Tuesday, 30 November 2010

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Monday, 29 November 2010

MISC net profit quadruples to RM369.4mil for Q2

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

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

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

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

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

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

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

Sunday, 28 November 2010

Positive debut for Petronas Chemicals

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

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

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

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

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

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

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

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

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

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

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

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

Friday, 26 November 2010

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

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

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

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

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

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

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

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

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

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

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


Strong debut seen for Petronas Chemicals

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, 24 November 2010

Petronas Carigali Overseas Finds Oil At Ham Rong Field PetroVietnam

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

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

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

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

TOTAL Expands in Malaysia

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

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

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

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

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

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

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

Monday, 22 November 2010

Gazprom takes stake in Petronas's Cuba project

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

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

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

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

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

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

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

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

Saturday, 20 November 2010

Petronas to announce specific incentives for O&G sector

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

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

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

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

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

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

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

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

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

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

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

Friday, 19 November 2010

Woodside, Petronas Close to Deal on LNG Cargoes

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

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

Saturday, 13 November 2010

Australia approves Shell's giant floating LNG plant

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Malaysia Will Offer Tax Breaks to Spur Oil Exploration

Malaysia will offer tax incentives to encourage the exploration of less-profitable fields to boost revenue and extend the life of the country’s petroleum reserves.

The nation wants to attract oil and gas companies including state-owned Petroliam Nasional Bhd., or Petronas, to explore “marginal” fields, Second Finance Minister Ahmad Husni Hanadzlah said in an interview with Bloomberg yesterday. High exploration costs make some areas economically unviable.

“We are highly dependent” on oil revenue, Ahmad Husni said. “With the incentives, we’re confident that not only Petronas, but also the foreign petroleum companies, will continue their exploration.”

Malaysia’s oil and gas production has fallen for two straight years, declining to the equivalent of 1.63 million barrels of oil a day in the year ended March 31 from 1.66 million a day a year earlier, according to Petronas’s 2010 annual report. The country has tapped deepwater fields to increase reserves as energy demand rises.

“A lot of marginal oil fields were abandoned over the past few years, so giving a tax incentive will increase the possibility of more exploration,” said Arhnue Tan, an analyst at ECM Libra Capital Sdn. in Kuala Lumpur. “Oil prices at this level also make it potentially more profitable. The timing is just right.”

Two-Year High

Crude oil futures on the New York Mercantile Exchange have risen 10 percent this year, yesterday touching $88.63 a barrel, the highest level in two years.

Malaysia’s crude oil reserves may last 24 years based on current output levels, the finance ministry said in its 2010/2011 economic report on Oct. 15. The country has sufficient natural gas reserves for 38 years as of Jan. 1.

About 23 percent of Malaysia’s oil reserves are located in deepwater fields and close to 15 percent are in fields with high carbon dioxide content, Petronas said in the annual report.

“The oil reserves are there, but for them to do more exploration, they need the government support” to compensate for the higher drilling costs, said Ahmad Husni. The government has approved the initiative and it will be announced soon, he said, declining to give a specific time. While the tax income may initially fall, the amount of revenue to be generated later is “huge,” he said.

The government’s tax revenue from the petroleum industry will drop 33 percent to 18.3 billion ringgit this year, according to the economic report. Indonesia is the biggest oil and gas producer in Southeast Asia.

Thursday, 11 November 2010

Petronas ups Tapis price factor to US$5.30

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

Petronas, as the Kuala Lumpur-based company is known, raised the factor to US$5.30 a barrel for November, up from US$4.20 in October, said an official today, asking not to be identified because of corporate policy.

The factor averaged 59 cents last year and US$2.48 in 2008. - Bloomberg

Technip to launch RM600mil pipe-manufacturing plant in Johor

Technip Asia Pacific Sdn Bhd expects to launch a RM600mil flexible pipe-manufacturing plant in Tanjung Langsat, Johor, on Nov 25.

Technip Asia is a subsidiary of Pacific Technip SA of France which provides oil and gas-related engineering works and technology.

Technip Asia Pacific senior vice-president Edgar Pushparatnam said the plant had started operation and would reach its maximum annual output of 200km of pipes in 2013.

Pushparatnam said the plant would be the first of its kind in South-East Asia and was Technip’s third, after its facilities in Africa and Brazil.

“We command 60% to 70% of the global market for flexible pipes for the oil and gas industry and we expect the Johor plant to further strengthen our leadership position,” he told StarBiz yesterday.

The company expects flexible pipelines with diameters of four to 14 inches to be its most profitable products. “We expect this market segment to grow significantly over the years,” he added.

Compared with rigid pipelines, Pushparatnam said flexible pipelines were more resistant to corrosion, required less maintenance, easier and quicker to install and could be reused and extended.

However, he said, it doubled the cost of rigid pipelines.

Pushparatnam said the Johor plant would meet the demand for flexible pipelines in the oil and gas industry, for the replacement market (of rigid pipelines) and for deep-sea oil and gas explorations.

Technip supplies its flexible pipelines to several countries in Asia such as Vietnam, Indonesia and Malaysia.

Pushparatnam said he expected return on investment for the Johor plant to take five to seven years.

He said the company had started the second phase development of the Johor plant and had so far invested RM50mil.

“The completion of the second phase, costing about RM200mil, will take a year or so,” he said, adding that it would manufacture steel tubes and thermoplastic hoses, known as umbilicals, for the oil and gas industry.

Wednesday, 10 November 2010

Ex-CEO says BP was unprepared for oil spill

Former BP PLC chief Tony Hayward has acknowledged that the company was unprepared for the disastrous Gulf of Mexico oil spill and the media frenzy it spawned, and said the firm came close to financial disaster as its credit sources evaporated.

In an interview with the BBC broadcast Tuesday, Hayward said the company's contingency plans were inadequate and "we were making it up day to day."

"What was going on was some extraordinary engineering," he told the broadcaster in an hour-long program devoted to the spill. "But when it was played out in the full glare of the media as it was, of course, it looked like fumbling and incompetence."

An April 20 explosion aboard a Gulf oil rig killed 11 workers and kicked off the worst oil spill in U.S. history.

Hayward said BP was "not prepared to deal with the intensity of the media scrutiny" it faced as millions of barrels of oil poured into the ocean and washed up on shore.

Hayward left his post last month after taking much of the flak for BP's poor public handling of the disaster. Gaffes, including his statement that "I want my life back," were ridiculed in the U.S. media and seized on by critics of BP.

Hayward said he was "pretty angry" at the personal vilification.

"If I had done a degree at RADA (The Royal Academy of Dramatic Art) rather than a degree in geology, I may have done better, but I'm not certain it would've changed the outcome," he said.

He defended his much-criticized decision to take part in a yacht race with his family at the height of the crisis, saying he had not seen his son for three months and had only been aboard for six hours.

"I'm not certain I'd do anything different," Hayward said.

He said BP had found itself unable to borrow from international investors during the spill crisis, threatening its finances. He said that before a meeting with President Barack Obama at the White House in June, "the capital markets were effectively closed to BP."

"We were not able to borrow in the capital markets, either short- or medium-term debt at all, " he said. "It was a classic financial crisis issue."

Hayward's successor, Bob Dudley, told the program that "these were frightening days" for BP.

"With a company the size of BP, its reputation, what it does — you almost can't quite believe how close you are" to financial disaster, Dudley said. "Bank of America called — wouldn't buy crude from us. Suppliers were asking for money up front. This was a very unusual environment for BP. It was a very, very intense period."

Dudley and Hayward also detailed their interactions with the White House, whose anti-BP statements Hayward in part blamed for pushing the company to the brink of disaster. But he described the June 16 meeting with Obama — during which BP agreed to set up a $20 billion fund for victims of the Gulf oil spill and suspend its dividend — as civil.

"It wasn't confrontational, it wasn't aggressive. It was practical and workmanlike," Hayward said. He added that the meeting also yielded what he called an "almost unspoken agreement" that the White House would cool its rhetoric.

Dudley used the program to defend the company's safety record, saying that a series of disasters — including the deadly 2005 explosion at BP's refinery in Texas City, the near-sinking of one of its flagship rigs a few months later and the huge oil spill in Alaska in 2006 — were not related.

"The company has always had this strong, strong ethos around safety," Dudley said. "It's also had a business model that drives for performance. And we've got to continue to find that right - AP

Sunday, 7 November 2010

Petronas Chemicals to expand capacity

Petronas Chemicals, soon-to-be-listed arm of Petronas, plans to carry out selective acquisitions in the mid-to-long term.

Petronas Chemicals Group Bhd (PCGB) (6033), one of the largest petrochemicals producer in Southeast Asia, plans to grow by expanding its production capacity and carrying out selective acquisitions in the mid-to-long term.

PCGB is the soon-to-be-listed petrochemicals arm of Petroliam Nasional Bhd (Petronas).

"In the medium to longer term, we will look to expand our product portfolio and production capacity - including through the development of new production plants using gas and alternate types of feedstock - as well as potentially synergistic and prudent acquisitions to pursue growth," it said in its draft prospectus released yesterday.

It may consider opportunities outside Malaysia, it added.
PCGB, made up of 22 petrochemical-related companies within the Petronas group, has total assets of about RM27 billion as at end-March.

Its net profit fell by a quarter to RM2.6 billion in the financial year to March 31 compared with RM3.4 billion in the year before.

Revenue declined to RM12.2 billion from RM12.4 billion before.

Datuk Tengku Mahamad Tengku Mahamut, 56, a director of several companies within the Petronas group, has been named president and chief executive officer of PCGB.

PCGB is currently considering expanding its operations in Sabah and Sarawak to take advantage of the natural gas feedstock available in that region.

For instance, it may develop a world-scale greenfield ammonia and urea production facility there.

"This project is currently at a pre-feasibility study phase, and we expect to make a final decision in fiscal year 2012 whether to proceed with the investment," PCGB said.

On top of that, it also expects to get more closely involved with a greenfield project that Petronas is currently evaluating.

The project is to develop an integrated refinery and petrochemicals complex in Peninsular Malaysia, together with international partners, to produce products like naphtha that can be used as feedstock for petrochemical products.

PCGB's draft prospectus did not give details on the size of the listing, but it has been reported that it may raise about US$2 billion (RM6.24 billion) from the exercise.

PCGB is one of two Petronas subsidiaries slated for a listing on Bursa Malaysia this year, the other being Malaysian Marine and Heavy Engineering Sdn Bhd, which is expected to be listed next month.

CIMB Investment Bank Bhd was appointed as PCGB's principal adviser and managing underwriter, with Deutsche Bank AG and Morgan Stanley & Co helping as joint global coordinators and bookrunners.

Saturday, 6 November 2010

Saipem awarded offshore contracts worth €700m

Saipem, Italian turn-key contractor for the oil and gas industries, has been awarded project contracts in both Europe and Africa.

In Nigeria, Saipem has been awarded a subcontract for the Critical Crude Pipeline Replacement Project in Nigeria, in which the scope of work encompasses fabrication, transportation, installation and testing of the replacement of six pipelines connecting six platforms in an offshore field, for a total length of 85km, including shore approach and bridges.

The marine activities will be carried out between the fourth quarter of 2010 and the second quarter of 2011, mainly by the Crawler vessel.

In Spain, UTE ACS Cobra Castor awarded Saipem the Offshore Construction Gas Pipeline contract as part of the Castor Underground Gas Storage Development Project for the delivery of onshore and offshore facilities for the compression, transportation, storage, production, treatment and reinjection of natural gas into the public grid.

Saipem’s scope of work will encompass the installation of a 30in diameter offshore pipeline approximately 22km from land in mainland Spain at Vinaroz to the offshore field where the WHP platform, installed by Saipem 7000 in August 2010, is located.

Offshore activities will be performed between the end of 2011 and the first quarter of 2012.

Friday, 5 November 2010

Murphy Oil net rises 7 pct, revenue rises 17 pct

Murphy Oil Corp.'s net income rose 7 percent and revenue rose 17 percent as the company benefited from higher prices for natural gas and crude oil. But higher exploration and extraction costs and lower sales volumes were reasons why the third-quarter results fell short of Wall Street's forecasts, and shares slipped.

The oil company's net income was $202.8 million, or $1.05 per share, short of the $1.10 per share that analysts surveyed by Thomson Reuters expected. A year ago, the company earned $188.9 million, or 98 cents per share.

Revenue rose 17 percent to $6.06 billion, also short of analysts' predictions. Analysts expected $6.3 billion.

The stock fell 62 cents to $65.10 in after-hours trading, after falling 13 cents to finish the regular trading session at $65.72.

Thursday, 4 November 2010

PCG may invest US$1bil in facility

Company to decide on ammonia project in FY 2012

Petronas Chemicals Group Bhd (PCG) may invest up to US$1bil in a greenfield ammonia and urea production facility in Sabah to enhance its profile as a key ammonia and urea producer in South-East Asia, said its top executive.

PCG chairman Datuk Wan Zulkiflee Wan Ariffin said the project was currently at a pre-feasibility study phase and PCG would make a final investment decision in financial year 2012.

“We have not sanctioned the project yet and hope to do it by the next financial year, with a targeted commissioning date in 2015/2016. The investment for the facility will be between US$900mil and US$1bil,” he told reporters after PCG’s prospectus launch yesterday.

Proceeds from the initial public offering may be used for this facility as well as a greenfield project to develop an integrated refinery and petrochemicals complex in Peninsular Malaysia.

PCG could potentially raise gross proceeds of RM3.54bil from the issuance of 700 million new shares at a retail price of RM5.05. From the RM3.54bil, 63.3% would be used to expand PCG’s business and synergistic growth acquisitions within five years.

The company would issue a total of 2.48 billion shares under its initial public offering (IPO), of which 1.78 billion would be existing shares and 700 million would be new.

The retail price is RM5.05 while the institutional price would be determined through a bookbuilding exercise, which is ongoing and will end on Nov 12.

The gross proceeds of RM8.99bil from the existing 1.78 billion shares would go back into Petroliam Nasional Bhd’s (Petronas) coffers and be utilised by the group for capital expenditure, said Petronas executive vice-president for finance Datuk George Ratilal.

PCG’s two cornerstone investors, the Employees Provident Fund and Kumpulan Wang Persaraan, would take up 445 million shares, or 18%, of the 2.48 billion shares offered under its IPO.

Wan Zulkiflee said the company was on the start of an up-cycle that would continue until 2015 and that PCG was more focus on captive markets and pushing towards differentiated and specialised products.

PCG has a total of 22 companies producing a wide range of petrochemical products such as olefins, polymers, fertilisers and methanol.

The petrochemical industry has generated some US$3 trillion in revenue globally last year and is expected to grow at an average of 4.9% from 2010 to 2015.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said in a speech at the prospectus launch yesterday that the Petronas group could collectively account for over 10% of Bursa Malaysia’s total market capitalisation and over 16% of the FTSE Bursa Malaysia KL Composite Index.

“The listing (by PCG) is expected to be one of the largest ever undertaken in South-East Asia and will contribute significantly to the expansion of Malaysia’s capital markets by increasing the liquidity needed to fuel economic growth,” he said.

Muhyiddin said that government-linked investment companies were to divest their shareholdings in major companies listed on the stock exchange as a way to increase liquidity and trading velocity in the market.

Wednesday, 3 November 2010

Petronas Gas appoints 4 new directors after 2 resigned

Petronas Gas Bhd has appointed four new directors following the resignation of two directors, namely Datuk Mohammed Azhar Osman Khairuddin and Farehana Hanapiah.

It told Bursa Malaysia that the newly appointed non-independent and non-executive directors were Rosli Boni, Mohammad Medan Abdullah, Ramlan Abdul Malek and Lau Nai Tuang.

Mohammed Azhar also resigned as a Petronas Gas audit committee member. Rosli was appointed a new audit committee member.

Rosli is currently serving as the deputy chief executive officer with Malaysia Thailand Joint Authority, on secondment from Petroliam Nasional Bhd (Petronas).

Media is Petronas senior general manager (corporate services division), Ramlan is vice-president of petroleum management (exploration and production business), and Lau is vice-president of infrastructure and utilities (gas business).

In August, Petronas Gas announced the appointment of Datuk Anuar Ahmad as chairman, replacing Datuk Wan Zulkiflee Wan Ariffin.

Tuesday, 2 November 2010

Petronas to expand Malacca plant for high-grade fuel

* Expansion to produce Euro IV fuels, meet future demand

* Refinery to process more sour crude as output falls

* New hydrocracker started operation in Q3 (Adds details)

Petronas plans to expand and upgrade its Malacca refinery to produce higher-quality fuel and meet rising demand after recently raising the plant's capacity to 290,000 barrels per day (bpd), industry sources said on Thursday.

The project comes as several other refiners have revived or are considering expansions. Around 5.1 million bpd of net refining capacity is likely to be added between 2011 and 2015, according to Wood Mackenzie.

Upgrades will allow Petronas [PETR.UL] to process more sour crude at the refining complex, as the country's sweet crude production declines, one of the sources said.

The study, which will determine the capacity and investment costs, is expected to be completed in first-quarter next year, he said.

The company could not be immediately reached for official comment.

The expansion will be carried out at the refinery's Train 1, which has a design capacity of 100,000 bpd, but operates at 120,000 bpd and processes only locally produced sweet crude, the source said.


Petronas plans to produce Euro-IV gasoline and diesel at the refinery ahead of a possible government mandate to raise fuel standards in the country, the source said.

"Industry players are talking to the government although there is no specific date," he said.

The company is also looking at increasing capacity to meet stronger demand in the future, he said.

The project includes increasing the refinery's base oil output, he said. Petronas has a 300,000 tonne-per-year (tpy) Group III base oil plant at Malacca.

In the third quarter, Petronas started operations at a new 50,000-bpd hydrocracker which raised the overall refining capacity at Train 2 to 170,000 bpd, the source said.

Petronas owns 53 percent of the refinery while U.S. oil company ConocoPhillips (COP.N) holds the remaining stake.