see state-run producers Petronas and PetroleumBrunei, as well as US independent Murphy Oil jointly operate blocks CA1 and CA2 for the next 40 years, state-run news agency Bernama reported.

Murphy will take a 30% slice of CA2. Other details of the equity split, including that covering CA1, were not made public.

The two blocks are in the South China Sea, lying within the two nation's Commercial Arrangement Area along the Brunei-Sarawak maritime boundary off Limbang, the northernmost division of Sarawak.

The nations agreed in March last year that the disputed areas "are no longer part of Malaysia" but allowed Malaysia's state-owned Petronas to enter into new production-sharing contracts, AFP said.

Brunei had previously awarded exploration rights in one offshore block to French giant Total and another to Anglo-Dutch supermajor Shell.

But Petronas had awarded the same blocks to Murphy and its own subsidiary, Petronas Carigali.

Wednesday, 15 December 2010

Brunei-Malaysia Seal Oil Pact

Brunei and Malaysia yesterday agreed to jointly develop an oil exploration block, with officials of state-owned companies Brunei National Petroleum Company Sdn (PetroleumBRUNEI) and Petronas signing the agreement.

The Brunei deepwater block Production Sharing Agreement (PSA) for Block CA2 of the Commercial Arrangement Area (CAA) was inked in a signing ceremony between PetroleumBRUNEI and its contractors at the Istana Nurul Iman. His Majesty, the Sultan and Yang Di-Pertuan of Brunei Darussalam and Malaysian Prime Minister Dato' Laila Utama Dato' Seri Mohd Najib Tun Hj Abd Razak, who was here for a brief working visit, were present to witness the signing between PetroleumBRUNEI Chief Executive Officer Azren Taib, and Petronas President and Chief Executive Officer cum Chairman of Petronas Carigali Dato' Shamsul Azhar Abbas.

"This trip is significant because of the implementation of the understanding and agreement based on the Exchange of Letters back in March 2009, and based on our statement issued after our annual consultation last September. So this is a significant step forward because we have started CA1 and now CA2, and we look forward to more progress in the near future," Dato' Seri Najib said in response to a question asked by The Brunei Times on the significance of his day trip to Brunei was and how it would heighten bilateral relations.

Prior to his departure at the Brunei International Airport, he told reporters, "Today, the understanding has been achieved, where Block CA2 has been formally signed between Petronas and Brunei National Petroleum Company Sdn Bhd. With this, we see a bigger opportunity for Petronas to take part in the development of both areas."

He noted that His Majesty has also expressed satisfaction with the understanding that has been achieved, and there was a possibility that Petronas "might get better opportunities" in the future.

Regarding the four-eyed meeting held between His Majesty and prime minister Dato' Sri Najib at the Istana Nurul Iman, he said: "His Majesty has spoken of his wish to expand Brunei's investments in Malaysia, whether in Sabah, Sarawak or the Iskandar region, and to continue the development of a hotel in the vicinity of KLCC (Kuala Lumpur City Centre) in Kuala Lumpur."

"We acknowledged dialogue and discussions which are still being conducted between relevant ministers in various aspects, including improving connectivity between Sabah, Sarawak and its people," prime minister Dato' Sri Najib added.

When asked if the production sharing agreement for CA2 was based on a "50-50 per cent basis of oil exploration", the prime minister said: "There are terms and conditions, where both sides have agreed to it for 40 years".

A joint statement between the leaders of both countries said both leaders viewed the signing occasion as a "significant milestone" in enhancing cooperation between the petroleum authorities of the two countries in the area.

"They underscored the importance of the signing of the PSA for Blocks CA1 and CA2 of the CAA in carrying out the commercial arrangement aspect of the Exchange of Letters (EOL), and expressed satisfaction with the progress to date.

Apart from reiterating their view that there remains good potential for future cooperation in both countries, especially beyond Blocks CA1 and CA2, Sabah and Sarawak, they also noted the possibility of a joint venture in a "third country" in the exploration and exploitation of oil and gas, and the development of downstream industries.

In attendance at the signing ceremony were Crown Prince and Senior Minister at the Prime Minister's Office His Royal Highness Prince Haji Al-Muhtadee Billah and Minister of Foreign Affairs and Trade His Royal Highness Prince Mohamed Bolkiah.

The Deed of Ammendment of the Brunei deep water block PSA between PetroleumBRUNEI and its contractors for Block CA1 of the CAA was inked on September 21 in Putrajaya, Kuala Lumpur.

Tuesday, 14 December 2010

Six Petronas Carigali workers injured in platform fire

Six people were injured when fire broke out at the Bekok C platform operated by Petronas Carigali Sdn Bhd, 200km off Terengganu early today.

They were sent to the Kuala Terengganu Hospital while their 102 colleagues were evacuated to nearby platforms.

The blaze was contained by the platform’s emergency response team.

In a statement, the company said 108 personnel were at the platform when the incident occurred just after midnight.

It said Bekok C was undergoing a scheduled shutdown for planned maintenance activities at the time of the incident.

Petronas Carigali, which is in the midst of determining the cause of the fire, has notified the relevant authorities on the incident. — Bernama

Monday, 13 December 2010

Petronas denies report on RM8b bid for UK firm

National oil company Petroliam Nasional Bhd (Petronas) said it has not put in a 1.71bil (RM8.49bil) cash bid to buy Heritage Oil Plc, an independent upstream exploration and production company listed on the London Stock Exchange (LSE).

Petronas has never made a cash bid for Heritage Oil based in the United Kingdom, it said in a statement issued to StarBiz yesterday, following a foreign news report that Petronas would look into buying Heritage Oil.

UK's Daily Mail reported on Thursday that Petronas would soon put in a cash bid of 1.71bil to buy Heritage Oil, which would give it exposure to relatively low-risk exploration fields in Iraqi Kurdistan and Malta in the near term.

Any cash offer for Heritage would have to be agreed by chief executive Tony Buckingham, who sits on 29.7% of the (company's) equity, the report said.

The Daily Mail said Buckingham had pocketed 84.5mil in August after announcing a 1-a-share special dividend with the firm's 50% stake sale in a series of oil exploration assets in Uganda and would reap a further 51mil-plus should Petronas make a bid to buy Heritage Oil.

According to Bloomberg data, Heritage Oil's market capitalisation on the LSE was some 1.2bil yesterday.

The Daily Mail report also said Petronas president and chief executive officer Datuk Shamsul Azhar Abbas wanted to make a statement and buy something big, after Petronas lost out to Korea National Oil Corp's 1.8bil bid to buy Britain's Dana Petroleum Plc.

However, Petronas said it had never bid for Dana Petroleum.

Meanwhile, when contacted by StarBiz via email yesterday, Heritage Oil said it does not comment on market speculation.

Heritage Oil has a main listing on the LSE and a secondary listing on the Toronto Stock Exchange. Its core activity areas focus on Africa, the Middle East and Russia.

Its exploration projects are in the Kurdistan region of Iraq, Malta, Pakistan, Tanzania, Mali and the Republic of Congo.

According to the group's website, Heritage Oil was awarded a production-sharing contract (PSC) in Kurdistan by its government in 2007 and was appointed operator of the Miran Block in the southern part of Kurdistan. The licence area covers 1,015 sq km.

The website also said there was huge potential in the Kurdistan region for undiscovered hydrocarbons, estimated by the US Geological Survey at 40 billion barrels of oil and 60 trillion cu ft of gas.

Heritage Oil also entered into a PSC with the Maltese government in 2007 for a 100% interest in Areas 2 and 7 in the south-eastern offshore region of Malta. The licences cover some 18,000 sq km.

Petronas did not say in the statement if it would consider a proposal to buy Heritage Oil in the future.

Saturday, 11 December 2010

Saipem wins Sunrise deal

Saipem SpA, Europe's largest oilfield service provider, has won a $1 billion oilsands contract for the Sunrise Energy Project.

The contract is for the engineering, procurement and construction of two plants that will produce a total of 60,000 barrels per day of bitumen, Milanbased Saipem said Friday in a statement.

Saipem operates in Calgary through Snamprogetti Canada, which has been recruiting in Canada from its Calgary base. Saipem is 43 per cent owned by Italy's Eni SpA, Europe's fifth-biggest integrated oil and gas firm by market value.

The contract was awarded by Calgary-based Husky Energy Inc. for the oilsands project northeast of Fort McMurray.

BP PLC and Husky agreed this week to start work on the first phase of the $2-billion project, scheduled to start producing in 2014.

Snamprogetti first entered the Canadian market in 2005, after winning a contract with SNC Lavalin to build hydrotreaters for the Horizon oilsands project, owned by Canadian Natural Resources Ltd.

Friday, 10 December 2010

SapuraAcergy secures US$160m contract in Australia

SapuraCrest Petroleum Bhd has announced that SapuraAcergy Sdn Bhd (SASB) has accepted a US$160 million (US$1=RM3.13) contract from PTTEP Australasia (Ashmore Cartier) Pty Ltd (PTTEPAAA).

In a filing to Bursa Malaysia, SapuraCrest said the contract was for the provision of offshore transportation and construction activities for PTTEPAAA’s Montara Development Project in Australia.

SASB is a joint venture company equally owned by SapuraCrest and Acergy SA.

The Montara Development Project is located in the southern Timor Sea approximately 650km west of Darwin

Thursday, 9 December 2010

BASF, Petronas Plan 1 Billion-Euro Chemical Venture in Malaysia

BASF SE and Petronas are evaluating a 1 billion-euro ($1.3 billion) joint venture in Malaysia to produce specialty chemicals for customers in Asia.

A feasibility study is set to be completed in 2011, Ludwigshafen, Germany-based BASF said in a release today.

BASF is investing 2 billion euros in Asia and it aims to manufacture 70 percent of its sales there locally by 2020. For Petronas, the venture would highlight its strategy to expand downstream from oil and gas after holding Malaysia’s biggest initial public offering last month. The two companies first began partnering on projects in 1997 and jointly operate plants making acrylic monomers and butanediol.

“With the rapid growth of chemical markets in Asia Pacific, we are further expanding our specialty chemical business,” Martin Brudermueller, BASF’s board member overseeing Asian operations, said in the statement.

Wednesday, 8 December 2010

Petronas to develop west Malaysia LNG terminal

Malaysia's state oil company Petronas has signed a deal with its subsidiary Petronas Gas to develop a liquefied natural gas terminal on the country’s west coast.

According to NewYork-based Platts, two floating storage units will receive and store the LNG before it is regasified at the LNG terminal near Sungai Udang Port in Malacca. The gas will then be transported to other parts of Malaysia.

The regasification facilities will have a maximum capacity of 3.8mtonnes per year and the development project is expected to be completed by July 31, 2012.

The LNG terminal is eventually likely to receive LNG from Petronas’ share of Australia’s Gladstone LNG project in Queensland, which is targeting first cargoes in 2014.

However, the earlier start-up date of the Malacca project implies Petronas will initially have to look for alternative LNG imports to go to Malaysia’s new regasification terminal in Malacca.

A surge in Asian demand for LNG, which is transported to markets on LNG carriers, has bolstered the market over the third quarter.

Malaysia, along with Singapore and Vietnam, is ramping up demand as LNG is the cheapest way to meet carbon reduction targets.

Tuesday, 7 December 2010

Petronas Q2 net profit down on higher taxation

Petronas net profit fell marginally to RM11.88bil in the second quarter ended Sept 30 from RM11.97bil a year ago due to higher taxation but the group is optimistic of its outlook.

President and chief executive officer Datuk Shamsul Azhar Abbas said Petronas hoped to achieve a pre-tax profit of about RM80bil for the full financial year ending March 31, 2011 (FY11).

The national oil company posted a pre-tax profit of RM67bil in FY10.

Moving forward, if the same environment prevails until the financial year ends in March ... then easily we will beat last year's results, he said at a briefing to announce the group's quarterly results.

Nevertheless, Shamsul cautioned that the world's economy remained fragile and would have an impact on energy demand.

From left: Petronas executive vice president (Finance) Datuk George Ratilal, Petronas executive vice president (Gas and Power) Datuk Anuar Ahmad and Petronas president and chief executive officer Datuk Shamsul Azhar Abbas.
We are cautious but if the same economic environment prevails, I reckon we can beat last year's results.

Our third quarter performance is looking extremely good, especially based on current oil prices. However, we think comfortable levels for oil prices should be between US$70 and US$75 per barrel, based on fundamentals, he said.

According to its financial report, Petronas' tax expenses for the second quarter amounted to RM6.33bil.

The group's revenue for the quarter jumped 10.3% to RM57bil from RM51.7bil previously mainly due to higher realised prices of crude oil, condensates and energy commodities like liquefied natural gas (LNG).

Benchmark crude prices recovered over the period, with Dated Brent increasing by 12.6% to US$76.86 per barrel and West Texas Intermediate improved by 11.5% to US$76.04 per barrel while Tapis Official Selling Price rose to US$77.70.

Stronger oil prices in the second quarter were mirrored in the increase of prices in other energy commodities, particularly LNG, which surged by 46.5% to US$9.10 per mmbtu.

For the second quarter, Petronas's pre-tax profit grew 9.6% to RM18.2bil on the back of enhanced operational efficiencies and cost optimisation initiatives.

Its gross profit margin remained stable for the period at 37.7% against 37.1% a year ago while return on revenue stood at 31.9%.

For the six months ended Sept 30, Petronas' net profit jumped 18.8% to RM26.5bil from RM22.3bil previously.

It recorded a17.7% growth in revenue to RM115.5bil for the six-month period compared with RM98.2bil previously on higher realised prices of petroleum products and crude oil as well as improved sales volume of LNG, petrochemical products and natural gas.

Petronas paid a dividend amounted to RM30bil in FY10. The group expects to maintain a similar dividend for FY11. However, the payment will be dependent upon Petronas' growth requirements.

Exploration and production gross revenue grew 18.5% to RM20.5bil from RM17.3bil a year ago, driven by higher entitlement for natural gas and crude prices. Operating profit from the division grew 7.1% to RM10.6bil from RM9.9bil previously.

Gas and power contributed RM16.1bil to gross revenue, up 45% from last year due to higher realised prices and volumes sold for LNG as well as improvements in average sales gas delivery.

Meanwhile, its downstream operations' revenue dropped 6.2% to RM29.6bil from RM31.6bil previously due to stronger ringgit against the US dollar and lesser crude oil trading volume on the back of lower trading activities.

Going forward, Shamsul said the appreciation of ringgit remained a challenge for the group as Petronas operated mainly in US dollars.

He added that the group also needed to prop up its production, which had dropped compared with last year. We're lucky that the lower oil production is compensated by higher oil prices, he said.

To a question, Shamsul said the Petronas currently working in progress with the Economic Planning Unit and the Performance Management and Delivery Unit (Pemandu) to revise gas prices to be market-driven. However, he did not comment further.

As at Sept 30, a total of RM10.22bil in subsidies were borne by Petronas.

Earlier, Prime Minister Datuk Seri Najib Tun Razak announced several tax incentives, including a reduced income tax of 25% for marginal oil field development, to spur exploration and production of oil and gas in the country.

Shamsul said the incentives would boost Malaysia's average oil recovery rate to 30% from 26% now.

He said it would help to unlock some 1.7 billion barrels of oil in the country over the next 15 to 20 years.

Monday, 6 December 2010


The government has endorsed a new plan of tax incentives proposed by Petronas which will be incorporated in the Petroleum Income Tax Act, Prime Minister Datuk Seri Najib Tun Razak said today.

He said five new incentives were proposed to promote the development of new oil resources, facilitate the exploitation of harder-to-reach oil fields and stimulate domestic explorations.

"By lowering risks and increasing the rewards for investment, this initiative will potentially lead to additional petroleum-generated revenue of more than RM50 billion for Malaysia over the next 20 years," he said when announcing nine new developments and Entry Point Projects of the Economic Transformation Programme here.

Najib said there would be a notional trade-off of about RM8 billion in the form of revenue foregone from investment tax allowances, reduced tax and the export duty waiver for marginal fields.

"But the benefits far exceed this trade-off and these measures mark the kind of rational policy changes that will enable the private sector to play a greater role in our economic development," he said.

The five new incentives are:

* Investment tax allowance of up to 60 to 100 per cent of capital expenditure to be deducted against statutory income to encourage the development of capital-intensive projects that is in the area of enhanced oil recovery, high carbon dioxide gas fields, high pressure high temperature, deepwater and infrastructure projects for petroleum operations;

* Reduced tax rate to 25 per cent from the current 38 per cent for marginal oil field development to improve commercial viability of the development;

* Accelerated capital allowance of up to five years from 10 years, where full utilisation of capital cost deducted could improve project viability;

* Qualifying exploration expenditure transfer between non-contiguous petroleum agreements with the same partnership or sole proprietor to enhance contractors'' risk-taking attitude, which could encourage higher levels of exploration activity; and

* Waiver of export duty on oil produced and exported from marginal field development to improve project viability.

Sunday, 5 December 2010

Petronas Chemicals Q2 net profit down 8.9%

Petronas Chemicals Group Bhd registered a net profit of RM503mil for the second quarter ended Sept 30, 8.9% lower than RM552mil in the same period last year due to lower operating profit.

In a filing with Bursa Malaysia, Petronas Chemicals said its operating profit fell to RM572mil from RM814mil in the corresponding quarter last year.

Operating profit in the corresponding quarter included a once-off negative goodwill of RM175mil arising from the acquisition of Optimal Glycols (M) Sdn Bhd. In addition, the consolidation of Optimal Glycols and Optimal Chemicals (M) Sdn Bhd resulted in higher amortisation and depreciation expense by RM75mil in the current quarter, it said.

It said the above factors resulted in lower operating profit and contributed to a lower profit.

The group's revenue rose 10% to RM3.17bil from RM2.88bil in the previous corresponding period, driven by higher realised prices for most products as demand increased on the back of improved market condition.

This is further supported by higher sales volume with improved plant utilisation and additional volume contribution from acquisition of Optimal Chemicals in September last year, it said.

Its net profit for the first six months was RM1.19bil, up from RM980mil in the same period last year, supported by share of profits of associates and jointly controlled entities increasing by RM212mil, mainly due to an increase of profits in BASF Petronas Chemicals.

It registered higher revenue of RM6.3bil in the first six months, compa red with RM5.2bil.

Kenaikan 4-dalam-1: NGO, orang ramai kesal

Kenaikan harga barang kawalan seperti minyak, diesel, gas asli cecair (LPG) dan gula kesan daripada rasionalisasi subsidi mendapat bantahn meluas daripada pertubuhan bukan kerajaan (NGO).

Penasihat Gabungan Persatuan Pengguna-Pengguna Malaysia (FOMCA), Prof Datuk Hamdan Adnan menyifatkan kenaikan harga minyak RON95 adalah tidak wajar kerana minyak merupakan nadi kepada rakyat.

"Kalau gula naik, tidak apalah, tapi kalau harga minyak naik, rakyat di negara ini akan makin terdesak kerana minyak menjana pembangunan negara.

"Rakyat banyak menggunakan bahan tersebut dan pertimbangan mengenai kenaikan harga minyak adalah perlu," katanya kepada Bernama.

Beliau berkata kerajaan sewajarnya mewujudkan satu mekanisme dalam mengawal harga minyak supaya golongan sasaran saja yang menikmati subsidi berkenaan.
Cuepacs: Golongan rendah terjejas

Beliau diminta mengulas mengenai kenaikan harga keempat-empat barangan itu yang diumumkan kerajaan hari ini.

Berkuatkuasa mulai esok, harga petrol RON95 dinaikkan sebanyak 0.05 sen kepada RM1.90 seliter, diesel dari RM1.75 kepada RM1.80 seliter, harga gas asli cecair (LPG) dinaikkan 0.05 sen kepada RM1.90 manakala harga gula dinaikkan sebanyak 0.20 sen menjadikan harga gula adalah RM2.10 untuk sekilo.

Pandangan Hamdan itu turut dikongsi oleh Setiausaha Kerja Persatuan Pengguna Islam Malaysia (PPIM), Datuk Nadzim Johan yang mengulangi pendiriannya sebelum ini mengenai kenaikan harga gula dan minyak.

Sementara itu, Presiden Kesatuan Pekerja dalam Perkhidmatan Awam (CUEPACS), Omar Osman berkata, pihaknya bimbang mengenai kenaikan harga semua barangan berkenaan terhadap golongan berpendapatan rendah.

"Kita bimbang dengan kenaikan ini (harga barangan) akan menjejas golongan berpendapatan rendah terutamanya yang bekerja dengan kerajaan," katanya.

Naib Presiden PAS, Salahuddin Ayub pula mempersoalkan kewajaran kerajaan menaikkan harga bahan api petrol dan diesel yang dikatakan membabitkan petrol RON 95.
Rakyat marhaen menderita

Harakahdaily melaporkan Salahuddin sebagai berkata RON 95 adalah untuk rakyat yang perlu dikekalkan harganya supaya tidak membebankan rakyat yang menjadi pengguna terbanyak.

Kata Salahuddin (kanan), kenaikan itu sangat mengecewakan.

"Sikap PAS, keutamaan mesti pada rakyat, ambil kira rakyat dahulu sebelum yang lain-lain," katanya.

Ahli Parlimen Jerai, Mohd Firdaus pula berkata, rakyat marhaen paling terkesan dengan kenaikan itu kerana mereka adalah majoriti pengguna petrol RON95.

Sambil menyifatkan kenaikan mengejut itu sebagai 'gila', beliau mengharapkan rakyat menolak Umno BN yang secara terang terangan tidak mengutamakan rakyat terbanyak.

"BN zalimi rakyat marhaen, tak peduli kesusahan rakyat," katanya.

Gamis: Tarik subsidi kroni, bukan rakyat

Sementara itu, Gabungan Mahasiswa Islam Semalaysia ( GAMIS ) juga kesal dengan kenaikan harga barangan asas pengguna yang menjadi permintaan harian rakyat iaitu petrol, gas, diesel dan gula.

Menurut, presidennya, Ahmad Syazwan Muhammad Hasan kenaikan ini akan menimbulkan reaksi yang kontradik kepada keputusan kerajaan tersebut.

“Alasan yang digunakan ialah perlu pelarasan fiskal dalam perbelanjaan negara khususnya dalam mengurangkan perbelanjaan. Persoalnnya kenapa subsidi syarikat kroni dalam IPP berjumlah RM19billion tidak dipotong?

“Kenapa mahu bina menara 100 tingkat yang kosnya mencacah RM 5billion yang akhirnya rakyat tak dapat keuntungan darinya. Kenapa kos permulaan penubuhan PEMANDU di bawah JPM berjumlah RM66juta yang hanya diperolehi oleh orang-orang tertentu sahaja?” soalnya dalam satu kenyataan.

Menurut Gamis, sepatutnya pengurangan fiskal mesti dibuat dalam pentadbiran kerajaan, bukannya dengan menarik hak rakyat marhaen.

Katanya, mahasiswa merasakan alasan untuk mengurangkan subsisdi bagi bahan keperluan asas rakyat ini sangat tidak masuk akal.

“Dimana slogan rakyat didahulukan yang dilaungkan sebelum daripada ini sekiranya perkara keperluan asas rakyat juga boleh diperdagangkan.

Katanya, soal yang lebih besar bila harga petrol dan diesel naik akan menyebabkan harga barangan lain akan naik secara lansungnya. - MalaysiaKini

Saturday, 4 December 2010

Petronas to Pay $9.5 Billion Shell-Sized Dividend as Oil Production Falls

Petroliam Nasional Bhd. will pay the government a dividend of about 30 billion ringgit ($9.5 billion) this fiscal year and focus investment on extending the life of the nation’s reserves, Chief Executive Officer Shamsul Azhar Abbas said.

The dividend -- approaching the $10.5 billion payout by Royal Dutch Shell Plc, a company with sales almost four times larger -- will be unchanged from the past two years. After net income fell 23 percent in the 12 months ended March 31 because of declining energy prices, Shamsul said the company needs to invest more to boost domestic oil and gas production.

“We expect to maintain the dividend at the same amount for the current financial year ending March 2011,” Shamsul, 58, said on Nov. 8 in an e-mailed reply to questions from Bloomberg News. “Over the years, we have been able to uphold our obligations to return value to our shareholders while at the same time maintaining healthy capital expenditure levels.”

Petroliam Nasional, known as Petronas, manages all the petroleum resources in the country, Southeast Asia’s biggest oil and gas producer after Indonesia. Shamsul said on July 1 he plans to increase capital spending 7.8 percent this year to 40 billion ringgit, following two years of falling production.

Malaysia’s government, which had a budget deficit at a 22- year high of 7 percent of gross domestic product last year, depends on oil and gas revenue for 40 percent of its income, according to a finance ministry report on Oct. 15.

Ratings Risk

Shell, based in The Hague, paid its 2009 dividend on sales of $278.2 billion. Kuala Lumpur-based Petronas reported 12-month sales equal to about $70 billion.

If it can’t cover its dividends and investment spending from its cash-flow this financial year and next, “then we’ll take this as an indication that the government may strip Petronas’s cash reserves in the event of a sovereign crisis,” Arnon Musiker, a Sydney-based Fitch Ratings analyst, said in a telephone interview. “We could reduce Petronas’s foreign currency rating by one notch to the Malaysian sovereign.”

Malaysia has crude oil reserves to last 24 years and natural gas for 38 years, the finance ministry said on Oct 15. Production fell to the equivalent of 1.63 million barrels of oil in the year to March 31 from 1.66 million a year earlier, according to Petronas’s 2010 annual report.

“Our domestic investments are primarily aimed at boosting the country’s maturing reserves, maintaining our production rate and prolonging our reserves life,” said Shamsul.

Riskier Debt

Shamsul became CEO in February, replacing Hassan Marican, who led the company for 15 years. He joined Petronas in 1975 and holds a master’s degree in energy management from the University of Pennsylvania in Philadelphia. Shamsul stepped down in January 2009 as chief executive of subsidiary MISC Bhd., the world’s biggest owner of liquefied natural gas tankers. MISC shares rose 44 percent on the Kuala Lumpur stock exchange during Shamsul’s tenure, seven times faster than the benchmark KLCI index.

Investors regard Petronas’s debt to be a riskier bet than similarly-rated ConocoPhillips, the third-largest U.S. oil producer, the spreads on the state-owned explorer’s bonds and credit-default swaps show. Petronas and ConocoPhillips are rated A by Fitch, the sixth-highest rank, and one level above the Malaysian government itself.

S&P ranks Petronas’s debt A-, the same as Malaysia and its seventh-highest investment grade. The company’s stand-alone credit profile, or its rating independent of the sovereign, is three notches higher.

Government Intervention

“The company remains sensitive to government intervention,” Standard & Poor’s said in a Nov. 4 report. If Petronas can’t cover its investment needs and dividend payouts from cash generated from its operations, this may “pressure” its credit profile, S&P said.

The extra yield over similar-maturity Treasuries investors demand to own Petronas’s $3 billion of 5.25 percent bonds due August 2019 is 125 basis points, according to Royal Bank of Scotland Group Plc prices on Bloomberg. That’s wider than the extra yield of 79 basis points for ConocoPhillips’ $2.25 billion of 5.75 percent notes due February 2019, Hapoalim Securities USA Inc. prices show.

Credit default swaps insuring Petronas’s debt against default have fallen 10 basis points this month to 80 basis points, higher than the swaps on ConocoPhillips at 39 basis points.

Debt Load

Petronas has the equivalent of $15.3 billion of bonds and loans maturing through 2026, according to data compiled by Bloomberg. Cash and cash equivalents were 100 billion ringgit and borrowings 51.3 billion ringgit on June 30, according to the fiscal first-quarter earnings statement.

“If oil prices don’t remain above fiscal 2010 levels and the operating margin that all oil and gas companies face continues to decline, Petronas may need to borrow money or use existing cash reserves to continue paying dividends at current levels,” Andrew Wong, a Singapore-based credit analyst at S&P, said in a telephone interview.

Crude in New York averaged $78.64 a barrel this year as of Nov. 26, or 30 percent more than a year earlier, boosting Petronas’s profit. Net income in the three months ended June 30 rose 60 percent to 12.3 billion ringgit, the company said Oct. 4. Petronas is due to report second-quarter earnings today.

A recovery in oil prices and proceeds from a share sale by the petrochemicals unit of Petronas may help fund exploration. Petronas Chemicals Group Bhd. raised $4.1 billion in Malaysia’s biggest initial public offering this month. About 72 percent of the proceeds will go to the parent, according to the sale document released Nov. 1.

Petronas Chemicals

Petronas Chemicals shares rose 1.7 percent to 5.40 ringgit yesterday, after gaining 2.1 percent on their Nov. 26 debut

Malaysia Marine & Heavy Engineering Bhd., a rig-building arm of Petronas-controlled MISC, raised $646 million in a share sale in October. The parent has a total of six units on the Kuala Lumpur stock exchange, including Petronas Dagangan Bhd., Petronas Gas Bhd. and KLCC Property Holdings Bhd.

Shamsul said it’s too early to plan listings of more units and ruled out the possibility of selling shares in Petronas itself.

“As the national corporation vested with the entire ownership and control of Malaysia’s petroleum reserves, Petronas remains a key national asset of strategic importance,” he said. “Listing of Petronas as a group is not a consideration.”

Shamsul said the government understands Petronas’s spending needs and financial commitments.

“Dividends to the government are decided by the board, taking into account a number of factors, including the financial performance of Petronas, its capital expenditure requirements and other financial commitments,” Shamsul said. “Over the longer term, payments will still be decided based on those factors, taking into account investment requirements to sustain our business growth. This is well understood by our shareholder.” - Bloomberg

Friday, 3 December 2010

Petronas Trading Ltd. (GDP) recorded a revenue increase of 10.3 per cent to RM10.9 billion

Petronas Trading Ltd. (GDP) recorded a revenue increase of 10.3 per cent to RM10.9 billion in the first half of the financial year ended 30 September.

The increase in revenue Petroleum Nasional Bhd subsidiary. (Petronas) is driven to positive growth in sales volume and average selling price of oil higher.

Managing Director, Amir Hamzah Azizan said the GDP growth of 6.9 percent due to increased average selling prices due to higher oil prices on global markets.

"The emphasis on marketing strategy also has an impact through an increase of 2.8 per cent of turnover in the period," he said in a press release today.

Meanwhile, gross profit in GDP rose marginally by 4.1 per cent to RM561.5 million due to lower revenue for the product Mogas, Asphalt and lubricants.

However, these problems can be offset by profits generated from other products such as diesel and aviation fuel and tighter control of operations.

Amir Hamzah said, the GDP will remain committed to developing long term business to enhance returns to shareholders.

"Despite the economic slowdown earlier this year, PBD was still able to open a petrol station to-950 to support the development of the retail sector for the last quarter.

"We are optimistic to maintain status as a leading local petroleum retail industry," he said.

Thursday, 2 December 2010

Iraq Says to Sign Shell, Mitsubishi Deal by January

Iraq will sign by the end of January an agreement with Royal Dutch Shell Plc and Mitsubishi Corp. for the capture of associated gas at oil fields in the country’s south, the director-general of Iraq’s South Gas Co. said.

The agreement will be signed “either next month or the one after at the most,” once legal details are resolved, Ali Hussain Khudair said today in an interview in Basra, Iraq.

The government gave initial approval on June 29 for the creation of a joint venture with Shell and Mitsubishi to be called Basra Gas Co. The venture would be owned 51 percent by state-run South Gas, with Shell holding 44 percent and Mitsubishi the remaining 5 percent.

A foreign consulting firm is working to settle issues related to the venture’s establishment, Khudair said, without identifying the company.

“Once the agreement is signed, it will be referred for approval to the Iraqi Council of Ministers,” he said.

Iraq wants foreign investors to help it increase production of oil and gas to stimulate a recovery after years of conflict and economic sanctions. Iraq has the world’s fifth- largest oil reserves, and its gas reserves rank fifth in size in the Middle East, according to data from BP Plc.

Wednesday, 1 December 2010

Petronas hands Total deep-water patch

Total is primed to explore the deep waters off Sarawak after Malaysian state-run company Petronas awarded Block SK317B to the French giant.

Under the terms of the production sharing contract, Total will operate the deep-water Block with an 85% stake, while Petronas Carigali will hold the remaining 15% interest.

Total is committed to drilling one exploration well, shoot 400 square kilometres of new 3D seismic data and reprocess 500 line kilometres of existing 2D seismic data.

Petronas said the minimum financial commitment is valued at $31 million.

Block SK317B lies in the eastern part of the Sarawak basin in water depths of between 200 and 1000 metres.

Previous exploration efforts were confined to the southern sections of the original Block SK317 and led to the discovery of the Layang gas field. The deeper water area remains mostly under-explored due to the different operational requirements that come with deep-water conditions, said Petronas.

Harga petrol RON97 naik 15 sen lagi

Harga petrol RON97 akan dinaikkan 15 sen lagi kepada RM2.30 seliter berkuatkuasa 1 Disember ini, mengikut sumber. Pengumuman rasmi dijangka akan dibuat lewat hari ini. Bagaimanapun harga petrol RON 95 kekal tidak berubah pada RM1.85 seliter. - MalaysiaKini

Tuesday, 30 November 2010

Petronas To Help Pengerang/Teluk Ramunia Develop Into Regional O&G Hub

Petronas will take the lead in developing Pengerang and Teluk Ramunia, in South East Johor, into the region's oil and gas hub.

Prime Minister Datuk Seri Najib Tun Razak said although Petronas and its partners have invested in the hub, the government would provide the necessary infrastructure facilities.

"It will be Petronas's investment with international partners, the government can look into the infrastructure support but the actual investment will be borne by Petronas and its partners.

"It (Pengerang and Teluk Ramunia as an oil and gas hub) will be a major development, it will serve the entire Asia Pacific region," he told reporters after opening Asiaflex Products Sdn Bhd in Tanjung Langsat, near Pasir Gudang here Thursday.

The 150 million euro plant, owned by french-based Technip, is designed to construct high-technology flexible pipe and umbilical used by the deepwater oil and gas fields in Asia Pacific and the Middle East.

The Prime Minister also said Technip's decision to locate its plant in Malaysia proved that the country was recognised as a hub for deepwater oil and gas hubs in the Asia Pacific region.

"We are already considered as a hub," he said, adding that with the implementation of the National Key Economic Areas for oil and gas, Malaysia would be a major hub for the industry.

The 20-hectare plant would be the only plant which would produce flexible pipe and umbilical in Asia Pacific, fulfilling orders from China and major oil and gas companies like ConocoPhilips.

Najib also said Technip was impressed with the local workforce quality which was at par with the very best in the world.

"The performance of our workers has impressed Technip," he said.

Petronas Chief Executive Officer Datuk Shamsul Azhar Abbas, who was also present during the press conference, said the development of Pengerang and Teluk Ramunia as a major regional oil and gas hub was progressing well.

Also present were Menteri Besar Datuk Abdul Ghani Othman, Chief Executive Officer of Technip Thierry Pilenko and President of Technip Malaysia Bernard Di Tullio.

On Ireland's banking crisis and its possible repercussion on the Malaysian economy, Najib, who is also Finance Minister, said the crisis could have a worldwide impact and not only on Malaysia.

But, he said the situation in Ireland was being contained at the moment.

He also said a strong recovery in the United State's economy would help Malaysia because many factories and multinationals in this country were geared towards exporting their products to the United States.

"So, if there is a big external demand and we are a major trading nation (with the US), it certainly will help a few percentage points in terms of Gross Domestic Product growth," said the Prime Minister.


Monday, 29 November 2010

MISC net profit quadruples to RM369.4mil for Q2

MISC Bhd posted a jump in net profit to RM369.4mil for the second quarter ended Sept 30, 2010 against RM82mil a year ago due to improved performance in the restructured liner business and increased profitability in the heavy engineering business.

It told Bursa Malaysia yesterday that revenue for the period was RM3.09bil versus RM3.53bil a year ago while earnings per share were 8.3sen against 2.1sen

The group proposed a dividend of 15 sen per share for this quarter, the same as last year's same quarter.

It said MISC expected improvement in freight rates from last year's depressed levels.

However, the competitive landscape in the shipping industry remains challenging with volatility in rates over the short term.

In addition, prospects in the offshore and heavy engineering segments have significantly improved, it said.

It added that in line with the recent listing of Malaysia Marine & Heavy Engineering Holdings Bhd on Bursa Malaysia, contribution from the heavy engineering segment would be diluted to 66.5%. - The Star

Sunday, 28 November 2010

Positive debut for Petronas Chemicals

Shares of Petronas Chemicals Group Bhd closed at RM5.31 on the stock's debut as South-East Asia's largest initial public offer (IPO) on the Main Market yesterday, 11 sen higher than its IPO price of RM5.20 per share.

It was the most active on the stock exchange yesterday with a total of 637 million shares changing hands, pushing the trading value of Bursa Malaysia to RM4.73bil, the highest this year after reaching RM2.35bil on Nov 12.

Based on its closing price, Petronas Chemicals' market capitalisation is now RM42.48bil.

The counter opened at RM5.71, registering a premium of 51 sen per share.

The group is Petroliam Nasional Bhd's (Petronas) second wholly-owned unit to be listed this year, following last month's listing of heavy engineering unit Malaysia Marine and Heavy Engineering Holdings Bhd.

Petronas Chemicals will be included as a constituent of the FBM KLCI on Monday.

Speaking at a press conference after the listing yesterday, non-executive director Datuk George Ratilal said the group was very satisfied with the opening price.

It is an excellent price, opening almost 10% above the IPO price, he said, adding that the group expected to raise RM12.8bil from the listing and part of the proceeds would be used for working capital and capital expansion.

Asked if there would be more capital raising from the group, non-independent non-executive chairman Datuk Wan Zulkiflee Wan Ariffin said there was currently no plan to do that.

Our balance sheet is still very strong and more than adequate for our business strategies in the next few years, he said.

Going forward, he said, the group was very bullish and excited with the business as the industry was heading into an up-cycle phase.

We will increase utilisation of our plants going forward and will look for new opportunities. Having said this, we are targeting to reach more than 90% utilisation for the plants in 2011 from the current 80%, he said.

Friday, 26 November 2010

Malaysia Set To Become One Of World's Deepwater O&G Hubs

Malaysia will soon become one of the world's four deepwater oil and gas hubs, standing shoulder-to-shoulder with industry leaders like the United States, Brazil and Europe.

Prime Minister Datuk Seri Najib Tun Razak said the Asia-Pacific region has seen increased interest in deepwater development and Malaysia is already at the forefront of this development.

"Already we are an established hub in the subsea industry and soon we will become one of the world's four deepwater oil and gas hubs, with industry leaders such as the United States, Brazil and Europe," he said when opening Asiaflex Products Sdn Bhd plant, owned by Technip, at Tanjung Langsat, near Pasir Gudang, Thursday.

The plant, the first in the Asia-Pacific region, will produce high-tech flexible pipes and umbilicals for deepwater oil and gas fields in the region and the Middle East.

For a relatively small country like Malaysia, Najib said it was an achievement to be proud of as much of the country's growth in this area occurred organically through local talents in partnership with glocal industry players.

The Malaysian oil and gas industry, he said, has grown at a remarkable pace and presently the sector is an important segment of the national economy, with upstream and downstream businesses contributing RM17 billion to the economy last year.

"Over the years, Malaysia has grown from being solely a supplier of crude oil and gas to become a value-added provider of equipment and services, both domestically and throughout the Asia-Pacific region," said the prime minister.

He said that with Asiaflex's plant in Tanjung Langsat, Malaysia will now be home to the Asia-Pacific region's very first flexible pipe manufacturing facility, which will further entrench the country's leadership in the deepwater market and expand its foothold in the offshore oil and gas sector.

Najib said Asiaflex's 150 million euro facility in Tanjung Langsat is Technip's third plant in the world, joining two others in France and Brazil.

"This is testament to the strong interest that businesses have for this special part of Malaysia and the relatively early success we have been experiencing since the formation of Iskandar Region," he said.


Strong debut seen for Petronas Chemicals

Perception based on MHB’s strong showing and CIMB’s stabilising role

Petronas Chemicals Group Bhd would likely see a strong debut tomorrow and its share price may range between RM5.50 and RM5.70 on its first day of trade, according to analysts.

Kenanga Investment Bank Bhd research head Yeonzon Yeow said a 10% premium on its first-day trade on the Main Market of Bursa Malaysia would be commendable, above its offer price of RM5.20 per share. Under Petronas Chemicals' initial public offering (IPO), retail investors paid RM5.04 per share while institutional investors paid RM5.20 per share.

Petronas Chemicals is the second Petroliam Nasional Bhd (Petronas) owned unit to be listed this year, following last month's listing of the group's heavy engineering unit Malaysia Marine and Heavy Engineering Holdings Bhd (MHB).

MHB, which ended 19% above its offer price of RM3.80 on the first day of trading, has somewhat sustained its higher trading price in the past month. Its share price ended higher by 2 sen at RM4.50 yesterday.

Therefore, Petronas Chemicals' share premium upon its debut would likely be sustained over the short term as seen with MHB, said analysts.

Moreover, the company's share price is expected to remain stable over the short term given that CIMB Investment Bank Bhd, the principal adviser and managing underwriter, has agreed to buy up to 372 million shares in the company from the open market to stabilise the stock post listing.

CIMB has been designated as the so-called stabilising manager for the IPO and would carry out its mandate to keep the stock stable for a maximum of 30 days post listing.

We expect Petronas Chemicals' price to remain stable (over the long term) driven by an anticipated positive market performance over the next 12 months, TA Securities research head Kaladher Govindan told StarBiz.

Analysts said the stock would generate keen interests among local and foreign investors, driven by its potential earnings and dividend payout ratio.

Maybank Investment Bank Research said that Petronas Chemicals could be the biggest FTSE Bursa Malaysia KL Composite Index (FBMKLCI) stock within the next five years.

In the next upcoming cyclical peak, the company is likely to surpass its previous net income record of RM3.9bil achieved in financial year ended March 31, 2008 (FY2008). With its leaner fixed cost structure, Petronas Chemicals can easily render the highest absolute net profit of any KLCI member, it said in a report last Friday.

In a media statement yesterday, Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff said Petronas Chemicals' listing was a positive contribution to the local capital market as it would bring about a potential re-rating of the oil and gas sector and, in turn, boost its valuations further.

He added that Petronas Chemicals offered a wider investment opportunity to local and international investors and the listing boded well with the bourse's efforts of boosting market liquidity.

After its public listing, Petronas Chemicals would be included as a constituent of the FBMKLCI. It would be added to the index effective Monday with a total share issue of 8 billion and an investability weighting of 30%.

Petronas Chemicals' market value would be RM41.6bil based on the institutional price, making it one of the largest petrochemical producers in South-East Asia.

According to research houses, the target price for Petronas Chemicals ranges from RM5.51 to RM6.70.

Maybank said Petronas Chemicals was worth RM6.64 per share based on price-earnings ratio (PER) and RM6.70 per share based on discounted cash flow valuations.

This implies FY2012 PER of 13.1 times which is undemanding relative to its strong growth prospects (+26% 3-year earnings compound annual growth rate), it said.

OSK Research Sdn Bhd's target price for the company was RM5.51 based on a PER of 16 times for FY2012 while JF Apex Investment Research's target price was RM5.70.

This PER is slightly above its close peer average of 15 as the company deserves such valuations since it gets strong suppport from Petronas group, especially in terms of low feedstock prices, which make up close to 40% of its total cost, OSK Research said in a report last week.

The research houses also highlighted Petronas Chemicals' strong cashflow and attractive dividend payout ratio of 50%, which was considered the highest compared with peers like Saudi Basic Industries Corp, Thailand's PTT Chemical Public Co Ltd and India's Reliance Industries Ltd.

Maybank said Petronas Chemicals' capacity to pay dividends was substantial with projected free cashflow yields of 10.7%-19% in FY2011-13. - The Star

Wednesday, 24 November 2010

Petronas Carigali Overseas Finds Oil At Ham Rong Field PetroVietnam

Petronas Carigali Overseas Sdn. Bhd. and its partners have found oil at Ham Rong field in Blocks 102 and 106 offshore Vietnam, state-run Vietnam Oil and Gas Group, or PetroVietnam said Monday.

The Ham Rong field has crude oil reserves of 138.11 million barrels and gas reserves of 4.94 billion cubic meters, of which 43.43 million barrels of crude and 1.55 billion cubic meters of gas are recoverable, PetroVietnam said in a statement.

First oil production from the field is scheduled for the third quarter of 2014, it said.

Petronas Carigali Overseas holds a 50% stake in the blocks, while PetroVietnam Exploration & Production and Singapore Petroleum Co. each have 20% and ATI Petroleum Inc. has 10%.

TOTAL Expands in Malaysia

Integrated oil and gas company TOTAL S.A. has agreed to acquire an 85% interest in Block SK317B, offshore Malaysia. The company has entered into a pact with the national oil company Petronas for interest in the Malaysian assets encompassing an area of 700 square kilometers.

Under the terms of the agreement, TOTAL will operate the Block alongside its partner Petronas Carigali holding the remaining 15% interest.

The Block SK317B is located near Sarawak in the water depths of 200 to 1,000 meters. The acquisition of these assets will benefit TOTAL as the exploration work at the site includes seismic data acquisition and deep offshore exploration drilling, in which TOTAL enjoys thorough expertise.

This acquisition reflects TOTAL’s strategy to expand its exploration acreages in new areas while developing its partnerships with national oil companies such as Petronas.

TOTAL already has operations in Malaysia in Blocks PM303 and PM324 (70% interest), located offshore Peninsular Malaysia, in partnership with Petronas Carigali (30%). The company has Production Sharing Agreement signed in 2008, which covers the Blocks PM303 and PM324. The company started a seismic study of these two blocks in 2009 and plans to start high-pressure exploration drilling campaign in 2011.

France-based TOTAL is among the top five publicly traded global integrated oil and gas companies based on production volumes, proved reserves, and market capitalization. TOTAL has operations in more than 130 countries across five continents with approximately 97,000 employees. The company’s major integrated oil and gas peers include BP Plc., Exxon Mobil Corp. and Chevron Corp.

We continue to like TOTAL for its positive production growth profile, attractive returns and balance sheet strength. The company has one of the best upstream exposures in the industry besides, being the largest European refiner. The company’s ongoing alternative energy projects add a silver lining to its already positive profile.

Monday, 22 November 2010

Gazprom takes stake in Petronas's Cuba project

Gazprom Neft the oil arm of Russian energy company Gazprom , is to take a 30 percent stake in a Cuban oil project, owned by Malaysia's Petronas's, to explore and develop four blocks in the Gulf of Mexico.

Gazprom Neft said on Tuesday its financial contribution to the project would be proportional to its 30 percent share, but gave no further details. It will also contribute towards costs Petronas has incurred to date.

Cuba estimates it has 20 billion barrels of oil in its section of the Gulf of Mexico that abuts the oil-rich U.S. and Mexican zones.

Cuba's portion of the Gulf of Mexico has been divided into 59 blocks, of which 21 have been contracted out to companies including Spanish oil giant Repsol and its partners, Malaysia's Petronas, Brazil's Petrobras, Venezuela's PDVSA and PetroVietnam.

Gazprom Neft, Russia's fifth largest oil producer, is seeking to raise crude output to 100 million tonnes per year by 2020, from around 70 million presently.
In addition to the Cuba project, Gazprom Neft is also exploring and producing oil in Equatorial Guinea, Iran and Venezuela.

Petronas, Malaysia's state oil company, is looking to focus on domestic projects and trim stakes in certain oversees operations.

In September, for example, Petronas sold its 5 percent stake in an Australian liquefied natural gas project to French group Total.

There have been reports it will also divest its 14.5 percent share in Cairn India Ltd

Saturday, 20 November 2010

Petronas to announce specific incentives for O&G sector

Petronas will be announcing more incentives for the oil & gas industries soon as the government sets the stage for the country to be a regional hub for oilfield service, says Minister in the Prime Minister’s Department Senator Datuk Seri Idris Jala.

“There are a lot of opportunities for local players to participate in this – be it in the form of CONSTRUCTION [] work, or providing related oil and gas services. All of this will come into play,” he said on Tuesday, Nov 16.

While Jala did not provide a timeframe, he said the incentives companies could expect were the renegotiation of certain contracts for renewal like for those production sharing contractors such as Shell and Exxonmobil.

He was speaking at the opening of Schlumberger Ltd’s financial hub in Kuala Lumpur which will provide employment for about 400 people by next year.

Jala, who is also the Performance Management & Delivery Unit chief executive officer, said that the nine Entry Point Projects under the ETP also targeted multinational companies to locate their global or regional headquarters in Greater Kuala Lumpur or Klang Valley.

Two rounds of Steering Committee meetings have already taken place and many initiatives are in various stages of progress towards attracting more MNCs to relocate their headquarters to Kuala Lumpur.

As for the Schlumberger Financial Hub, it is part of the government’s Entry Point Project to attract 100 multinational companies to set up their global or regional headquarters in Greater Kuala Lumpur or Klang Valley under the Economic Transformation Programme (ETP) recently announced by Prime Minister Datuk Seri Najib Razak.

Their financial hub will provide financial and accounting services to Schlumberger’s businesses in Asia Pacific, Middle East, European and African regions and 75% of its employees hired here will be Malaysians.

“Malaysia was the obvious choice for this new facility. The country offers highly qualified professionals with excellent customer service attitudes,” said Schlumberger’s chief financial officer Simon Ayat.

“Malaysia is open to attracting knowledge based activities, offers an excellent business environment with the government committed to the development of education as well as the country’s infrastructure,” Ayat added.

Schlumberger Limited, is a United States’ based oil and gas services company which had been present in Malaysia since 1935 and has offices for its other business chapters in Kemaman, Miri and Labuan.

Friday, 19 November 2010

Woodside, Petronas Close to Deal on LNG Cargoes

Woodside Petroleum Ltd. may be close to a deal to source six liquefied natural gas cargoes worth up to an estimated A$160 million from Malaysia’s Petroliam Nasional Bhd., or Petronas, as it seeks to cover sales commitments from the delayed Pluto project, the Australian Financial Review reported, without citing sources.

Analysts expect the cost of the A$13 billion project will be increased by A$200 million to A$700 million, while the timing of first production may be pushed out to mid-2011, the report said.

Saturday, 13 November 2010

Australia approves Shell's giant floating LNG plant

Australia Friday gave environmental approval for Shell to install a revolutionary floating liquefied natural gas (LNG) plant which is set to become the world's longest vessel.

Environment Minister Tony Burke gave the green light with conditions aimed at protecting the area, off sparsely populated north-western Australia, from damage including oil spills.

"This is a large-scale project that is using world-first technology. We can't risk getting it wrong, so I have set very strict conditions to help ensure our precious marine environment will be protected," he said.

The under-design structure, the length of five football pitches, will cool gas from Shell's Prelude field into liquid for shipping. The energy source is on track to become a major industry in Australia.

Shell said the floating, ship-shaped structure, which will reportedly cost 5.0 billion US dollars, would be some 480 metres (1,600 feet) long, 75 metres wide and weigh about 600,000 metric tons.

"Deploying our floating LNG technology reduces the project's cost and environmental footprint," said Ann Pickard, chairwoman of the Anglo-Dutch company's Australian wing.

"It removes the need for offshore compression platforms, long pipelines to shore, nearshore works such as dredging and jetty construction, and onshore development such as building roads, laydown areas and accommodation."

A Shell spokeswoman said talks on a production licence were "progressing well" and a final investment decision was expected to be made next year, with the platform scheduled to open in 2016.

She confirmed comments by senior Shell official Malcolm Brinded, who said last year that the plant would be "significantly the largest vessel in the world when it's constructed".

The platform, nearly 50 percent longer than the USS Enterprise aircraft carrier, is being designed by France's Technip and will be built by South Korea's Samsung, who are contracted for "multiple" editions.

The plant will be towed to each spot and temporarily anchored to the seabed. Reports said it would be designed to withstand extreme weather such as a one-in-10,000-year cyclone.

Although the technology is commercially untested, the project would have the capacity to produce about 3.5 million tonnes of LNG per year, as well as liquefied petroleum gas over its 20-year lifespan.

The development is particularly relevant for Australia which is believed to have stranded gas reserves worth about 1.0 trillion Australian dollars (890 billion US).

"By reducing the cost of a development, floating LNG can provide a means of developing smaller and more remote offshore gas resources that may otherwise stay in the ground," a Shell statement said.

Western Australia is the centre of Australia's booming LNG industry which some analysts believe is on course to rival Qatar, the world's biggest producer.

Burke also said Shell would also have to address greenhouse gas, light and noise pollution and would pay for any damage caused by spills, following a major leak from a Thai-owned offshore oil rig off northern Australia last year.

Shell this year sealed a joint takeover of Australian coal-seam gas company with PetroChina. It is also a joint venture partner in the Timor Sea's Greater Sunrise project, along with Woodside, ConocoPhillips and Osaka Gas.

The consortium has also suggested a floating platform for the project, but has met with stiff resistance from East Timor's government, which prefers an onshore facility.

Shell's spokeswoman said called the Prelude plant "the first cab off the rank", while one for Greater Sunrise was "potentially the second".

"I'm sure once it's done and dusted, people will feel a lot more comfortable," she said, referring to the first floating plant.

"You might expect to see a few other people being willing to invest."