Oil and gas service provider Dialog Group Bhd, Roc Oil Malaysia (Holdings) Sdn Bhd and Petronas Carigali Sdn Bhd have bagged a 15-year small field risk service contract (SFRSC) from Petroliam Nasional Bhd for the development and production of petroleum from the Balai Cluster Fields, Sarawak estimated to cost up to US$950mil (RM2.8bil).
“We are excited about the prospects of this project...being only the third local company to have been awarded a risk service contract (RSC) after Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd,” Dialog Group Bhd executive chairman Ngau Boon Keat told Starbiz yesterday.
The contractor group will be 32% owned by Dialog's unit Dialog D&P Sdn Bhd while ROC Oil Malaysia, which is part of the Australian Roc Oil group, and Petronas Carigali will own 48% and 20% interests respectively in the group which will form a joint venture company to manage the SFRSC .
The joint venture company will carry out the management, operations and development of the SFRSC including the funding for the cost of development and production of the fields, Dialog said.
Dialog said it would fund its portion of its working capital for the project from its internally generated funds, bank borrowings and/or proceeds from equity/debt fund raising exercises.
“The breakdown of the funding is pending finalisation,” it said, adding that the board was mindful to maintain a healthy gearing level.
Shares in Dialog were suspended in yesterday's afternoon trading session pending the announcement. It was last traded at RM2.67 6 sen or 2.3% up from the previous day's close.
Dialog said the development and production of the petroleum located offshore Bintulu, Sarawak would be carried out in two phases - the pre-development phase, estimated to cost between US$200mil and US$250mil and which is scheduled to commence this year, taking up to 18 months to complete, as well as the development phase estimated to cost between US$650mil and US$700mil.
The group will submit a field development plan for all or some of the fields on the successful completion of the pre-development phase and agreement on the economic viability of the fields.
Production from all the fields in the cluster was planned to be online within 24 months from commencement of the development programme, Dialog said adding that development activities were planned to include the drilling of wells, the installation of platforms and topsides and pipelines.
Industry sources said the potential return on marginal oil field development for the contractors could be as high as 15%, in line with returns seen for upstream works.
In its announcement to Bursa Malaysia, Dialog said the contract was expected to contribute positively to the group's future earnings.
In January this year, a consortium formed by Kencana, SapuraCrest and Petrofac Energy Developments Sdn Bhd which is part of the London-listed Petrofac Ltd were awarded the country's first RSC.
The RSC is a new contract implemented for the development and production of local marginal oilfields.
