Thursday, 30 September 2010

Exxon Mobil's LNG project in PNG attacked

Villagers in Papua New Guinea attacked Exxon Mobil's liquefied natural gas project late last week, burning heavy machinery and using high-powered weapons to damage construction equipment, a newspaper reported.

The attack took place on Friday night at Kaiam, Papua New Guinea, near the project's Kopi LNG facility, Papua New Guinea's The National paper reported.

The attacks were part of ongoing land disputes within the footprint of the $15 billion PNG LNG project.

Residents of the area have been frustrated by what they see as their exclusion from participating in the initial stages of construction of PNG LNG's 6.6 million tonne per year processing plant that began earlier this year, the paper said.

No one was wounded in the attacks, which took place at the worksite of Australia-based Clough Curtain joint venture, according to the paper.

Media reports have suggested that the project could be delayed due to landowner disputes with the government.

Exxon Mobil officials could not immediately be reached for comment.

At a conference in Singapore last week, Papua New Guinea's minister of planning and development, Paul Tiensten, said there was 'infighting' among the landowners affected by the project, but said the project was still expected to stay within the original cost estimate and start exporting LNG in 2014.

Tiensten said some of the approximately 60,000 landowners affected by the project question the division of benefits from the project.

LNG benefit-sharing negotiations late last year resulted in violence in Port Moresby and earlier this year, a fatal gunbattle erupted between tribal groups arguing over a share of the project.

The Papua New Guinea government holds equity in the project, while Exxon Mobil is the majority stakeholder. Other equity holders include Oil Search, Santos, and Japan's Nippon.

PNG LNG has long-term supply agreements with China's Sinopec , Japan's TEPCO and Osaka Gas, and Taiwan's CPC.

Wednesday, 29 September 2010

Shell Increases Oil Trade with Iran

While its competitors bowed to international pressure against trade with Iran, the U.K.-registered oil giant Shell increased its purchase of crude from the isolated regime over the summer, according to a report in Tuesday's Guardian.

The British broadsheet says it obtained confidential documents revealing that Shell paid Iran at least $1.5 billion for crude oil in the summer months alone, as competitors including BP halted orders from the Islamic Republic.

Iran is under strict economic and military embargoes implemented by the United Nations Security Council and many countries unilaterally, including, of course, the United States.

Shell's only response to the Guardian's report was to insist that the purchase of Iranian crude in no way violates any sanctions.

The importation of oil from Iran has not been banned by the sanctions currently in place, but most large petroleum companies have voluntarily stopped purchasing from the nation.

Any money paid to Iran for crude goes to the state-owned oil company, and in turn to help fund the government. Run by Islamic clerics and hardline President Mahmoud Ahmadinejad, the Islamic government has made the development of its nuclear power program a cornerstone policy.

The U.S. government and many of its allies insist the energy program is hiding a clandestine effort by the Iranians to develop nuclear weapons capability - a charge the country's leaders flatly deny.

British foreign secretary William Hague said recently that the U.K. does not encourage trade with Iran due to "serious concerns about the nature of Iran's nuclear program," reports the Guardian.

Asked to comment on the story Monday night, a spokesman for Hague's office told the newspaper that the government was, "serious about intensifying the pressure on Iran to return to the negotiating table."

Monday, 27 September 2010

SapuraAcergy chooses 6G acoustic positioning technology

SapuraAcergy has become the first company in Southeast Asia to take advantage of the benefits available from Sonardyne’s new 6G (Sixth Generation) acoustic positioning technology. The subsea engineering and installation contractor has taken delivery of US$1.55 million worth of 6G products from Sonardyne for use in projects in South East Asia.

SapuraAcergy will be upgrading its conventional and deepwater construction vessel, Sapura 3000. The vessel’s existing Sonardyne Ranger Ultra-Short BaseLine (USBL) positioning system will be upgraded to the latest Ranger 2 standard that interfaces with the new 6G product range.

In addition to the upgrade, Sonardyne is trialling its Lodestar subsea Inertial Navigation System on the Sapura 3000’s ROV system to improve pipe touch-down monitoring.

Over the next two years, SapuraAcergy will, use the 6G equipment for precise positioning of structures and pipelines on projects in South East Asia.

The new range of Sonardyne 6G products has been developed to produce innovative navigation, positioning and communications solutions for a wide range of subsea operations.

Sunday, 26 September 2010

Aker wins Kanowit subsea orders

Aker Process Systems Asia Pacific has won two subsea contracts from Petronas Carigali for subsea equipment offshore Malaysia.

One is for a subsea production system and associated services for the Kanowit field. The other involves delivering 5,600 m (18,372 ft) of subsea umbilicals to tieback the field’s subsea wells to the Kumang Cluster, offshore Bintulu, Sarawak.

The subsea production system engineering, procurement, and construction work order is worth around $45 million. It follows a frame agreement signed by the two parties last year covering equipment supply over a period of three years or until completion of Kanowit, which is Petronas’ first subsea project in the Malaysian sector.

The production system will comprise two subsea trees, wellheads, a subsea control system, a manifold with a high integrity pressure protection system, a pipeline-end manifold, and all tie-in equipment.

Aker Solutions' manufacturing base in the Port Klang Free Zone will deliver the equipment, with all subsea hardware due to be completed in 2011.

The umbilicals contract, valued at $5 million, covers project management, engineering, procurement, and manufacturing of subsea steel tube umbilicals and auxiliary equipment to connect the host platform to the Kanowit subsea field.

Aker Solutions' umbilical facility in Moss, Norway, will be responsible for this consignment, which should be delivered by next spring.

The Kumang Cluster project is 250 km (155 mi) offshore Bintulu. Phase 1 is based around a central processing platform at the Kanowit field (KAKG-A), and a drilling platform on the F9 field (F9JT-A) and the Kumang field (KUJT-A). The facilities will supply gas to the MLNG-2 terminal in Bintulu.

Saturday, 25 September 2010

Petronas reviews crude price formula

Petronas is reviewing its crude price formula, paving the way for a change for the first time in eight years, industry sources said yesterday.

The move comes after two other South-East Asian producers – Vietnam and Indonesia – said they planned to review their price formulae, abandoning volatile local benchmarks in favour of European bellwether Brent to price their crudes.

Petronas has been using 100% Tapis prices from the Asian Petroleum Price Index (APPI) since 2002.

The company has sought feedback from market participants to change the formula to 25% Tapis APPI and 75% of prices from Japan’s RIM and Platts. Other benchmarks such as dated Brent and Dubai, which have higher liquidity, may be considered. — Reuters

Friday, 24 September 2010

Murphy, Petronas farm into Brunei block

Total has signed a deed of amendment (DOA) with Petroleum Brunei concerning deepwater block CA-1, previously known as Brunei block J.

The DOA amends the original production sharing contract for the block, signed in 2003, and allows Petronas Carigali Overseas and Murphy Oil subsidiary Canam Brunei to join the existing consortium. Total will remain operator with a 54% interest, the other partners being BHP Billiton and Hess.

Deepwater block CA-1 covers over 5,850 sq km (2,258 sq mi) in water depths ranging from 1,000- 2,750 m (3,280-9,022 ft). It is around 100 km (62 mi) northwest of the coast of Brunei Darussalam.

Marc Blaizot, senior VP, Geosciences at Total Exploration & Production, said the new agreement would ‘‘enable exploration operations to resume on this promising block, and a drilling campaign to start within a short period of time based on the seismic studies already performed’’. - offshore-mag

Thursday, 23 September 2010

Malaysia, Brunei to develop offshore oil blocks

Malaysia's Petronas and Brunei's government have agreed to jointly develop one of two offshore blocks off Borneo island, the Malaysian government said on Wednesday.

The offshore exploration areas, formerly designated as Block L and Block M and now renamed CA1 and CA2, were awarded to Petronas and Murphy Oil Corp in 2003 but were cancelled in April after Malaysia and Brunei agreed that the blocks were not part of Malaysia.

Petronas and Brunei on Tuesday signed the production sharing agreement for Block CA1. Both countries hoped that the agreement for Block CA2 would be finalised soon.

"Both leaders noted that the signing represented a significant step forward in the development of cooperation between the petroleum authorities of both countries in this area," the Malaysian government said in a statement.

Malaysia and Brunei also said there was potential for future cooperation beyond Block CA1 and CA2 and a possible joint venture in a third country in oil and gas exploration. - Reuters

Wednesday, 22 September 2010

OMV to buy Petronas interests in Pakistan

OMV AG has signed an agreement to purchase the exploration and production interests in Pakistan of Petronas International Corp. Ltd.

The interests include the Mubarak, Mehar, and Daphro exploration licenses and Mehar and Mubarak development and production licenses. Terms of the agreement, which must be approved by the government, weren’t disclosed.

The only current production is from Rehmat gas field on the Mubarak block in Sindh Province, where output averaged 14 MMscfd of gas and 34 b/d of condensate in 2008-09 but is declining, according to Government Holdings Private Ltd. (GHPL), a partner.

A later discovery on the block, Saqib 1A, tested 25 MMcfd of gas in March 2008 and is being developed to produce through the Rehmat gas plant.

A gas discovery on the Mehar block in Sindh Province has been approved for development. GHPL estimates the field holds 564 bcf of gas and 82 million bbl of condensate in place.

Tuesday, 21 September 2010

Saipem Wins Onshore Contracts Worth Around $500 Million

Italian oil services company Saipem SpA said it has won onshore contracts in Africa worth a total of around $500 million.

In Algeria, Sonatrach has awarded Saipem a contract at the Hassi Messaoud oil center.

Saipem has also received a contract from the joint venture between the Nigerian National Petroleum Corp. and Chevron Corp. (CVX) for engineering, procurement and construction at the Olero Creek Restoration project.

In Congo, the Porte Noire Port Authority has awarded Saipem an engineering, procurement and construction contract to build an 800-meter-long pier.

Monday, 20 September 2010

Syria, Iraq to build pipeline

Syria and Iraq have signed an initial agreement to build two crude oil pipelines to the Mediterranean Sea, an Iraqi official said.

Iraqi government spokesman Ali al-Dabbagh said the larger pipeline with a 1.5 million barrel daily capacity would carry heaver crudes and the smaller pipeline with a 1.25 million daily capacity would carry lighter crude oil, the Global Arab Network Web site reported Sunday.

The Iraqi spokesman said a third pipeline for gas, already approved by his government, will also be constructed by the two countries in the future.

The Iraqi government has signed a series of agreements with major international oil companies to quadruple its crude oil production capacity in the next seven years, with the aim of raising Iraq's oil production to a 12 million barrel daily capacity, the report said.

Sunday, 19 September 2010

BP's oil well near death, but disaster is not over

The impending death of BP's blown-out oil will bring one piece of the catastrophe that began five months ago to an anticlimactic end — after all, the gusher was capped in July.

This, though, is an important milestone for the still-weary residents of the Gulf Coast: an assurance that not so much as a trickle of oil will ever seep from the well that already has ruined so much since the catastrophe first started. The disaster began April 20, when an explosion killed 11 workers, sank a drilling rig and led to the worst offshore oil spill in U.S. history.

Crews had already pumped in cement to seal the well from the bottom, and officials said Saturday it had set. Once a pressure and weight test was finished, officials expected to confirm that the well is permanently plugged. That was expected to occur late Saturday, but an announcement may not come until Sunday.

People who rely on the Gulf of Mexico and its coastline for their livelihoods, though, know the disaster is far from over. They are left to rebuild amid the businesses destroyed by once-oil-coated shorelines and fishing grounds that were tainted by crude. Even where the seafood is safe, fishermen struggle to sell it to consumers fearful that it's toxic.

News that the blown out well would soon be dead brought little comfort to people like Sheryl Lindsay, who owns Orange Beach Weddings, which provides beach ceremonies on Alabama's coast.

She said she lost about $240,000 in business because of the spill as nervous brides-to-be canceled their weddings all summer long and even into the remainder of the year. So far, she has only received about $29,000 in BP compensation.

"I'm scared that BP is going to pull out and leave us hanging with nothing," Lindsay said.

The Gulf well spewed 206 million gallons of oil until the gusher was first stopped in mid-July with a temporary cap. Mud and cement were later pushed down through the top of the well, allowing the cap to be removed. But officials will not declare it dead until it is killed from the bottom.

In Louisiana's coastal Plaquemines Parish, Guy Laigast was among three deputies setting up New Orleans Saints football garb Saturday along a fence at the sheriff's office training center, preparing for an annual employees' picnic. For him, news that the plug was nearly done meant little.

"They've still got tons of oil out there, so ..." he said, his voice trailing off. "I don't think it's going to solve all the problems. They've got a lot to go."

Librarian Donna Pobrica was working Saturday in an otherwise empty library in Belle Chasse serving as a polling place Saturday for a local election.

"I know a lot of people who have been waiting for that," she said of the well's plugging. "We've waited a long time."

Pobrica said the spill "really killed the people down the road. Oysters were the main thing down here, and now it's gone."

Many of the area's oyster beds were wiped out when officials flooded the marshes with fresh water, hoping it would help keep oil out of the delicate wetlands. Oysters thrive in salt water.

For Tom Becker, a charter fishing boat captain in Biloxi, Miss., news that the well was nearly dead is too little, too late. His business has tanked, down more than 60 percent with $36,000 in lost revenue, not to mention the business he'll lose in the future.

"The phones just aren't ringing," Becker said. "The damage is done. I'm glad to hear the well is sealed because now we won't have to speculate about it happening again. Now let's worry about the future. How can we recover from this, and what do we have to do to bring people back?"

Even aboard the Development Driller III — the ship that drilled the relief well and allowed crews to pump in the cement for the plug — celebrations were muted.

"It's kind of bittersweet because we lost 11 men out here," said Rich Robson, the offshore installation manager on the DDIII vessel. "There isn't going to be any real celebration. To a lot of people, the water out here is a cemetery."

The Associated Press was the only media outlet with a print reporter and photographer aboard the ship.

Tim Speirs, BP's well site leader aboard the ship, told The Associated Press there would be no sirens, no lights flashing, once the declaration came. In fact, most of the crew would be asleep. Most of the crew was still working to set up equipment for the pressure test, breaking only at lunch to feast on grilled ribeye steaks, rabbit and chicken.

The DDIII crew began finishing their work Thursday, when the relief well being drilled intersected BP's blown-out well. The cement — which will permanently plug the blown-out well from the bottom — started flowing Friday. It had hardened by Saturday, leaving only the pressure test.

Until the test was finished, men in red work suits and mud-splattered hardhats were operating heavy hydraulic machines being used to lift the drill pipe back to the deck of the DDIII vessel. Two men sitting in black leather chairs used joysticks to maneuver the massive machines on the deck, which were lifting the equipment that was thousands of feet below.

The relief well was the 41st successful drilling attempt by John Wright, a contractor who led the team drilling the relief well aboard the DDIII vessel. Wright, who has never missed his target, told The Associated Press in August that he was looking forward to finishing the well and celebrating with a cigar and a quiet getaway with his wife.

He told the AP Saturday he plans to make good on that promise. He planned to head back to Houston and then leave for a vacation with his wife, probably to California. For him, the difficult work is finished.

"In my mind, it's already over. It's been a long, exhaustive process," he said, citing "the media attention, the government involvement, the stress levels, the pressure levels — not just on me, but on the entire team."

Saturday, 18 September 2010

Petronas Gas Will Be The Winner In IPPs' Talks With Ministry, Says OSK Research

Petronas Gas will be the winner in the "reimagined" talks between first-generation Independent Power Producers (IPPs) with the Energy, Green Technology and Water Ministry, says a research firm.

OSK Investment Research said the outcome would be Petronas Gas' transporting gas business model would continue even as the domestic gas supply in Peninsular Malaysia declined.

"As such, we maintain a "Buy call" for Petronas Gas, with fair value unchanged at RM13.52," said the research house in a statement.

It was responding to a newsreport in StarBiz tFriday, quoting a source as saying the Energy, Green Technology and Water Ministry has begun fresh talks with the country's first-generation IPPs after a couple of failed attempts and a long hiatus, to convince the IPPs to compromise and "give back a little to the system" and in return, be "rewarded" by extending their concessions upon expiry in 2014-15.

The report said the government felt that there must be some degree of compromise from the IPPs as their concessions are expiring soon and they should be willing to work with the system. The government has given the ministry a deadline of year-end to reach an agreement with the players, the report said.

There are five first-generation power purchase agreements (PPAs) that were signed in 1993 that were binding for 21 years.

The IPPs are YTL Power Generation Sdn Bhd, Genting Sanyen Power Sdn Bhd, Segari Energy Ventures Sdn Bhd, Powertek Bhd and Port Dickson Power Sdn Bhd.

OSK Investment Research said it was learnt that the Energy Commission would take the lead in individual negotiations with the IPPs and it would be up to the IPPs to propose how much capacity tariff cut they could accept in exchange for an extension to their PPAs.

"The negotiations are limited to first-generation IPPs and will be generally neutral to the IPPs and Tenaga. "Instead, any savings Tenaga gets from the IPP capacity charges, they will be used to secure a long-term natural gas supply from Petronas at market price.

"This will in turn allow Petronas to build a liquefied natural gas (LNG) floating regasification terminal in Melaka and import LNG at market prices.


Friday, 17 September 2010

Petronas sells 5% of GLNG project to Total

Total to tap Petronas’ expertise in marketing LNG in Asia

Petronas has entered into an agreement to sell a 5% stake in the Gladstone Liquefied Natural Gas (GLNG) project in Australia to Total, the Australian Associated Press (AAP) reported.

Total is the world’s fourth largest listed natural gas producer. At the same time, Santos Ltd, Australia’s third-largest oil and gas producer, stated it would sell 15% stake in the GLNG project to Total for A$650mil.

Upon completion of the transactions, Santos will retain a 45% ownership, Petronas 35% and Total 20%. Santos said the GLNG transaction was the first major investment by Total in an LNG project using unconventional gas anywhere in the world.

Chief executive David Knox said the deal with Total was a landmark agreement for the Australian LNG industry. “We are pleased to welcome Total into the GLNG project as a fully integrated joint venture partner,” Knox said in a statement yesterday.

“Total brings substantial technical LNG plant and project management expertise with respect to major LNG developments,” he said.

Total chairman Christophe de Margerie said the company was teaming up with Santos for its expertise in gas production in Australia, and with Petronas for its experience in marketing LNG in Asia.

“Total will bring to the project its experience in successfully managing major projects such as the construction of gas liquefaction plants, and its capacity to market LNG to the Asian market,” he was quoted by AAP as saying.

Santos said GLNG had also signed an agreement for the sale of 1.5 million tonnes per annum (mtpa) of LNG to Total for a period of 20 years starting in 2014. In addition, GLNG and Petronas have increased contracted volumes to 3.5 mtpa under their previously announced agreement.

The combined agreements provide for the sale of five mtpa of LNG for more than US$100bil, underpinning the development of a two-train project, Santos said.

Santos also said it would explore further potential cooperation with Total in respect to commercialising its significant contingent resources in Australia.

Proceeds from the asset sale transaction would be used to fund Santos’ significant pipeline of growth projects and general corporate purposes, including funding the company’s 45% share of GLNG project costs.

The sale agreement is subject to Australian Foreign Investment Review Board approval and other customary consents and regulatory approvals. — Bernama


Thursday, 16 September 2010

Oil industry: Nix higher offshore inspection fees

The oil and gas industry says an Obama administration plan to double fees charged for inspections of offshore operations could cost jobs.

The industry recognizes the need for improved inspections and oversight following the massive BP oil spill, American Petroleum Institute president Jack Gerard said. But doubling the fees is not appropriate, especially during a recession, he said.

"This is not the time to go back and impose additional costs on industry," Gerard said Tuesday in a conference call with reporters.

The oil and gas industry contributes billions of dollars to the U.S. government in royalty payments, taxes and other fees, Gerard said, adding that government policies should encourage development of domestic energy while making sure it is safe.

The White House asked Congress late Monday to approve the higher inspection fees as part of a request for $80 million in new spending for the agency that oversees offshore drilling.

The proposal would more than double the amount collected from oil and gas companies, to $45 million next year from about $20 million this year.

Obama said in a letter to Congress that the fee increases and other changes are needed to strengthen oversight of offshore oil and gas operations; address deficiencies in mineral revenue collection; and complete the reorganization of the agency formerly known as the Minerals Management Service.

The drilling agency's new director said Tuesday that he was not involved in the fee increase decision, but supports additional revenue for his organization, now known as Bureau of Ocean Energy Management, Regulation and Enforcement.

"We need the additional resources to do the job that we've been asked to do," said Michael Bromwich, the drilling agency's new chief. Under its former name, the drilling agency was long plagued by staffing shortages and an overly cozy relationship with the industries it oversees.

Bromwich acknowledged those problems, but said the ocean energy bureau is turning a corner — and needs additional money to get even better.

"We've been faulted for not doing the job people expected us to do, and the central reason for that is we haven't had adequate resources. If we don't get the resources we need we won't be able to do the job effectively," Bromwich said Tuesday in a separate conference call.

Congress recently approved $29 million in emergency spending to hire hundreds of new offshore drilling inspectors and take others steps to improve the drilling agency. No new inspectors have been hired yet, but Bromwich said officials were conducting a "full-court press" to find and hire qualified inspectors to bolster the 60 or so inspectors now responsible for about 3,500 drilling rigs and platforms in the Gulf of Mexico.

In a related development, Bromwich said the Interior Department has hired McKinsey & Co., a management consulting firm, to help him reorganize the drilling agency.

Bromwich said he was not involved in the selection process — which began before he took office in June — and did not know how much the company was being paid.

Federal records indicate that McKinsey will be paid $4.4 million over the next year for its analysis and expertise. The company defeated four other bidders for the yearlong contract, which began Aug. 13.

Bromwich also said the Interior Department is "highly unlikely" to extend its six-month moratorium on deepwater drilling beyond Nov. 30.

He said he hopes to finish a report to Interior Secretary Ken Salazar by the end of September, a month ahead of a deadline to make recommendations on the drilling moratorium and other issues. It was unclear how soon Salazar will act after the report is submitted.

Wednesday, 15 September 2010

Petronas to lay off its employees at Ethiopia

Petronas, which is prospecting for oil resources in the Ogaden basin, in south-eastern Ethiopia, is to lay off its employees working in the company’s Ethiopian office, it was learnt. Some of its employees told The Reporter that the company has already started laying of some off the employees working in the logistics and radio communications department. The employees said that they were informed of the management’s decision to lay off most of the employees two months ago. There are about 40 Ethiopians working full time for the company. As Petronas outsources most of the services like transport, payroll management, cooking, security and other services, it does not hire many employees.

The company also subcontracts companies, which undertake drilling and seismic studies. Petronas has drilled two wells in the Ogaden basin. The first one is in the Genale block that turned out dry. The second one is near the Hilala gas field in block 15. The testing result of the well (Hilala 5) is not yet known. However, after drilling the second well last September, the company has been hauling all its equipment and machineries out of Ogaden.

Petronas has hired Adika Tour and Travels to manage the transportation of machineries and equipment from the Ogaden to Djibouti and Addis Ababa. Reliable sources told The Reporter that the Malaysian professionals who left for Malaysia did not return to Ethiopia, adding that Petronas is sending its vehicles and machineries that it had imported duty free back to Malaysia.

Petronas has been exploring the Ogaden basin since 2006. The company acquired an exploration area covering 93,000 The company collected numerous seismic data in the Ogaden. “They did a remarkable job,” says an industry analyst. “They drilled two wells, though the result of the second one is yet to be determined,” the analyst said.

Petronas acquired the Gambela concession in 2003. The Ministry of Mines and Energy (MME) granted 16,000 of land in the Gambela sedimentary basin near the Sudanese border. The company drilled two exploration wells in Jigaw and Jacaranda locality and both turned out dry. The company relinquished the Gambela concession in 2009. In 2007, Petronas also signed an agreement with MME to develop the Calub and Hilala gas fields.

The employees working in the company’s Ethiopian office fear that the company was pulling out of Ethiopia by abandoning all the exploration projects. The Minster of MME, Alemayehu Tegenu, said that that was not the case. Alemayehu said the company wanted to evaluate the results of the drillings.


Monday, 13 September 2010

Petronas Chem posts net profit of RM2.59bil

Economic conditions cause 25% drop in profit

Petronas Chemicals Group Bhd, which is headed for a listing on the Main Market this year, made an after tax profit of RM2.59bil for its fiscal year ended March 31, 25% lower than the RM3.45bil posted a year ago after the cyclical nature of the industry, economic conditions and higher feedstock costs affected earnings.

Revenue was also lower at RM12.2bil against RM12.37bil while after tax profit margins were 21.3% compared with 27.9% for 2009.

The group, controlled by state oil firm Petroliam Nasional Bhd (Petronas) had total assets of RM26.89bil as at March 31.

The figures were part of the information revealed in Petronas Chemicals’ draft prospectus which was posted on the Securities Com-mission (SC) website yesterday.

In the draft prospectus which will be available until Sept 29, petrochemicals producer Petronas Chemical did not state how much it aimed to raise in the initial public offering (IPO) but banking sources familiar with the company had valued it at some US$2bil, according to a newswire report.

“We intend to continue to explore growth opportunities that complement our products or markets, or enable us to gain footholds in countries where the Petronas Group already has oil and gas operations so that we can leverage on the group’s presence to develop vertically integrated operations in that market,” Petronas Chemicals said.

The company, a global market leader, added that it hoped to strategically increase its production capacity through enhancements to its existing facilities and potentially through investments in new facilities.

Upon the successful completion of the IPO, Petronas will continue to be the controlling shareholder of the company although it is not certain what the stake would be, according to information in the draft prospectus.

“For investors who want to participate in this industry, the presence of Petronas as a state-owned firm would give them some confidence,” Areca Capital Sdn Bhd fund manager Danny Wong said.

CIMB Investment Bank Bhd is the principal adviser, managing underwriter and retail underwriter for the IPO exercise.

The joint global coordinators and joint bookrunners are CIMB Investment Bank, Deutsche Bank AG, Hong Kong branch and Morgan Stanley & Co International plc.

Sunday, 12 September 2010

Malaysian offshore chopper operators clinch RM8b deal

In what can be billed as one of the mega oil and gas exploration deals in the country, two local helicopter operators have clinched a RM8 billion package deal with national oil corporation, Petroliam Nasional Berhad (Petronas), to perform offshore transport missions.

Industry officials named the two as Malaysian Helicopter Services (MHS) Aviation Bhd and Weststar Aviation Sdn Bhd, which would be required to carry out air transport for offshore exploration work between Kota Baru and Kerteh for more than 10 years from April next year.

The deal includes the purchase of five Eurocopter EC 225 and nine AgustaWestland AW139 light-medium helicopters by MHS and Weststar, respectively.

Also included are training for the air and technical crew, and comprehensive support packages.

The two companies successfully made the bid over two other companies, Sabah Air and Sarawak-based Hornbill Skyways, when tenders closed in March this year, the industry officials added.

Petronas had chosen MHS and Weststar Aviation for fitting the bill.

"To add icing on the cake, a defence industry government-linked company has shown interest in acquiring a major stake in one of the companies.

"This will enhance and fortify the company's business development," industry officials said.

For the record, MHS is believed to have an existing three-year contract worth RM300 million with Petronas which will expire in March next year.

With a fleet of 25 helicopters and 585 employees, MHS has a long and credible track record in helicopter operations with more than 27 years' offshore experience. It has bases in Kerteh, Kota Baru, Miri, Labuan, Subang and Nouakchott in Mauritania.

In 1997, at the height of the economic recession, 13 entrepreneurs obtained a loan from Venture Capital for a RM260 million buyout of MHS from Tan Sri Tajuddin Ramli, who at that time was also helming Malaysia Airlines.

Saturday, 11 September 2010

Utility company: Gas line ruptured in blast area

SAN BRUNO, California – The utility company that serves the San Francisco Bay area says one of its gas lines ruptured in the area where a massive blast and fire destroyed homes and sent residents fleeing.

Pacific Gas and Electric Co. officials said in an e-mailed statement that the ruptured gas line was theirs, although they cautioned that the cause of the blast has yet to be determined.

The company said it would "take accountability" if it was found to be responsible for the explosion.

Utility crews were on the scene in San Bruno in the hills south of San Francisco working with emergency officials as the explosion was investigated.

Selamat Hari Raya Idul Fitri 1431H


Friday, 10 September 2010

BP report blames itself, others for oil spill

In an internal report released Wednesday, BP blames itself, other companies' workers and a complex series of failures for the massive Gulf of Mexico oil spill and the drilling rig explosion that preceded it.

The 193-page report was posted on the company's website even though investigators have not yet begun to fully analyze a key piece of equipment, the blowout preventer, that should have cut off the flow of oil from the ruptured well but did not.

That means BP's report is far from the definitive ruling on the blowout's causes, but it may provide some hint of the company's legal strategy — spreading the blame among itself, rig owner Transocean, and cement contractor Halliburton — as it faces hundreds of lawsuits and possible criminal charges over the spill. Government investigators and congressional panels are looking into the cause as well.

"This report is not BP's mea culpa," said Rep. Edward J. Markey, D-Mass., a frequent BP critic and a member of a congressional panel investigating the spill. "Of their own eight key findings, they only explicitly take responsibility for half of one. BP is happy to slice up blame, as long as they get the smallest piece."

Robert Gordon, an attorney whose firm represents more than 1,000 fisherman, hotels, and restaurants affected by the spill, was more blunt.

"BP blaming others for the Gulf oil disaster is like Bernie Madoff blaming his accountant," he said.

Members of Congress, industry experts and workers who survived the rig explosion have accused BP's engineers of cutting corners to save time and money on a project that was 43 days and more than $20 million behind schedule at the time of the blast.

BP's report acknowledged, as investigators have previously suggested, that its engineers and employees of Transocean misinterpreted a pressure test of the well's integrity. It also blamed employees on the rig from both companies for failing to respond to warning signs that the well was in danger of blowing out.

Mark Bly, BP's chief investigator, said at a briefing in Washington that the internal report was a reconstruction of what happened on the rig based on the company's data and interviews with mostly BP employees and was not meant to focus on assigning blame. The six-person investigating panel only had access to a few workers from other companies, and samples of the actual cement used in the well were not released.

Outgoing BP chief Tony Hayward, who is being replaced Oct. 1 by American Bob Dudley, said in a statement that a bad cement job and a failure of a barrier at the bottom of the well let oil and gas leak out.

Transocean blasted BP's report, calling it a self-serving attempt to conceal the real cause of the explosion, which it blamed on what it called "BP's fatally flawed well design."

"In both its design and construction, BP made a series of cost-saving decisions that increased risk — in some cases, severely," Transocean said.

Halliburton said in a statement of its own that it found a number of omissions and inaccuracies in the report and is confident the work it completed on the well met BP's specifications.

"Contractors do not specify well design or make decisions regarding testing procedures as that responsibility lies with the well owner," the statement said.
An AP analysis of the report shows that the words "blame" and "mistake" never appear. "Fault" shows up 20 times, but only once in the same sentence as the company's name.

Steve Yerrid, special counsel on the oil spill for Florida Gov. Charlie Crist, said the report clearly shows the company is attempting to spread blame for the well disaster, foreshadowing what will be a likely legal effort to force Halliburton and Transocean, and perhaps others, to share costs such as paying claims and government penalties.

In midday trading in New York, BP shares were up $1.15, or 3 percent, to $38.32.
Several divisions of the U.S. government, including the Justice Department, Coast Guard and Bureau of Ocean Energy Management, Regulation and Enforcement, are also investigating the explosion.

The blowout preventer was raised from the water off the coast of Louisiana on Saturday. As of Tuesday afternoon, it had not reached a NASA facility in New Orleans where government investigators planned to analyze it, so those conclusions were not part of BP's report.

Retired Coast Guard Adm. Thad Allen, the government's point man on the spill response, said the BP report will add to investigators' understanding "but is not the end-all-be-all ... about why it happened and what needs to happen in the future."
The rig explosion killed 11 workers and sent 206 million gallons of oil spewing from BP's undersea well.

Investigators know the explosion was triggered by a bubble of methane gas that escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before igniting.

But they don't know exactly how or why the gas escaped. And they don't know why the blowout preventer didn't seal the well pipe at the sea bottom after the eruption, as it was supposed to.

There were signs of problems prior to the explosion, including an unexpected loss of fluid from a pipe known as a riser five hours before the explosion that could have indicated a leak in the blowout preventer.

Witness statements show that rig workers talked just minutes before the blowout about pressure problems in the well.

At first, nobody seemed too worried, workers have said. Then panic set in.

Workers called their bosses to report that the well was "coming in" and that they were "getting mud back." The drilling supervisor, Jason Anderson, tried to shut down the well.

It didn't work. At least two explosions turned the rig into an inferno.

In its report, BP defended the well's design, which has been criticized by industry experts. It also said "more thorough review and testing by Halliburton" and "stronger quality assurance" by BP's well team well might have identified potential flaws and weaknesses in the design for the cement job.

Other conclusions in the report include:
• BP says its use of six centralizers, key devices used as part of the process to plug a well, instead of the 21 recommended by Halliburton likely did not contribute to the cement's failure. Congress has questioned BP's decision, because centralizers ensure casing runs down the center of the well bore and an imperfect seal could allow oil and gas to shoot up.
• BP said that while drilling the well on March 8, more than a month before the disaster, there was a "kick," or fluid entering the well bore from the oil reservoir, that wasn't noticed for 33 minutes. BP says there's no evidence Transocean took any documented, corrective actions with the rig crew either to acknowledge or address the response time.
• Workers realized eight minutes before the blast that flammable oil and gas was traveling up the pipe connecting the rig to the well head, although data revealed that would happen 40 minutes before the explosion.
• The blowout preventer failed to do its job in part because equipment was faulty but also because it was damaged during the explosion.
• The drilling crew routed the flow from the blownout well to a system on the rig instead of overboard, a decision that allowed gas to get into ventilation systems, where it caught fire.

Wednesday, 8 September 2010

Tapis oil set at record high

Petroliam Nasional Bhd, Malaysia’s state oil and gas company, increased a price-adjustment factor for its Tapis crude for this month’s shipments to a record.

The factor was raised by 40 cents, or 11 per cent, from August to US$4.10 a barrel for September, said an official at Petronas, as the Kuala Lumpur-based company is known, asking not to be identified because of corporate policy. Last year, the price factor averaged US$2.48.

The increase follows a recovery in margins for processing light crude such as Tapis into gasoil, or diesel. The product’s premium to Dubai crude, the Asian benchmark, was at US$11.38 a barrel today, up 42 per cent so far this year, according to brokers PVM Oil Associates. This crack spread is a measure of refining profit.

Petronas includes the adjustment factor in its formula for calculating monthly official selling prices. The other component is the average of twice-weekly assessments compiled by the Asian Petroleum Price Index, a Hong Kong-based panel of traders. -- Bloomberg

Tuesday, 7 September 2010

Banks set to bid for Petronas IPOs

A number of local investment banks are in the midst of preparing proposals to secure the mandate to handle the initial public offerings (IPO) of Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) and Petroliam Nasional Bhd’s (Petronas) petrochemicals business, industry sources said.

It is understood that among those Petronas issued a request for proposal (RFP) are the investment banking arms of CIMB, RHB, Maybank and the AmBank group.

Sources added that the deadline for submitting the proposals is sometime next week and that the banks would be assessed on their broad approach to the IPOs.

A key issue will be the valuation method the banks would be comfortable using in pricing the IPO.

This may range from multiples of profits or of earnings before interest, tax, depreciation and amortisation.

“The track record of the investment bank would also play a factor. So too would be signs of innovativeness in the suggested IPO structures,” said one banker.

It is understood that Petronas and MISC Bhd (the parent of MMHE) have hired an advisor to oversee the RFPs and the selection of investment banks for the IPOs.

Analysts said that MMHE, which reported a net profit of RM284mil in the financial year ended March 31, 2009 (FY09), could fetch an attractive price-earnings multiple of its FY09 earnings, possibly in the high teens.

A valuation of say 17 times its FY09 earnings would give MMHE a total valuation of around RM5bil.

Its performance is driven by three core businesses: engineering and construction services, marine conversion and marine repair.

MMHE runs a yard in Pasir Gudang, Johor, one of the largest in the region and the only one capable of converting big ships into vessels that can process and store oil and gas.

These are known as floating, production storage and offloading units and floating storage offloading units. The yard is also used to fabricate high-tonnage offshore oil and gas structures.

According to OSK Research, MMHE had a huge outstanding order book valued at RM6.4bil as at Dec 31, 2009.

More jobs are expected to come with the oil price stabilising at US$84 per barrel with potential upside. Petronas may also dish out some large-scale projects to MMHE following the former’s success with its partners in winning the rights to develop four oilfields in Iraq late last year.

The proposed listing of MMHE could be considered a “continuation” of its listing intention that did not materialise when the MISC-Ramunia Holdings Bhd reverse takeover (RTO) deal fell through in 2008 due to unsatisfactory due diligence findings.

In the RTO, MMHE was valued at RM3.2bil.

Meanwhile, it is less clear what the IPO structure of Petronas’ petrochemical business will take. Petronas has 19 companies in the petrochemical business, including BASF Petronas Chemicals Sdn Bhd and Optimal Olefins (M) Sdn Bhd.

It is unclear if the IPO would group all of them or just some of the companies.

Petronas’ petrochemical business registered a revenue of RM13bil for the year ended March 31, 2009. Its diverse product portfolio ranges from olefins and polyolefins, fertilisers, industrial to specialty chemicals.

Monday, 6 September 2010

Petronas Unit Bids Again for Shell, BP Businesses in Zimbabwe

Petronas African unit, Engen Petroleum Ltd., has bid again to buy Royal Dutch Shell Plc and BP Plc’s Zimbabwean businesses, the state-controlled Herald said, citing Engen special projects consultant Andrew Bryce.

The National Indigenisation and Empowerment Fund on March 25 rejected an offer for the businesses from Engen and Kenya’s KenolKobil Ltd., the Harare-based Herald said. The bid prompted opposition from black-empowerment lobbying groups, the newspaper said.

The new bid by Engen meets Zimbabwean laws regarding black ownership of companies, the Herald quoted Bryce as saying.

Saturday, 4 September 2010

Petronas makes oil, gas discovery off Vietnam

Petronas Carigali Overseas Bhd. made an oil and natural gas discovery with its Ham Rong-2X well in the Ham Rong oil field off northern Vietnam, according to local media reports.

Commercial output was estimated at 6,300 b/d and 8 MMscfd of gas on Block 106 of the Song Hong basin, about 75 km south of Haiphong, Vietnam’s official news agency said, citing the Tuoi Tre newspaper.

Analyst IHS Global Insight said the Ham Rong 2X well is likely to be an appraisal well on Block 106. The well followed the drilling of the Do-Son 1X wildcat, which was plugged and abandoned in mid-November 2009 having also encountered oil and gas shows.

“The discoveries at Ham Rong-2X will further support the company's exploration plans in Block 106, despite the complexities of exploring the area, due to seismic imaging difficulties and complex reservoir architecture,” IHS Global Insight said.

Petronas is operator of the block with a 50% stake. The remaining 50% is divided among Singapore's SPC, PetroVietnam Exploration & Production, and ATI Petroleum.

Thursday, 2 September 2010

BP sells Malaysian petrochemical operations to Petronas

BP continued its asset disposals to pay for the cost of the Gulf of Mexico oil spill with a $363m (£235m) sales of its Malaysian petrochemical operations to state-owned Petronas.

The oil company is selling a 15pc stake in Ethylene Malaysia and a 60pc interest in Polyethylene Malaysia to the Petronas, which already operates the two businesses.

It will also be eligible for a possible $48m dividend from the ethylene unit.

Sue Rataj, president of BP’s Global Petrochemicals Business, said in a statement: “BP will continue to focus on the development and expansion of our olefins and derivatives business in China, and other large rapidly growing markets, and pursue opportunities in China and India.”

BP in July pledged to sell as much as £20bn of assets to meet the spill costs. It has agreed to sell oil and gas fields in the US, Canada and Egypt to Houston-based Apache for $7bn. -

Wednesday, 1 September 2010

Samsung Engineering wins US$770m Petronas deal

PETRONAS Carigali Sdn Bhd has awarded a US$770 million (RM2.4 billion) contract to Samsung Engineering to build an oil and gas terminal in Sabah.

The plant, which will produce 300,000 barrels of oil and 1.25 billion cubic feet of gas per day, will account for 40 per cent of Malaysia's crude oil production.

Samsung Engineering president and chief executive officer Park Ki-Seok said the contract reflects the company's excellent project performance and the clients' trust in the hydrocarbon plant sector.

"With expanding market share in the GOSP (gas oil separation plant) field and about US$50 billion (RM157 billion) invested annually, we plan to continue our drive to diversify our market and products in all upstream hydrocarbon fields such as offshore projects," Park said in a statement.

For the Sabah project, Samsung Engineering will lead the engineering, procurement, construction and commissioning work with local partner NCSB Engineering.

The plant is expected to be mechanically completed in December 2013.

Park said Samsung Engineering has successfully executed an ethylene project in Malaysia, gas plants in Thailand's Songkola and a PVC (polyvinyl chloride) plant in Vietnam for Petronas.

"Samsung has had a lot of experience in gas separation plants and oil facilities in the Middle East, Africa and Southeast Asia, and plans to continue its expansion into the GOSP hydrocarbon upstream sector with the Sabah oil and gas terminal," he added.

The company was ranked 35 in the recently published 2010 list of Top International Contractors (based on overseas revenue) by Engineering News Record. It made a significant jump, moving up by 18 spots from 2009.