Sunday, 31 October 2010

Petronas Dagangan Aims For Retail Segment Leadership In Three Years

Petronas Dagangan Bhd aims to become a market leader in the retail segment within two to three years, says its Managing Director and Chief Executive Officer, Amir Hamzah Azizan.

He said the company holds a 32 per cent market share at the moment.

"Retail has been a very important component of Petronas Dagangan. More than 50 per cent of our profitability comes from our retail division," he told reporters after the launch of the company's latest promotion, "Petronas The Road To Rewards" on Wednesday.

Amir said the promotion, from Nov 1, 2010 to Feb 15, 2011,is part of the company's effort to reward its customers.

He said Petronas Dagangan is offering prizes worth up to RM3 million including cash, Petronas Mesra points and Petronas gift cards, for customers to participate.

Over the next four months, the promotion offers grand prizes of a total of 30 lucky customers, of whom three will walk away with RM100,000, 12 customers RM20,000 while 15 others stand to take home RM10,000.

In addition, each of these winners will also be going home with one million Petronas Mesra points each, to be used to redeem and purchase fuel or items from the Kedai Mesra at all Petronas stations nationwide.

Apart from that, the grand prize winners who use the Petronas Maybankard Visa credit card to make their winning transaction, also get additional prizes.

Meanwhile, Amir said Petronas Dagangan has set aside RM500 million as capital expenditure (Capex) for the current financial year 2010/2011.

He said the company targets to have over 970 stations at the end of the current financial ending March 31, 2011 from 948 stations currently.

Petronas Dagangan is the principal domestic arm of Petroliam Nasional Bhd (Petronas), the national oil company, which holds 69.86 per cent of its equity.

The company markets a wide range of high quality petroleum products including motor gasoline, aviation fuel, kerosene, diesel, fuel oil, bunker fuel, lubricants, liquefied petroleum gas (LPG) and asphalt in Malaysia.


Saturday, 30 October 2010

China methanol ADD draws mixed reactions from SE Asia producers

China’s imposition of antidumping duties (ADD) on methanol imports drew mixed reactions from affected producers, with one considering halting shipments to the key market in the region next year, industry sources said on Tuesday.

China announced late on Monday that provisional ADDs above 9% would apply on methanol imports from Petronas of Malaysia, Kaltim Methanol Industri of Indonesia and Methanex New Zealand, effective 28 October.

Petronas of Malaysia was not concerned about the new trade policy on methanol, given current strong margins as Chinese prices remained high, a company source said.

China slapped a 9.3% duty on methanol from Petronas.

“The net effect is only over 4%, and China’s spot price is way above that percentage as compared to selling in other Asian countries,” the company source said.

As of last week, methanol was trading at around $360/tonne (€259/tonne) CFR China, its highest level since October 2008. This represented a 16% jump from the start of the year, based on ICIS data.

PT Kaltim Methanol Industri of Indonesia, meanwhile, was looking at an extreme measure of stopping exports to China in 2011, citing strong disadvantages with the tariff in place, said a company source.

Kaltim Methanol would be required to pay 9.4% tariff for product shipments into China, which meant that its imports would be more expensive than cargoes coming from the Middle East, said the source.

Methanex New Zealand could not be reached for comment.

Meanwhile, China had not imposed ADDs on Saudi Arabian producers after concluding - after more than a year of review - that these producers had not engaged in dumping activities.

“Everyone will complain except for the Saudis, and the real tax rate will be determined from 24 December,” said the Kaltim Methanol source.

China is conducting a second round of investigation on dumping activities until 24 December, when the final ADD rates were expected to be imposed. Affected producers were given 20 days to submit comments on the policy to the Ministry of Commerce.

China had launched the investigations on suspected dumping activities by Malaysia, Indonesia, New Zealand and Saudi Arabia in June 2009, as production rates at local plants tanked to just 30% in the first quarter and methanol prices declined $165-175/tonne (€134-142/tonne) CFR (cost and freight) China.

In 2009, Malaysia’s methanol exports more than doubled to 302,000 tonnes, Indonesia’s shipments totalled 226,000, up 63% from 2008 and from New Zealand, a total of 329,000 tonnes i was sent in 2009 from just 115,000 tonnes in 2008, based on industry estimates.

Methanol is used in the production of formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. It also has fuel applications - dimethyl ether (DME), biodiesel - and could be blended directly into gasoline.

Friday, 29 October 2010

ConocoPhillips 3Q earns double

ConocoPhillips 3Q earns double

ConocoPhillips on Wednesday said earnings more than doubled for the third straight quarter as oil prices rebounded from their 2009 lows.

The Houston oil company is the first major integrated company to report income for the July-September period, and its hefty profit suggests that Big Oil will be able to shrug off expenses from the Gulf of Mexico drilling moratorium and low natural gas prices. Exxon Mobil and Royal Dutch Shell will announce their quarterly earnings on Thursday. Chevron reports on Friday.

Integrated oil companies are involved in all phases of the business, from exploration and production to refining and marketing.

Conoco reported net income of $3.06 billion, or $2.05 per share for the third quarter. That compares with $1.47 billion, or 97 cents per share, in the year-ago period. Excluding gains from asset sales and other special items, Conoco made $2.23 billion, or $1.50 per share, in the third quarter. Analysts, who typically exclude special items, expected earnings of $1.46 cents per share on revenue of $45.6 billion.

Revenue totaled $49.55 billion, up from $41.27 billion in the same quarter last year.

Conoco earnings got a big boost from the sale of Lukoil shares. Company officials said earlier this year that they planned to part ways with Russia's largest private oil company. So far they've sold $6.4 billion of Lukoil shares, with a net gain of $874 million in the third quarter from the sales. Conoco expects to sell its 50 million remaining shares by the end of 2011.

Conoco also benefited as crude prices jumped 11.7 percent year-over-year to an average of $76.24 per barrel. Prices have more than doubled since bottoming out below $34 per barrel in February 2009.

The company saw increased profits in the third quarter in its production, pipelines, chemicals and refining businesses. However, historically low natural gas prices continue to make gas wells less profitable, and Conoco said it has started to cut back on natural gas production.

"The prices you see today are really unsustainable," Jim Mulva, Conoco chairman and CEO, said in a conference call with Wall Street analysts. Conoco will look for prices to increase before it turns back to natural gas, he said: "We need to see price levels at $4 or $5" per 1,000 cubic feet. Natural gas futures traded for about $3.75 per 1,000 cubic feet Wednesday on the New York Mercantile Exchange.

Analyst Fadel Gheit with Oppenheimer & Co. said the rest of the industry is doing the same. Every petroleum driller is looking for wells with more oil than gas right now because oil generates much higher profits, he said.

Mulva also told analysts that the company will continue to sell refineries even though its fuel-making business nearly tripled profits year-over-year to $268 million. In fact it will try to accelerate the pace of asset sales.

"The refining business is still volatile," Gheit said. "Historically, it never generated decent returns. Never. And it takes billions of dollars just to be maintained. It's like a tread mill — you're running so hard just to stay in place. Everyone realizes this now."

Overall, the company produced 1.72 million barrels of oil and gas per day, down from 1.79 million barrels in the third quarter of 2009. Conoco blamed natural declines in some of its oil and gas fields, primarily in North America and Europe. It also has sold off some petroleum-producing assets.

Mulva said the slide in production should be offset over the next several years with new offshore production operations in southeast Asia, liquefied natural gas projects in Qatar and Australia as well as shale and oil sands development in North America. Conoco expects to produce about 1.71 million barrels of oil and gas per day in the final three months of the year.

Conoco shares fell 82 cents to $60 in afternoon trading, following the broader market lower. Shares in energy companies dropped, as oil prices tumbled below $82 a barrel. - AP

Thursday, 28 October 2010

Dialog up on deepwater petroleum terminal project

DIALOG GROUP BHD shares advanced on Thursday, Oct 28 after The Edge Financial Daily reported that Dialog is gearing up for exciting times ahead with the multi-billion-ringgit independent deepwater petroleum terminal project at Pengerang, Johor.

The project will turn Pengerang into a regional oil storage and trading hub by 2017. At 9.25am, Dialog was up four sen to RM1.29 with 1.14 million shares done.

Wednesday, 27 October 2010

Shell’s retreat from Nigeria

Shell will be reducing activities in Nigeria and appears to be selling off below market price due to all the hassle there. John Browne leading a consortium. All in Sunday Times.

If true, this will be a major blow in the face of Shell, they give up. Precisely what you can expect from beancounters who have never worked in bad places like Nigeria… I see it as reducing value. Bunch of cowards.

And what happened to the promises of Brinded? By 2013 or 2014 he ‘hoped’ to realise 6-6.5 mln boe/d. And this ‘promise’ was as recent as 2005 or thereabouts. I would like to know where the deliverable is?

Tuesday, 26 October 2010

Nigeria: Why Shell, Total, Agip Sell Off Oil Stakes

Shell Petroleum Development Company of Nigeria Ltd (SPDC), Total Nigeria Ltd (Total) and Nigeria Agip Oil Company Limited Wednesday sold 45 per cent stake in OML 26 in a deal with a Nigerian company in what oil operators attribute to fear of political instability in Nigeria.

Oil sources said the new deal was reached not because of the controversy around the Petroleum Industry Bill which is still with the National Assembly.

The remaining 55 per cent is owned by the NNPC.

"They are reducing their investments in Nigeria because of the situation in Niger Delta and the political instability they foresee in 2011," a source added.

Earlier this year, the Nigerian joint venture company operated by Royal Dutch Shell Plc agreed to sell its 30% interest in three oil production licenses to a consortium led by Nigerian companies for an undisclosed sum.

First Hydrocarbon Nigeria Limited (FHN) Wednesday announced that it has reached a Definitive Agreement with Shell Petroleum Development Company of Nigeria Ltd, Total E&P Nigeria Ltd and Nigeria Agip Oil Company Limited for the acquisition of a 45 per cent interest in OML 26, Delta State onshore Niger Delta. The remaining 55 per cent stake remains the property of the Nigerian National Petroleum Corporation (NNPC).

First Hydrocarbon Nigeria said in a statement: "FHN has today announced the acquisition of a 45 per cent interest in OML 26, which holds two producing and three proved undeveloped fields, from the SPDC JV in Nigeria. Total independently certified recoverable reserves and contingent resources are 184 million barrels.

"Located onshore the Niger Delta the Ogini and Isoko fields are currently producing approximately 5,000 bpd gross from a limited number of currently active drainage points, with significant potential for further development. Existing flow station capacity for the fields is currently 30,000 bopd. FHN's forward work programme across three phases is expected to increase production to more than 40,000 bpd over the next four years. The transaction is subject to the approvals of the Federal Government of Nigeria and NNPC."

The company said it intends to list on the Nigerian Stock Exchange in the future, providing an opportunity for all Nigerians to invest in the sector.

FHN will make a net investment of $187.5m in OML 26, which includes both the acquisition cost and FHN's equity share of the phased development.

FHN will assume operatorship, with Afren acting as technical service provider to FHN.

Afren says it has also agreed terms with BNP Paribas for a $130m credit facility towards the acquisition cost.

The deals show how oil companies are shifting their focus away from Nigeria, a source said.

Shell had said earlier that it no longer expects Nigeria which has been one of its oil ally for decades to drive output growth for the company.

iolence, kidnapping and attacks on oil infrastructure in Niger Delta and the recent bomb explosions have made the oil majors to develop cold feet about Nigeria, experts say.

The multinational oil companies such as Shell, ExxonMobil, Chevron, Total, Agip, Addax that operate Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) did not participate in the last oil bid round in 2007.

Experts in oil and gas who spoke at the just concluded economic summit in Abuja expressed fears that oil investments in Nigeria are going southward.

They say drilling is falling. investment is drying up, production is falling and so too are profits.

Whereas there have been three final investment decisions (FIDs) in Angola this year alone, there has not been any significant FID in Nigeria in the last three years.

According to them, if the current fears are not resolved, Nigeria should expect no investment from off shore.

Monday, 25 October 2010

Petronas mega methanol plant rates at 80% of capacity

Petronas operating rates at its 1.7 million mt/year methanol plant at Labuan were at least 80% as of early Friday, a source close to the company said.

The company had shut the plant on October 3 due to a natural gas supply disruption, and was only able to restart the plant on October 18, another source close to the company noted earlier this week.

The company was targeting to reach gradually stable operations of around 90%, the source noted then.

A source close to the company had estimated on October 13 that the shutdown could stretch out until the latter part of October.

Despite the outage, the company did not need to issue a force majeure as it had sufficient inventory.

A disruption of natural gas supplies shut the plant between July 19 and August 10 this year as well, and the company had to issue a force majeure during that time due to the production cut.

Petronas also has an older 660,000 mt/year methanol plant at Labuan, which has been idled since July 2009 due to water shortage, and the company does not plan to restart this plant in the near future, a source close to the company had confirmed earlier this week

Sunday, 24 October 2010

Labuan Shipyard appoints new head of oil and gas

Labuan Shipyard and Engineering Sdn Bhd (LSE) has appointed Johan Mohamad as the head of oil and gas effective Nov 1.

It said Johan has 24 years of experience and exposure in the oil and gas industry and had erved in various positions and capacities with wide-ranging scope of responsibility both within Malaysia and internationally.

Among the major companies Johan had served are Asean Bintulu Fertiliser Sdn Bhd (a subsidiary of Petronas), Petronas Carigali Sdn Bhd, Shapadu, White Nile Petroleum Operating Company in Sudan, Sarawak Shell Bhd and Brooke Dockyard and Engineering Works Corp, it said in a statement. — Bernama

Saturday, 23 October 2010

Saya ingin tahu, kenapa aset Petronas mula dijual satu per satu?

Oleh :

Seperti mana yang kita tahu, Petronas adalah anak syarikat milik kerajaan Malaysia yang menjalankan perniagaan yang berasaskan minyak, gas dan petrokimia. Selain dari itu, syarikat ini juga mempunyai cabang perniagaan di bidang perkapalan, hartanah dan lain-lain.

Malang buat rakyat Malaysia, walaupun syarikat ini milik rakyat Malaysia, tetapi ramai yang tidak mengetahui bagaimana kewangan syarikat ini diurus.

Apa yang rakyat tahu, setiap suku tahun dan akhir tahun, Petronas akan membuat pengumuman tentang laporan kewangan mereka sahaja.

Seperti mana yang kita ketahui juga, pengurusan Petronas sudah berubah apabila Presiden & Ketua Pegawai Eksukutif (CEO), Tan Sri Mohd Hassan Marican telah bertukar tangan kepada Datuk Shamsul Azhar Abbas.

Tindakan tidak menyambung kontrak Tan Sri Hassan pada saya lebih kepada tindakan dan tekanan ahli-ahli politik.

Malah, kemasukan Omar Ong ke dalam Lembaga Pengarah Petronas pada saya dilihat sebagai titik mula kemasukan pengaruh politik ke dalam Petronas. Walaupun pada mulanya Lembaga Pengarah Petronas menolak kemasukan Omar Ong, tetapi Perdana Menteri, Dato Seri Najib mempunyi kuasa mutlak untuk melangkaui segala keputusan Lembaga Pengarah Petronas untuk menerima Omar Ong.

Omar Ong juga merupakan bekas pembantu Dato Seri Najib semasa di Kementerian Pertahanan dulu.

Agak mengecewakan setelah perlantikan Datuk Shamsul Azhar menggantikan Tan Sri Hassan, beliau secara sinis menyindir Tan Sri Hassan sebagai one man show sewaktu mengandalikan Petronas dulu. Sedangkan kita tahu betapa besarnya jasa Tan Seri Hassan kepada Petronas dan negara.

Sekarang, Tan Sri Hassan Merican telah menjadi awang import kepada konglomerat Singapura, Sembcorp Industries sebagai Pengarah Bebas sejak Jun tahun ini.

Kini, setelah meneliti beberapa berita dalam dan luar negara, sejak akhir-akhir ini seperti ada trend kepada Petronas untuk menjual aset-aset mereka di luar negara.

Jikalau diperhatikan kepada laporan kewangan tahunan Petronas tahun-tahun sebelum ini, Tan Sri Hassan seperti ingin memperkasakan operasi Petronas di luar negara memandangkan simpanan minyak dan gas dalam negara semakin berkurang.

Setakat ini, aset-aset Petronas di luar negara yang diberitakan akan dijual ialah di Australia, India dan Ethiopia.

Apa sebenarnya yang sudah terjadi? Adakah ada tekanan-tekanan politik keatas Presiden Petronas untuk menjual aset-aset syarikat ini?

Petronas yang seperti kita tahu merupakan syarikat yang menjadi kantung kepada Perbendaharaan negara untuk menampung kebanyakkan perbelanjaan negara.

Mungkin pemimpin negara memerlukan instant cash untuk menampung pelbagai program transformasi ekonomi, bajet dan mini bajet seperti sebelum ini.

Semoga Petronas tidak menjadi seperti MAS yang hanya untung dari penjualan aset, bukan dari keuntungan operasi mereka.

Friday, 22 October 2010

Exxon, Chevron, Shell May Bid On Iraq Gas Fields

Exxon Mobil and Chevron , the two largest U.S. oil companies, and Royal Dutch Shell, the largest European oil company, are among the oil majors expected to bid today for licenses to develop three natural gas fields in Iraq.

ENI, Italy's largest oil company, Russia's Gazprom, Mitsubishi and and Japan Petroleum Exploration Co. are also expected to participate in the bidding.

The bidding starts at 10 A.M. Baghdad time. The auction focuses specifically on the Akkas, Mansouriya and Siba gas fields, which Iraq is eager to develop for domestic power generation as well as export revenue, according to Bloomberg News.

Iraq has estimated that the three fields hold a combined 11 trillion cubic feet of reserves.

Iraq has the Middle East's third-largest oil reserves and is looking to boos output to 2.3 million barrels per day.

Companies winning the contracts will be paid on the basis of barrels of oil equivalent and will not be involved in setting the price for gas exports, Bloomberg

Thursday, 21 October 2010

Petronas to export gas from Turkmenistan

Petronas is just about to start natural gas output in Turkmenistan and may ship 5 billion cibic metres (bcm) of the fuel for export next year, a Turkmen official said on Tuesday.

"Industrial gas production may start before the end of this year," Yagshigeldy Kakayev, head of Turkmenistan's State Agency on Management of Hydrocarbon Resources, told an international oil and gas forum.

"During the first stage, output will total 5 bcm of gas a year, and with new gas deposits coming onstream, volumes will rise to 10 bcm," he said. He gave no time frame for the rise.

He did not say where Petronas would export the gas. Petronas officials in Ashgabat could not be immediately reached for comment.

Turkmenistan, Central Asia's largest natural gas producer holding the world's fourth-largest reserves of the fuel, launched a China-bound pipeline last year and has agreed to boost exports to next-door Iran to lessen heavy dependence on traditional partner Russia.

Another government official told Reuters on condition of anonymity that Petronas could link its pipe to export trunk pipeline Central Asia-Centre-3, which was built in Soviet days and runs from western Turkmenistan to Russia across Kazakhstan.

Russian President Dmitry Medvedev is due to visit Turkmenistan on Oct. 21-22, and gas is widely expected to top his agenda.

Turkish Energy Minister Taner Yildiz said last month that Ankara might seek to buy all 5.5 bcm of natural gas output at a Turkmen site operated by Petronas.

Turkey and its partners in the $10 billion Nabucco gas pipeline project are seeking suppliers for the link, which could reduce Europe's reliance on Russia for a quarter of its gas.

The project, which aims to ship 31 bcm after opening in 2014, has yet to guarantee any supplies, but partners have cited Turkmenistan, along with Azerbaijan, Iraq, Iran and Egypt as potential contributors.

State-owned Petronas, developing an offshore block under a production sharing agreement with Turkmistan, has invested $3 billion since the start of its work in the country in 1996.

Wednesday, 20 October 2010

Technip finalizes agreements with MISC and MMHE

Technip announces today that it has finalized its agreements with MISC Berhad and Malaysia Marine and Heavy Engineering Holdings Berhad (MHHE), two companies within Malaysia’s national oil corporation, Petroliam Nasional Berhad (PETRONAS), to establish their long-term collaboration.

As previously announced on August 20, 2010, to strengthen the links between the two groups, Technip will take an 8% stake in MHB in connection with the listing and initial public offering of MHB's ordinary shares on the Main Market of Bursa Malaysia (Kuala Lumpur stock exchange), which is expected to occur at the end of this month.

This investment and collaboration extends Technip’s local content in Malaysia and reinforce its position in the fast growing Asia Pacific region in line with Technip strategic goals.

Technip is a world leader in the fields of project management, engineering and construction for the oil & gas industry, offering a comprehensive portfolio of innovative solutions and technologies.

With 23,000 employees around the world, integrated capabilities and proven expertise in underwater infrastructures (Subsea), offshore facilities (Offshore) and large processing units and plants on land (Onshore), Technip is a key contributor to the development of sustainable solutions for the energy challenges of the 21st century.

Present in 48 countries, Technip has operating centers and industrial assets (manufacturing plants, spoolbases, construction yard) on five continents, and operates its own fleet of specialized vessels for pipeline installation and subsea construction.

The Technip share is listed on Euronext Paris exchange and over the counter (OTC) in the USA.

Tuesday, 19 October 2010

Petronas Chemicals sasar raih RM12.5b

ETRONAS Chemicals Bhd dijangka mampu meraih sehingga RM12.5 bilion daripada tawaran awam permulaan (IPO) sempena penyenaraiannya, lebih tinggi berbanding anggaran awal RM6.25 bilion bersandarkan kepada kukuh terhadap saham syarikat Asia oleh pelabur antarabangsa.

Pasaran modal Asia kini menyaksikan pelaksanaan urus niaga berbilion dolar, didorong kedudukan kecairan yang tinggi, kadar faedah rendah dan pertumbuhan kukuh ekonomi.

IPO Petronas Chemicals, yang dimiliki PETRONAS bakal menjadi tawaran jualan saham terbesar di Malaysia, mengatasi penyenaraian Maxis bernilai AS$3.3 bilion (RM10.3 bilion) tahun lalu.

Ia dibuat selepas IPO anak syarikat logistik milik kerajaan Singapura bernilai AS$3 bilion (RM9.4 bilion) dan serentak cadangan penyenaraian cabang perniagaan insurans hayat American International Group di Asia bernilai lebih AS$15 bilion (RM46.9 bilion).

“Ini adalah satu kejutan besar dan ia muncul ketika terdapat peningkatan minat terhadap saham minyak dan gas,” kata Ketua Eksekutif Acera Capital, Danny Wong yang menguruskan dana berjumlah RM400 juta di Singapura, semalam.

“Walaupun kehadiran pelabur asing di Malaysia tidak besar, namun IPO itu boleh mencetuskan lebih banyak minat.

“Malah, saya menjangka banyak pelabur institusi akan melanggan saham anak syarikat PETRONAS itu,” katanya. - Berita Harian

Monday, 18 October 2010

Petronas Chem IPO priced at RM5.05-RM5.20

PETRONAS Chemicals Group Bhd (Petronas Chemicals) is likely to raise US$4.2 billion in Southeast Asia's biggest ever initial public offering (IPO) after setting an indicative price range for the float, analysts said.

The unit of Malaysian oil giant Petroliam Nasional Bhd (Petronas) indicated at a briefing it is likely to price its IPO at RM5.05 for retail investors and RM5.20 for institutions, analysts who attended the briefing in Kuala Lumpur said yesterday.

The IPO comes as Asian capital markets are seeing a flurry of multi-billion-dollar deals, helped by a flood of liquidity, low interest rates and strong economic growth.

Petronas Chemicals' IPO is set to exceed Maxis' US$3.3 billion IPO last year and also raise more capital than the proposed listing of another Petronas-linked vehicle, Malaysia Marine and Heavy Engineering. It follows Singapore wealth fund GIC's logistic unit's US$3 billion IPO and may overlap with American International Group's planned listing of its Asian life insurance business AIA in a deal worth over US$15 billion.

The IPO comprises 2.48 billion new and existing shares.

Analysts, who requested anonymity as they were not authorised to speak to the media, were divided on attractiveness of the valuation for the chemical group, which would be between 15 to 16 times 2011 earnings based on the indicative price.

"Compared to its peers in the Middle East, which are valued in the mid-teens, Petronas Chemicals' performance and valuation is on par," one analyst said.

The analyst expected the price of the share to be near the 20 times PE (price-to-earnings) mark upon trading owing to the "Petronas premium" - the additional benefit of having Petronas as a parent.

"The cheap feedstock from Petronas puts Petronas Chemicals in a pretty good position," she said.

Other analysts found the valuation too expensive, owing to the inherent volatility of the sector.

"It's very, very rich," said another analyst. "These businesses are intrinsically linked to the price of oil - you cannot run away from the volatility." Preliminary numbers from analyst models attribute a RM0.30 earnings per share to the company for 2011, and RM0.32 for 2012. The models also peg a rough RM2.10 of net tangible assets per share. - Reuters

Sunday, 17 October 2010

Kencana HL Secures Contract Worth RM16.4 Million

Kencana Petroleum Bhd's wholly-owned subsidiary, Kencana HL Sdn Bhd, has secured a contract from Petronas Carigali Sdn Bhd for the provision of a single buoy mooring overhaul for Petronas Carigali's Sarawak Operations.

The total value of the contract is estimated at about RM16.4 million, Kencana Petroleum said in a statement today.

The contract is for a one-off period and expected to commence within January next year.

It is also expected to contribute positively to the earnings and net asset per share of the Kencana Petroleum Group for the financial year ending July 31, 2011.--BERNAMA

Saturday, 16 October 2010

Iraq Says It's Near Final Draft Of $12 Billion Gas Contract With Shell

Iraq is in the final stages of agreeing on a draft of its $12 billion gas contract with Royal Dutch Shell PLC, the country's oil minister said Wednesday, allaying fears the project was mired in a legal dispute.

Speaking upon his arrival in Vienna for a meeting of the Organization of Petroleum Exporting Countries, or OPEC, Hussein al-Shahristani also said a planned bidding round for three major gas fields would go ahead as planned on Oct. 20 after being delayed twice before.

Asked about the reported delay of the Shell deal, Shahristani said: "We are in the final stages of agreeing on the draft before we take it on the cabinet again," adding "There has been no dispute" over the deal.

The Iraqi cabinet last month delayed the finalization of the project with Shell and Japan's Mitsubishi to capture gas from Basra's oilfields because of legal issues related to the joint venture, the website of Iraq Business News reported at the time. The cabinet already had approved the planned investment in June, but it is now waiting to sign the final draft once it is resubmitted by the oil ministry.

Shahristani said 13 companies had bought tender documents for the coming auction of the Akkas, Mansouriya and Siba gas fields.

"But I don't know how many are going to bid," he added.

Companies previously linked with the tender include Eni SpA (E, ENI.MI) and Edison SpA (EDN.MI), both of Italy, Japan's Mitsubishi, France's Total SA (TOT, FP.FR), South Korea's Kogas and Russia's TNK-BP Holding (TNBP.RS).

Iraq is intent on developing the fields to help boost its creaking levels of electricity supply, which still stand at only a few hours a day in some parts of the country.

Aiming to exploit estimated reserves of around 11.23 trillion cubic feet of gas in the three fields, Baghdad has already twice delayed the bids to accommodate foreign bidders, and has sweetened terms of the eventual deal.

It has promised to end the extra "signature bonus" payments of several hundred million dollars made by successful bidders in previous auctions, and will take or pay for all of the gas produced from these three fields.

According to Iraq's oil ministry, Akkas field in Anbar province has around 5.6 trillion cubic feet of gas; Mansouriya in Diyala province has reserves of about 4.5 trillion cubic feet; and Siba, located in Basra province, contains around 1.13 trillion cubic feet.

Friday, 15 October 2010

Areas of concern for Petronas

Expected slower global growth next year, portfolio rebalancing may affect company’s performance

PETALING JAYA: While Petroliam Nasional Bhd (Petronas) looks set to see healthier earnings in its current financial year ending March 31, 2011, an anticipated slower global growth next year will weigh in on its performance.

An area of concern highlighted by the national oil company during its first quarter results media briefing on Monday was the possibility of a double-dip recession and its repercussion on oil prices.

The global financial crisis experienced in 2008 and into 2009 saw downward pressure on the world economy, which consequently pulled down energy demand and prices.

Global oil demand fell as weaker activity in developed countries and slower growth in key emerging markets such as China and India battered demand.

According to Petronas’ 2010 annual report, world oil demand retreated to 84.4 million barrels per day (bpd) for the second consecutive year, despite positive contributions from pockets of demand growth in key emerging economies. World production capacity exceeded oil demand at 89.4 million bpd.

Motorists at a Petronas station in Kuala Lumpur. An area of concern highlighted by the national oil company during its first quarter results media briefing on Monday was the possibility of a double-dip recession and its repercussio n on oil prices.— Reuters

While the jury is still out on whether there will be a double-dip recession, the global economy is poised for slower growth next year as emerging markets come off their sharp growth seen in the first half of this year.

Despite the fact that world oil demand is expected to hover around 86.5 million bpd this year and increase marginally to 87.8 million bpd next year, a cooling off in global economic growth may see emerging economies scaling back on their oil demand.

For its first quarter ended June 30, Petronas posted a 60% jump in net profit to RM12.3 bil while revenue rose 26.3% to RM58.6bil, driven by higher oil prices and better sales demand.

Its results confirmed that the refining turnaround was felt globally as profits from oil majors like ExxonMobil Corp and Royal Dutch Shell Plc also grew.

With the global economic environment still looking fragile, Petronas does not expect its second half results for the year ending March 31, 2011 to be as good as the first half. Its second quarter results for the three month period ended Sept 30 will be released in two months.

Its oil and gas production for the first quarter dropped 0.5% to 1.079 billion barrels of oil equivalent per day from 1.084 billion barrels in the previous corresponding period.

Change in strategy

Another consideration to Petronas’ revenue stream is the outcome from the change in strategy this year to cutback on exploration works overseas and beef up domestic exploration instead.

The domestic oil exploration would see Petronas drill deeper for oil and gas in the shallow waters of Malaysia and to increase the amount of oil it pumps out from existing wells in the country.

The group’s new direction is also to acquire proven oil and gas reserves instead of drilling for them.

StarBiz previously reported Petronas president and chief executive officer Datuk Shamsul Azhar Abbas as saying that most of its international activities abroad, with the exception of developing reserves in areas such as Iraq, Sudan and Myanmar, were focused on exploration.

Results from such exploration work have not matched expectations and the push is now more centralised on Malaysia.

The change in strategy is a departure from former president and CEO Tan Sri Mohd Hassan Marican’s emphasis that global operations were an integral part of Petronas’ business, which accounts for over 40% of the group’s revenue.

According to its 2010 annual report, international operations was the largest contributor to the Petronas’ topline at RM98.1bil, or 45.3% of the total revenue.

“We are in the midst of a portfolio rebalancing mainly because we are heavy on our foreign portion and neglected the domestic portion,” Shamsul told reporters on Monday, adding that the greater emphasis on domestic deepwater and unconventional plays was to arrest domestic production declines.

Petronas said that it is currently working on a masterplan on key growth areas, in line with the oil and gas sector being earmarked as a national key economic area.

ECM Libra Investment Research said in a report last month that the sector contributed US$1.1bil to the country’s gross national income (GNI) and is projected to contribute US$2.6bil to GNI by 2020.

The anticipated growth is to be driven by projects such as deepwater developments off Sabah and the offshore liquefied natural gas (LNG) regasification plant.

Petronas expects Malaysia’s first regasification plant to be ready to process some 3.5 million tonnes of imported LNG by July 2012. - The Star

Thursday, 14 October 2010

Petronas boosts local ops, downplays divestments

State oil firm Petronas said it will focus more on domestic operations but played down plans to further divest assets overseas.

Petronas officials today said the company would spend US$2 billion (RM6.2 billion) to develop 50-60 wells, with investment split equally between domestic and foreign projects over three years.

“We hope to rationalise and spend more on development than on exploration and bring that into the domestic side,” Petronas Group CEO Datuk Shamsul Azhar Abbas told reporters after presenting the the firm’s quarterly results.

“So when you talk about development and production, we are on the lookout for possible acquisitions.”

Shamsul’s comments come after the Fortune 100 company sold a five per cent stake in Australia’s liquefied natural gas project to France’s Total and media speculation it will divest its 14.5 per cent share in Cairn India Ltd, which is subject to a takeover offer from Vedanta Resources.

“We have not come to a decision on what to do with our Indian equity but we are not keen to leave the country,” said Shamsul who replaced hard-talking Tan Sri Hassan Merican in February.

Petronas will continue to focus on other overseas assets including the four wells in Iraq it is jointly developing with other oil majors and the Carabobo Project 1 in Venezuela.

Shamsul said the company had no plans of taking over a stake in Iran’s giant Azadegan oilfield project from Japan’s top oil explorer Inpex Corp, which may pull out to avoid US sanctions.

It said that it no longer had any involvement in the Iranian South Pars project as its contract had expired.

The oil firm posted a near 60 per cent jump in first quarter earnings to RM12.3 billion on recovering demand but warned that the uncertain global economy may curb future profits.

It was the first time Petronas has reported its results on a quarterly basis, as it seeks to increase its transparency.

The April-June results confirmed the refining turnaround was broadbased as profits from oil majors like Exxon-Mobil, ConocoPhillips and Royal Dutch Shell have also climbed.

“The healing from this slowdown will take longer than previous recessions,” Shamsul told reporters.

Petronas, which manages Malaysia’s energy reserves, said the country’s total oil and gas output rose 0.3 per cent 1.59 million barrels of oil equivalent per day in the April-June period from a year ago on higher demand.

But the company’s international oil and gas share fell slightly to 1.8 per cent to 279,000 barrels of oil equivalent per day due to expiry of service contracts. — Reuters

Wednesday, 13 October 2010

Petra Energy awarded RM12m contract from Murphy Sabah Oil

PETRA ENERGY BHD has received a notice of award from Murphy Sabah Oil Co. Ltd to provide maintenance and repair services for rotating equipment for Murphy’s operations.

Petra Energy said, the duration of the contract is three years, effective from Sept 3 with two options to extend the duration of the contract for a further period of one year each.

It estimated the total value of the contract to be about RM12 million over the primary period of the contract.

Tuesday, 12 October 2010

Dialog Group secures RM60.6m Petronas Carigali contract

DIALOG GROUP BHD subsidiary, Dialog E&C Sdn Bhd has secured a RM60.66 million contract to build and commission a new condensate tank and associated facilities at Bintulu crude oil terminal.

Dialog said the contract was awarded by Petronas Carigali Sdn Bhd.

”The project will increase Dialog group’s order book of engineering, CONSTRUCTION, maintenance and fabrication projects in Malaysia and regional countries,” it said.

The company added the contract was also in line with its strategy to become a global provider of integrated specialist technical services as well as centralised tankage facility, engineering, construction, maintenance and fabrication services to the oil, gas and petrochemical industry.

Dialog said it would finance the working capital for the project from its own funds and/or bank borrowings.

Monday, 11 October 2010

Petronas works on growth masterplan

Petronas is drawing up a masterplan on its potential growth areas, in line with the Economic Transformation Programme’s (ETP) emphasis on oil and gas sector.

It is estimated that RM217.6bil will be needed from now until 2020 for the oil and gas and energy industry to continue contributing significantly to gross national income as envisioned under the ETP.

Petronas president and chief executive officer Datuk Shamsul Azhar Abbas said moving forward, the group aimed to focus on its domestic operations.

“We are rebalancing our portfolio. We hope to rationalise and spend more on development than exploration and bring that into the domestic side,” he said at the group’s first-quarter results briefing yesterday.

He added that the group was on the lookout for more acquisitions in the development and production areas.

On whether Petronas was selling its 14.9% stake in Cairn India Ltd, Shamsul said the group had yet to make a decision. Cairn India explores and produces crude oil and natural gas in India.

Petronas will also continue to focus on its other overseas assets like the four oilfields in Iraq it is developing alongside other oil players and another in Venezuela.

Sunday, 10 October 2010

Petronas sells Ethiopian assets to SouthWest

Malaysian state-owned player Petronas has agreed to sell its oil and gas interests in Ethiopia to Hong Kong-based SouthWest Energy.

SouthWest said it had agreed to purchase 100% of Petronas’ interests in Blocks 3&4, 11&15, 12&16, 17&20 and the Calub & Hilala contract area.

All of the blocks are located south-east of Addis Ababa, in the Ogaden Basin, the largest proven hydrocarbon bearing sedimentary basin in Ethiopia, with proven gas reserves of 2-4 trillion cubic feet.

SouthWest chief executive Tewodros Ashenafi said the acquisitions provided the company with an opportunity to expand its exploration and production activities in the country.

“We intend to develop these new blocks together with our existing blocks as quickly as possible and to work on developing transport solutions for hydrocarbons in the Ogaden Basin,” he said.

The transaction is expected to be completed during the first quarter of next year. -

Saturday, 9 October 2010

Oil Output Reaches Post-Soviet High

Russian oil output hit a new record of 10.16 million barrels per day in September, Energy Ministry data released Saturday showed, as fields returned from maintenance.

Oil output had slumped to 10.06 million bpd in August, largely because of maintenance at Sakhalin-1, an ExxonMobil-led project off the Pacific coast. The dip in August followed seven months of consecutive records that reached 10.14 million bpd in July.

Output of Sokol crude at Sakhalin-1 — on the basis of a production-sharing agreement — was halted for all of August. The resumption of production boosted the contribution of PSA operators by more than 50 percent. Production was up in September throughout the industry, except at LUKoil, where output fell 1.1 percent from August.

Among individual oil companies, the biggest gains month on month and year on year were reported for midsized producer Bashneft, the oil unit of Sistema, which last year consolidated oil assets once held by the regional government.

Bashneft is widely viewed by analysts as the leading contender for the biggest new fields in the state's portfolio — the Arctic Trebs and Titov fields — with 200 million metric tons of reserves. An auction is expected in December.

The ministry data confirmed that oil loadings at Russia's key ports fell by more than 6 percent as pipeline monopoly Transneft conducted maintenance work.

Gas output showed a seasonal recovery to 47.94 billion cubic meters in September, up more than 10 percent from August output of 43.32 bcm and up more than 5 percent from September 2009.

Gazprom's output rose 12.5 percent month on month, making up the bulk of the recovery. Gazprom's production was up 2.8 percent from last year's levels. -

Friday, 8 October 2010

Petronas could get handsome profit from Cairn India sale

Petronas looks set to walk away with a handsome profit from its 14.9% equity interest in Cairn India Ltd (CIL) if a general takeover offer goes through.

CIL operates India’s largest onshore oilfield in Mangala in the desert state of Rajashtan in Northwest India. The company holds 10 production-sharing contracts with the Indian government and other exploration companies. It also owns oil blocks in Sri Lanka.

In August, UK-listed Vedanta Resources Ltd, controlled by billionaire Anil Agarwal, made a general offer of Rs355 (RM24.29) per share for all Cairn India shares subsequently to its proposed purchase of between 40% and 51% equity stake in the oil driller from Cairn Energy plc.

Vedanta is offering Rs405 per share to buy the block from Cairn Energy compared with Rs355 for the general offer (GO). The lower offer is because of a non-compete fee of Rs 50 per unit to be paid to Cairn Energy’s block of shares.

Acquirers pay non-compete fees to the target company’s promoters in lieu of a commitment for not entering the same business in the near future.

Nevertheless at Rs355 or Rs405 or in between, it will still be a lucrative deal for the national oil company.

The divestment is believed to be part of Petronas’ new strategy to divest assets that are in markets that the national oil firm considers not strategic. It is learned that Petronas is also looking at hiving off assets in Pakistan . Petronas ventured into CIL in September 2006, a few months before the latter was listed in January 2007. Petronas had paid about US$700 million (RM2.17 billion) for a 10% stake, in a pre-listing placement or at Rs176.5 a share.

Petronas' new strategy is to divest assets in non-strategic markets. Photo by Reuters

According to news reports in March 2008, Petronas in another private placement acquired an additional 2.7% or 63.3 million shares at US$5.55 (Rs 224.30) per share or about US$350 million in total. Then in October 2009, Petronas bought an additional 2.3% for US$240 million (Rs260 per share), taking its stake to 14.9%.

In total, Petronas investments in CIL amount to almost US$1.3 billion. At Vedanta’s offer of Rs355 per share, Petronas’ 283.4 million shares or 14.9% are valued at US$2.2 billion, which marks a gain of about US$900 million.

However, the chunk could worth more. Vedanta and Agarwal have come under pressure to raise its price for its GO for CIL shares. A panel of the CIL’s independent directors assessing the GO stated that the decision to pay a higher price to Cairn Energy plc is not the “best corporate governance”practice. At an AGM on Sept 15, Cairn India appointed two independent directors to a two-member panel to assess the GO.

“The panel believes that Vedanta’s proposal to offer higher price to Cairn Energy plc, promoter of CIL, than other shareholders of CIL are in line with SEBI rules, but it’s not in line with the best corporate governance,” Omkar Goswami, an independent director on the board of Cairn India who is on the panel, was quoted by the media as saying.

If the GO is upped to Rs405, Petronas stands to make US$2.5 billion, an extra of US$300 million compared with the offer of Rs355 apiece.

Nonetheless, Oil and Natural Gas Corp of India, a state-controlled entity, which has the first right of refusal on CIL’s shares, is not seeking to counter bid. This has somewhat eased the pressure on Vedanta to raise its offer to appease the minorities.

There are also issues with the Indian government vetting Vedanta’s oil and gas prowess, which could scuttle the entire takeover. Oil Secretary (Oil Ministry’s top bureaucrat), S Sudareshan, said at the press conference in Mumbai recently that the issues of the technical capability of the parent company are guaranteed in the production-sharing contracts, so the parent company status would have to be examined.

In contrast to Vedanta, which is involved in mining, the current parent of CIL is Edinburgh-based Cairn Energy plc, a renowned independent oil and gas player, listed on the London Stock Exchange.

Sudareshan is understood to have conveyed his sentiments that his ministry can review production-sharing contracts to the Securities & Exchange Board of India (SEBI) as well.

SEBI has yet to give the green light for Vedanta to buy the block from Cairn Energy.

Thursday, 7 October 2010

Iran breaks gasoline production record

Deputy Oil Minister Alireza Zeighami says Iran has broken the record in gasoline production with an output of 66.5 million liters per day.

"Next year 27 million liters will be added to the country's gasoline production," said the Iranian oil official.

While Iran is the second-biggest crude oil producer in the Middle East, its limited refining capacity forced it to depend on imports to meet domestic demand for gasoline.

However, according to Iranian officials, the country has now reached self- sufficiency in gasoline production.

"Gasoline production projects are already underway at Shazand, Abadan, and Tehran refineries and we are trying to boost their production capacity by the yearend (Iran's calendar year ends on March 20)," he told SHANA.

In June, the UN Security Council imposed a fourth round of sanctions on Iran over its nuclear activities over accusations that the country is pursuing a military nuclear program.

Tehran has repeatedly refuted such allegations and maintains it has the right to use nuclear technology for civilian purposes as a signatory to the Nuclear Non-Proliferation Treaty and a member of the International Atomic Energy Agency.

The US-engineered UN Sanctions mainly target Iran's energy and financial sectors. -

Wednesday, 6 October 2010

Petronas to retain investment in Iran: CEO

Petroliam Nasional Bhd (Petronas) has not made any decision to leave Iran although its contract in the Iranian South Pars project has expired, says president/chief executive officer(CEO), Datuk Shamsul Azhar Abbas.

"At this point in time, there are a couple of opportunities to which I don't think it is the right time for us to leave Iran," he told reporters after announcing the company''s first-quarter result here today.

He said this when asked whether Petronas would leave Iran to avoid US sanctions.

Royal Dutch Shell and other international oil companies have ended their operations in Iran to avoid US sanctions aimed at halting its nuclear enrichment programme.

France's Total, Norway's Statoil and Italy's ENI had also announced they would stop their activities to evade the penalties which target companies doing business with Iran.

Japanese oil explorer, Inpex Corp, had also said it would exit the oil field project despite not on the US list targeted for the sanctions.

Shamsul Azhar also said Petronas has no plan to take over Inpex Corp's stake in Iran's giant Azadegan oilfield project.

Meanwhile, asked to comment on talks that Petronas wanted to divest its 14.5 per cent stake in Cairn India Ltd, he said: "We have not come to a decision on what to do with our Indian equity."

He said Petronas was actually looking to review its global expansion overseas and ramp up its domestic operation to focus on the exploration in areas it had neglected before.

"We hope to rationalise and spend more on development than on exploration and bring that into the domestic side. "So, when you talk about development and production, we are on the lookoutfor possible acquisitions," he said.

Petronas would spend about US2 billion (US1=RM3.09) on capital expenditure to develop around 50-60 wells under its three-year exploration and production programme domestically.

On the regasification project, Shamsul Azhar said, Petronas expected the plant to be ready by July 2012. He, however, declined to elaborate.

Petronas Gas Bhd has been commissioned by Petronas to do a study on the project and this was announced by Petronas Gas Bhd's former chairman Datuk Wan Zulkiflee Wan Ariffin on July 22 at the company''s annual general meeting. -- Bernama

MISC Heavy Engineering Unit Said to Seek $647 Million in IPO Share Sale

Malaysia Marine & Heavy Engineering Holdings Bhd. aims to raise as much as 2 billion ringgit ($647 million) in the Southeast Asian country’s biggest initial share offer so far this year, said two people familiar with the matter.

Its prospectus will be unveiled on Oct. 6, according to an e-mailed invitation today from its parent, MISC Bhd., the world’s biggest owner-operator of liquefied natural gas tankers. Malaysia Marine will start taking orders from investors the same day, said the two people, declining to be identified as the information isn’t public.

The IPO may surpass Sunway Real Estate Investment Trust’s 1.5 billion offering, Malaysia’s biggest share sale so far this year, and underscores rising investor appetite for equities in Malaysia amid an economic rebound from last year’s recession.

Malaysia Marine plans to use some proceeds from the share sale to help upgrade its Pasir Gudang engineering shipyard in the country’s southern Johor state, according to an earlier draft prospectus. It also intends to invest in the Kiyanly yard in Turkmenistan which it manages for Petronas Carigali Sdn., it said.

JPMorgan Chase & Co., Maybank Investment Bank Bhd. and Credit Suisse Group AG are managing the share sale. MISC set an indicative initial offer price of 3.80 ringgit per share for the listing of Malaysia Marine, according to a circular approved by shareholders on Sept. 22. MISC declined to comment on sale size, the company said by e-mail today.

MISC is controlled by state oil and gas company, Petroliam Nasional Bhd., which said on April 8 it also list its petrochemicals business this year, following the prime minister’s call for government-linked companies to sell assets and attract foreign investors.

MISC said on July 23 it intends to sell a 25.5 percent stake in Malaysia Marine. The unit posted net income of 279 million ringgit in the year ended March 31, compared with 278 million ringgit a year earlier. -

Tuesday, 5 October 2010

Petronas to deliver stellar 1Q results

Petronas, which is announcing for the first time its results on a quarterly basis today, is expected to show a strong increase in earnings in US dollar terms for 1QFY11 (quarter ended June 30, 2010), buoyed by a strong recovery in crude oil prices.

Nonetheless, the rate of increase in its earnings in ringgit terms may be smaller due to the sharp appreciation of the local currency against the US dollar compared to a year ago.

Petronas announces its results in both US dollar and ringgit.

The price of Tapis crude, the premium crude that is extracted locally, was traded below US$50 (RM154) per barrel in April last year. The price rebounded to reach a high of US$88.76 in November 2009 and has since been hovering in the range of US$70 to US$80.

For 1QFY11, the average price of Tapis crude was US$77.35 per barrel, up 34% from US$57.78 in the previous corresponding quarter. Such a big jump in Tapis crude prices would have presumably lifted the national oil company’s results, which suffered a setback a year ago due to the financial crisis that battered energy prices.

Other than an anticipated sharp increase in earnings, it is hard to gauge what Petronas’ 1QFY11 profit will be like since the national oil company has never revealed quarterly numbers in the past.

In 1HFY10 (April to September 2009), Petronas’ earnings were badly hit by the meltdown in energy prices, including Tapis crude. Its net profit plunged 47% to RM20.3 billion for the six-month period in 2009, from RM38.6 billion in the previous year. Revenue dipped 37% to RM98.2 billion from RM157.2 billion.

With a low base of revenue and earnings last year, it is obvious that Petronas’ 1QFY11 earnings will enjoy a huge jump on a year-on-year basis.

Nonetheless, the ringgit’s strong appreciation against the US dollar from a year ago would have potentially moderated the increase in the national oil company’s earnings in the local currency.

The management of Petronas once said every 10 sen gain in the ringgit against the greenback will trim the company’s profit by about RM2.5 billion, and vice versa.

The ringgit has strengthened substantially against the US dollar so far this year. The local unit was hovering between RM3.20 and RM3.30 against the greenback in 1QFY11, a substantial rise compared with the band of RM3.50 to RM3.60 in the previous corresponding quarter.

But overall, Petronas is very likely to see an impressive rise in earnings, taking into account much higher crude prices, although the ringgit’s strength will eat into its earnings when translated to the local unit.

The increase in Petronas’ earnings will also mean it could afford to at least sustain the generous dividend payment to its shareholder, namely the federal government.

This will be a blessing to the federal government which relies heavily on dividends from Petronas to fund its expenditure while narrowing the yawning budget deficit.

FY10 ended March 31 wasn’t a good year for Petronas which recorded a 23% drop in net profit to RM40.3 billion amidst an 18% fall in revenue to RM216.4 billion from RM264.2 billion previously.

However, the national oil company maintained its dividend payment of RM30 billion to the federal government for FY10. The hefty dividends in FY10 raised its payout ratio to 74% — probably the highest in history. The payout ratio was 39% in FY06 to FY08, and 57% in FY08.

The taxes and dividends paid by Petronas account for over 40% of government revenue.

In total, Petronas contributed RM53.5 billion in dividends and taxes (RM18.7 billion) to the federal government in FY10. On top of that, the oil major also bore RM18.9 billion in gas subsidy during the year.

Monday, 4 October 2010

Royal Dutch Shell among host of international companies quit Iran oil field project to escape U.S. sanctions

Royal Dutch Shell and a host of other international oil companies have ended operations in Iran to avoid U.S. sanctions aimed at halting its nuclear enrichment programme.

France's Total, Norway's Statoil and Italy's ENI have announced they will stop their activities to evade the penalties which target companies doing business with the Middle East country.

Japanese oil explorer Inpex Corp has also said it could pull out of an oil field project, despite not being named on a U.S. list targeted for the sanctions.

The U.S. has increasingly tightened sanctions against Iran over concerns about its nuclear programme and whether it is attempting to acquire nuclear weapons.

Tehran has repeatedly insisted the programme is purely for peaceful purposes.

Japanese trade minister Akihiro Ohata said: 'Inpex is considering things including a withdrawal based on its own management judgement.

Sanctions: The Balal offshore oil platform in the Gulf. Royal Dutch Shell and a host of other oil companies have pulled out of Iran to avoid U.S. financial penalties

'I want to respect their business decision and refrain from interfering in the matter.'

Inpex has a 10 per cent stake in the Azadegan oil field project and could struggle to raise funds from U.S. financial institutions and global development projects if it was subject to sanctions.

The Azadegan field was Iran's biggest oil find in 30 years when it was discovered in 1999 - with estimated reserves of 26 billion barrels and available resources believed to be around six billion barrels.

Concerns: France's Total has also pulled out of the Azadegan oil field project

Naftiran Intertrade Co, a subsidiary of the National Iranian Oil Company based in Switzerland, will face new sanctions.

The field started partial output in 2008.

Recent legislation gives the U.S. administration the power to penalise foreign companies which invest more than £12.7m in Iran's energy sector.

However, companies taking steps to comply with the law are exempted from penalties.

'People are increasingly reaching the conclusion that it's simply not worth it to engage in activities with Iran,' Deputy U.S. Secretary of State James Steinberg said.

Saturday, 2 October 2010

Petronas tight-lipped over US$900mil stake sale in Cairn India

Petronas remains tight-lipped over the sale of its 14.9% equity stake in Cairn India Ltd, which explores and produces crude oil and natural gas in India.

The local national oil company declined comment yesterday when contacted by StarBiz over a local business daily’s report that Petronas was looking to divest its stake in Cairn India, as part of its new strategy to do away with assets in markets that are considered not strategic.

The news report on Wednesday said Petronas would pocket a handsome gain of US$900mil from the equity sale in Cairn India.

London Stock Exchange-listed Vedanta Resources Plc announced in August its plan to buy a majority stake, between 40% and 51%, in Cairn India from parent company Cairn Energy Plc for up to US$8.48bil. Vedanta also made an open offer to buy up to 20% of Cairn India from minority shareholders.

Mining billionaire Anil Agarwal’s Vedanta is seeking to buy some 60% of Cairn India for as much as US$9.6bil. Vedanta is offering 405 rupees per share to buy the majority stake from Cairn Energy while its general offer to minority shareholders is 355 rupees for each Cairn India share.

The lower offer is because of a non-compete fee of 50 rupees per unit to be paid to Cairn Energy’s block of shares. Cairn India saw its share price shed 0.93% to end the day at 330.4 rupees yesterday.

Should Petronas decide to take up the general offer, its current combined stake, or 283.4 million shares, in Cairn India is valued at US$2.24bil based on the general offer price of 335 rupees. Petronas first made its entry as a shareholder in Cairn India by purchasing a 10% stake for US$700mil in a pre-initial public offering placement exercise carried out in 2006.

It has spent roughly US$1.3bil to own a 14.9% stake, with its lastest purchase of a 2.3% stake taking place last October for some US$240mil. - The Star

Friday, 1 October 2010

Fluor secures Shell's Project Hijau Gasoil Phase I

Fluor Corporation, which is engaged in providing engineering, procurement, construction and maintenance, as well as project management services, has received the Project Hijau Gasoil Phase I from Shell Refining Company, Malaysia.

The project comprises of a new 6,000-ton per day diesel processing unit located in Port Dickson, Malaysia. Fluor will perform engineering, procurement and construction management (EPCM) services as a follow on scope of work to its previous front-end engineering and design (FEED) work.

The project is expected to peak at approximately 650 craft and professional employees with work performed from Fluor's Manila, the Philippines; Haarlem, the Netherlands offices; and the Kuala Lumpur project site.

Peter Oosterveer, president of Fluor's Energy & Chemicals Group, said: "This important new project award from Shell follows our successfully completed FEED work on Hijau. We appreciate the confidence that Shell has demonstrated in Fluor by awarding us this next phase to bring the project to reality. Southeast Asia is a strategic geography for both Shell and Fluor, and this EPCM project will further solidify our strength in this area."

RM1bil MMHE listing expected end-Oct

MISC Bhd’s subsidiary, Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), is expected to be listed at end-October with an indicative initial public offering (IPO) price of RM3.80 per share, according to its circular.

MISC said it expected to receive gross proceeds of between RM1.04bil and RM1.16bil if the offer shares were sold at the IPO price.

The company said it expected to utilise the proceeds mainly for capital expenditure and working capital.

MISC said MMHE would receive gross proceeds of RM995.6mil if the shares were issued at the IPO price, and that it would be utilised for a yard optimisation programme, capital expenditure in Turkmenistan and listing expenses.

According to the circular, the yard in Pasir Gudang is currently undergoing a series of infrastructure upgrading works under the yard optimisation programme, which commenced in 2006 and is expected to be completed by 2014.

MISC said the increased activities in Turkmenistan required additional capital expenditure, subject to the approval of the MMHE board for the purchase of moveable heavy equipment.

Based on the IPO price, MMHE’s total market capitalisation is expected to be at RM6.08bil upon the proposed listing, according to the circular.

MMHE’s IPO will involve an offer for sale of 146 million existing shares to institutional investors. A total of 262 million new shares will also be issued, of which 184 million and 78 million shares will be set aside for Bumiputera and retail investors respectively. MISC said the IPO would boost the group’s marine and heavy engineering businesses.

At its EGM yesterday, shareholders approved the proposed listing of MMHE. The company declined to comment on the proceedings when approached by reporters.

But a shareholder revealed that MISC shareholders would get a 5% discount on MMHE’s IPO price.