Friday, 30 September 2011


Menteri Perumahan dan Kerajaan Tempatan, Datuk Chor Chee Heung berkata, siasatan awal Jabatan Bomba dan Penyelamat mendapati letupan di Empire Gallery, Subang, dipercayai berpunca daripada kebocoran saluran gas sebuah restoran di aras bawah pusat membeli-belah itu.

”Laporan awal pihak bomba juga mengesahkan semua aspek keselamatan yang melibatkan kebombaan berfungsi dengan baik,” katanya pada sidang media di tempat kejadian dekat sini, Khamis.

Chor berkata, mungkin kebocoran telah lama berlaku dan bila berlaku percikan api, ia telah menyebabkan letupan.

Beliau berkata, saluran gas berpusat di semua bangunan di Malaysia terletak di bawah kawal selia Suruhanjaya Tenaga dan pihak suruhanjaya mengesahkan saluran gas berpusat di pusat membeli-belah itu dipasang oleh pihak pakar.

Mengikut undang-undang di Malaysia setiap bangunan yang dipasang dengan saluran gas berpusat perlu menghantar laporan untuk diaudit setiap dua tahun, katanya.

“Namun agak malang bagi Empire Gallery kerana baru hanya beroperasi selama satu tahun setengah, kebocoran yang mengakibatkan letupan pula berlaku,” katanya.

Chor berkata, Jabatan Bomba dan Penyelamat, polis dan Suruhanjaya Tenaga masih terus melakukan pemeriksaan intensif untuk memastikan kawasan berkenaan selamat sebelum orang awam dibenarkan masuk.

Sementara itu, Penolong Pengarah Operasi Bomba dan Penyelamat Selangor, Mohd Sani Harul berkata, operasi menyelamat ditamatkan malam tadi.

“Operasi menyelamat telah ditamatkan namun pihak bomba masih melakukan pemantauan seperti memberi bantuan kepada pihak polis dan anggota (bomba) akan terus diletakkan 24 jam di sekitar kawasan selagi bangunan tidak diserahkan kembali sepenuhnya kepada tuan punya bangunan,” katanya.

Beliau berkata, pemantauan pihak bomba mendapati tiada gas dikesan kerana pihak pengurusan bangunan telah menutup saluran utama.

Tinjauan Bernama di lokasi kejadian mendapati beberapa pemilik kedai mengambil barang-barang dari kedai masing-masing untuk dipindahkan ke tempat lain.

Pengurus Restoran Chili Grill and Bar, Markhalim Khalid berkata, dia dibenarkan masuk ke kedai untuk mengambil dokumen-dokumen penting syarikat.

“Selagi restoran tidak dapat dibuka pekerja-pekerja akan dipindahkan untuk bertugas di cawangan lain,” katanya.

Pada kejadian yang berlaku awal pagi Rabu itu, empat orang cedera akibat letupan berkenaan.

Sabah-Sarawak gas pipeline to also benefit rural people

The massive Sabah-Sarawak Gas Pipeline (SSGP) will create many positive economic spin-offs for the people of both states, including the rural communities, says a Universiti Malaysia Sarawak (UNIMAS) academician who conducted a social impact study on the communities living within the vicinity of the pipeline.

Dr Shahren Ahmad Zaidi Adruce, Dean of the Cognitive Sciences and Human Development Faculty at UNIMAS, said the SSGP development would also create new economic activities in the rural areas.

Being built by Petronas at a cost of RM4.6 billion, the 512-km pipeline will transport gas from Kimanis in Sabah to the liquefied natural gas complex in Bintulu by end-2013.

Dr Shahren said its construction would mean that communities living along the pipeline would have more employment opportunities.

At the same time, the project would bring infrastructure amenities such as roads and telecommunications to these rural areas.

The spill-over effect of SSGP will be similar to the North-South Expressway in peninsular Malaysia in bringing economic growth, development in infrastructure and technology to enhance the people』s lives.

"Communities who live within a three-kilometre radius of the pipeline are those who will benefit most from this project.

"The project brings a lot of changes to the interior, especially in terms of infrastructure, to support the population』s basic needs and raise their standard of living," said Dr Shahren, who led the social impact research on communities living within the vicinity of the pipeline, stretching from Bintulu through Miri, Limbang and Lawas to Kimanis in Sabah.

The study, which commenced in 2007, had a sample size of 48 settlements and included focus-group interviews with the settlement』s population as well as non-governmental organisations.

Dr Shahren said some indigenous groups were at one time not supportive of the SSGP but later changed their mind when they "discovered that Petronas was not encroaching directly into some of the sensitive areas".

"Some of the areas in the pipeline project are very sacred to local communities. I am sure Petronas and the state government will look into this and solve the problem with the local communities.

"But, all in all, the local communities throughout the pipeline are giving positive support to this project," he said.

The SSGP is a part of the Petronas Sabah-Sarawak Integrated Oil and Gas Project to harness oil and gas resources in the offshore areas of Sabah and Sarawak.

Thursday, 29 September 2011

Fire at Singapore refinery contained, says Shell

Oil giant Royal Dutch Shell plc today said it contained a fire at its worldwide largest refinery in Singapore and shut down neighboring units as a precaution.

The fire at the Pulau Bukom refinery, about five kilometres south-west from Singapore’s mainland, started yesterday afternoon and flared up again in the evening.

Some company firefighters suffered heat exhaustion and minor injuries, but “no one was seriously hurt,” Shell said in a statement.

All staff were accounted for and non-essential staff had been evacuated, it added.

Shell said the fire had been contained within an area of approximately 150m by 50m.

“We believe it was an accident,” the statement said.

The Bukom site is Shell’s largest refinery globally in terms of crude distillation capacity with 500,000 barrels per day, according to the company website.

It said 90 percent of Bukom’s products were exported to countries in the Asia Pacific region and beyond.

SapuraCrest Orders Two Pipe-Lay-Cum-Heavylift Offshore Construction Vessels

SapuraCrest Petroleum Bhd unit TL Offshore Sdn Bhd has issued two letters of award to Cosco Nantong Shipyard Co Ltd to build two ships costing a total US$227mil (RM714.4mil).

SapuraCrest said that Cosco was to build two pipe-lay -cum -heavylift offshore construction vessels.

It said the contract price for the first ship was US$116.75mil and the second was US$110.25mil. The delivery date was 28 months and 26 months, respectively.

“The acquisition will enable TL Offshore to capitalise on the positive outlook for the installation of pipelines and facilities segment of the oil and gas industry,” it said.

Tuesday, 27 September 2011

Petronas to buy 30% in GMR Energy Singapore

GMR has agreed to sell a 30% stake in GMR Energy (Singapore) Pte Ltd (GMRE) to Petronas International Corporation Ltd (PICL), a wholly-owned subsidiary of Petronas, subject to approval of lenders. GMRE is developing an 800 MW Combined Cycle Gas Turbine (CCGT) Power Plant on Jurong Island, Singapore.

The power generating facilities, featuring Siemens' latest F-class gas turbines, will be designed and constructed by a consortium consisting of Siemens and Samsung.

Fuelled by re-gassified LNG, the power plant is scheduled for commercial operations in 2013. GMR Supply Singapore Pte Ltd, a wholly owned subsidiary of GMRE, holding an electricity retail license in Singapore, will manage the electricity retail business.

Petronas is one of the largest groups in South East Asia with substantial resources in Oil and Gas. This relationship would pave the way for other possible opportunities between the groups in India as well as internationally. GM Rao, Group Chairman of GMR Group said “This relationship between GMR and Petronas opens up powerful synergy going forward for both the Groups.

It is symbolic of true South-South co operation and its immense potential in the energy market in the Region.”

Datuk Anuar Ahmad, Executive Vice President, Gas and Power Business of Petroleum Nasional Berhard said, "This acquisition marks Petronas Group's maiden foray into the international power market, and is a major step in its effort to extend its existing integrated presence further along the energy value chain."

Monday, 26 September 2011

Johor plants raises wire rope stakes

A new steel wire rope plant is taking shape for Kiswire on the Malaysian coast with the present and future needs of the offshore industry very much in mind.

Of the 130,000t of wire rope the company already produces annually, some 30,000t is currently employed offshore in diameters ranging from 50mm to 140mm for abandonment & recovery winches, cranes, hoists, mooring & anchoring equipment and other applications. With the inexorable move into deeper waters placing ever greater demands on the wire rope used in such applications, Kiswire has responded by building a brand new plant at Johor.

It is also implementing a dual operations strategy that will substantially increase its manufacturing capabilities over the next year or two. The new factory, called Neptune 2 (N2 for short) and representing a $100 million investment, is being built in two phases that Kiswire expects will comfortably establish it as the biggest and most advanced facility of its kind in the world.

Already installed, and expected to go into operation by November under phase one, is one of the largest closing machines ever built, capable of producing 6-strand rope in units up to 300t. ‘That is a huge closure, and quite a jump since our current capacity limit is 125t,' says Kiswire VP and Kiswire Europe managing director Bert de Ruijter.

With deepwater subsea applications setting the pace, phase two of the N2 plant's development will see the start up, about a year later, of multi-strand non-rotating wire rope production using another record-setting machine now at the design stage. This machine will be capable of producing multi-strand ropes in 600t units, the kind of duty being specified for a new generation of vessels targeting ultra-deepwater construction work.

‘That is the requirement in the market that we see for the next 10 to 20 years, and right now nobody can make it,' says Bert de Ruijter. ‘It's all subsea driven these days. We believe the new large machine for multi-strand rope, producing wire rope units so big they will require reels of around 10m by 10m, will cover just about anything that is required or being done in the offshore oil & gas industry.

With the buildings complete and its first-phase machinery installed, N2 is now well into its equipment trials and commissioning phase. The plant will design and produce a wide variety of rope types with features including zinc/ aluminium coating, plastic infill and special lubricants.

N2 is situated adjacent to the Asiaflex flexible pipe production facility inaugurated last November by Technip, which also employs Kiswire steel wires in the manufacture of its flexpipe. The two companies jointly funded and share the use of a new jetty at Johor for the loadout of their giant reels onto offshore barges.

Sunday, 25 September 2011

Petronas charged with P1.058B smuggling complaint

MANILA, Philippines - An officer of mining, quarrying and oil firm Petronas Energy Philippines, Inc. and several customs brokers were charged with violations of the Tariff and Customs Code of the Philippines before the Department of Justice(DOJ) on Thursday for alleged unlawful importation of various petroleum products with a total dutiable value of P1.058 billion.

This is the first smuggling case filed by the Bureau of Customs(BOC) under its new Commissioner Ruffy Biazon.

In a news conference at the DOJ this morning, Biazon listed the respondents in the case:
- Evelyn Taneo, chief financial officer of Petronas;
- Jerilee Conlu, customs broker;
- Carlos Barte, customs broker;
- Dennis Ayong, customs broker;
- Edgar Rey Gallana, Jr., customs broker; and
- several "John" and "Jane Does."

According to the complaint, Petronas made several importations of various petroleum products at the Port of Cebu, Port of Iloilo and Sub-port of Iligan covered by 51 import entries minus the required Load Port Survey.

"There being no Load Port Surveys, all the foregoing shipments that arrived at the aforestated ports are considered high-risk, should not have been released from the BOC and should have remained in customs custody," the complaint read.

Biazon said this was verified by the BOC's Run After the Smugglers(RATS) group.

Confirmation was also done through an audit/compliance report, he said.

Saturday, 24 September 2011

Malaysia Marine bids for jobs worth RM6b

Malaysia Marine and Heavy Engineering Bhd (MHB), an indirect subsidiary of Petroliam Nasional Bhd (Petronas), has submitted bids worth between RM5 and RM6 million, says chairman Datuk Nasarudin Md Idris.

"The bids are for engineering, procurement, construction, installation and commissioning and construction projects in

the oil and gas industry, mostly in Malaysia," he told reporters after the company's annual general meeting here yesterday.

MHB was listed on the Main Market of Bursa Malaysia in October last year.

"They are now at various stages of being finalised. We have to replenish our order book and we are looking for more projects," he added.

Nasarudin said the company's order book currently stood at about RM3.1 billion, which would last until 2013.

It is derived from upstream projects ranging from the central processing platform to the floating production system for both domestic and international markets.

On the fabrication yard project in Brunei, Nasarudin said "it was still in the preliminary stage."

He said Petronas was in discussions for the setting up of petrochemical facilities in Brunei.

"The project is still in its infancy and we have yet to discuss with Petronas," he added.

Prime Minister Datuk Seri Najib Razak had said earlier that MHB would develop a fabrication yard in Brunei, but declined to mention how extensive the investment would be.

Nasarudin also said MHB's projection for capital expenditure depended on its yard optimisation programme and some RM2.7 billion has been allocated for the purpose.

"A total of RM700 million has been utilised and the remaining RM2 billion is for over the period until 2014," he added.

He added that upon completion of MHB's acquisition of Sime Darby Engineering's Pasir Gudang yard in Johor, the company's yard space would increase from 148.8ha to 195.2ha, while the capacity would rise to about 130 tonnes per year from about 70 tonnes per year currently.

"With the acquisition, we will be able to pitch for more projects to increase our margin and profitability," he added.

Nasarudin expects good performance for the current financial year.

"We hope it will be better. This year, we have nine months only because of the change in financial year to December 31 2011 instead of March 31 2012. We have a few months more to go," he said.

MHB turned in a pre-tax profit of RM424 million on a turnover of RM4.43 billion for its financial year ended March 31 2011. - Bernama

Friday, 23 September 2011

Lundin Petroleum Completes Third Well, Offshore Peninsular Malaysia

Lundin Petroleum AB (Lundin Petroleum) has completed the Batu Hitam exploration well located in Block PM308A, offshore the east coast of Peninsular Malaysia.

The Batu Hitam-1 well tested the hydrocarbon potential of a large basement high structure located in the east of the PM308A block. The objectives of the well were Oligocene sandstones in a four-way dip closure and fractured pre-Tertiary basement in the underlying horst block.

The well found the target Oligocene sandstones to be present with good reservoir quality containing gas with high concentrations of carbon dioxide. The well was plugged and abandoned as a dry hole.

The Offshore Courageous rig will now move to drill the Janglau-1 prospect located 47 km north of Batu Hitam-1. Janglau-1 will test a new play concept in an independent sub-basin in the same block.

Lundin Petroleum operates and holds 35 percent interest in PM308A through its subsidiary Lundin Malaysia BV. Partners in PM308A are JX Nippon Oil & Gas Exploration (Peninsular Malaysia) Limited with 40 percent interest and PETRONAS Carigali Sdn. Bhd. with 25 percent.

Lundin Malaysia BV operates 6 Blocks in Malaysia, namely PM308A, PM308B, PM307, SB303, SB307 and SB308.

Thursday, 22 September 2011

Malaysia Expansion Sets the Stage for ‘Greater Singapore’ Oil Hub

An unprecedented expansion of oil infrastructure in southern Malaysia over the next five years is set to create a “Greater Singapore” trading hub that will help the region retain its edge over competitors such as China.

Instead of competing with Singapore, the new infrastructure — including a state-of-the-art petroleum complex and capacity increases to storage — will lead to greater flows of oil and help meet growing demand from traders for more liquidity to feed increasing pricing activity.

“The new infrastructure should be regarded as part of the ‘Greater Singapore’ oil hub, rather than as competing with the current established order, as it is essentially the same players trading the same markets but in a larger way,” said Richard Yap of GE Consulting.

Singapore is the largest oil trading hub in Asia and the third-largest in the world, where traders regularly engage in pricing activities by taking speculative trading positions to optimize profits. It is also the world’s No. 1 bunkering port.

In the longer term, players see the region becoming an oil trading center similar to the Amsterdam-Rotterdam-Antwerp (ARA) hub in Europe, expanding its boundaries southwards into neighboring Indonesia and northwards deeper into Malaysian territory.

The ARA region is the main gateway for oil flows into Europe, particularly for distillates and fuel oil, which are stored and blended before being redistributed inland. It is also the world’s second-largest bunkering port after Singapore.

“Malaysia is well-placed to complement Singapore in this industry. Together, Malaysia and Singapore could operate to form a hub like Amsterdam-Rotterdam-Antwerp, which complement each other in areas of refining capacity, independent storage and blending capacity as well as access to markets,” said Malaysian think tank Pemandu.

Malaysia has not seen this kind of expansion before in terms of scale and size. This territorial expansion could occur from as early as the next month, as dredging works along the shallow waterway separating mainland Malaysia from Singapore to accommodate new structures force the displacement of about 2 million metric tons of oil stored on seven floating storages off Pasir Gudang in southern Malaysia.

The alternative locations for these vessels could be in Indonesian waters off the islands of Karimun and Nipah, or further north in Malaysian waters, extending the boundaries of “Greater Singapore,” traders said.

Tuesday, 20 September 2011

Petronas Calls For Tender To Find Drill Site In Mozambique

Petronas, is calling for tenders to select a company to conduct a study to find a suitable drilling site in its concession in the Rovuma Basin, off the coast of Cabo Delgado Province in northern Mozambique.

Petronas Carigali, the Malaysian state-owned corporation's exploration and production subsidiary, has gathered and processed 2D seismic data covering an area of 7,000 square kilometres and these data need to be interpreted to locate the best spot to drill for oil and gas.

In 2008, the Mozambican government awarded a licence to a Petronas Carigali-led joint venture to carry out drilling in two blocks (Area 3 and Area 6) in the Rovuma Basin, for US$40.6 million. The Mozambican state is represented in the joint-venture by the Mozambican National Hydrocarbon Company (ENH), with a 10 per cent stake.

In recent years, several companies have invested heavily in the search for oil and gas in Mozambique. Between 2009 and 2010, a total of US$370 million was spent on prospecting by various companies in the Rovuma Basin.

The biggest investment has been by the Texas-based Anadarko Petroleum Corporation, which has found large quantities of natural gas. By 2013 it will have invested US$3.0 billion in the Rovuma Basin.

If it goes ahead with a plan to develop a Liquefied Natural Gas (LNG) plant, its total investment in Mozambique will reach US$18 billion by 2018.

Monday, 19 September 2011

Petronas Seals Deal To Sell Oil Production Business Of UK Entity

Petronas has entered into an agreement to sell the oil production business of its United Kingdom subsidiary, Star Energy Group Ltd, to IGas Energy Plc.

The national oil company would focus on optimising the Humbly Grove Gas Storage facility which would remain with Petronas, the company said in a statement today.

Star Energy is expected to produce an estimated 2,800 barrels of oil equivalent per day this year.

"Petronas also entered into a long-term gas supply agreement with IGas Energy, through its London-based subsidiary, Petronas Energy Trading Ltd, to offtake up to 150 billion cubic feet of natural gas produced by IGas Energy.

"The transaction is in-line with Petronas' strategy to focus on growing its European asset returns through marketing and trading," Petronas added.

The company, already optimising all Humbly Grove gas storage capacity since April 2011 through Petronas Energy Trading, is continuing to grow and diversify its European energy portfolio for enhanced returns and growth for the long-term.

Sunday, 18 September 2011

TNB to issue RM5bil sukuk for Janamanjung plant soon

Tenaga Nasional Bhd (TNB) will raise RM5bil from a 20-year ringgit-denominated sukuk issuance at the end of next month to finance the extension of its Janamanjung power plant.

This comes at a time when the national utility company is facing a severe gas supply shortage that may result in it incurring additional fuel cost.

In a Bernama report on Thursday, TNB president and chief executive officer Datuk Seri Che Khalib Mohd Noh said the group would do its book-building exercise in the third week of October. “The timing is good as the domestic market is now flush with liquidity,” he said.

In April, TNB awarded French group Alstom a 650-million-euro (RM2.8bil) contract to build the Janamanjung 1,000-MW supercritical coal-fired power plant.

Alstom will engineer, procure, construct and commission a 1,000-MW steam turbine, a generator, a supercritical boiler and auxiliaries. The plant is expected to come online in 2015.

The plant will be the single largest in South-East Asia and will produce enough electricity to power nearly two million households in the country.

The project follows TNB's 1999 contract with Alstom to build the currently operating 2,100-MW Manjung coal-fired power plant.

The supercritical power plant operates at a higher temperature than regular coal-fired power plants. Its high temperature increases the pressure at which it operates, which in turn improves its efficiency, increasing the amount of power output and decreasing emission per unit of fuel burned.

Meanwhile, TNB is still bogged down by cost concerns whereby it may incur additional fuel costs of up to RM3bil.

On Tuesday, Che Khalib said the company's fourth-quarter performance would be weak and his earnings estimate for 2011 had gone haywire and had been cut by more than 50%, marred by a continued gas supply shortage.

Analysts have said the gas shortage might only be permanently resolved by the second half of 2012, when Petronas Gas' regasification terminal in Malacca was operational and Malaysia started importing liquefied natural gas at market prices.

Friday, 16 September 2011

Alstom signs long-term service agreement for 1943MW gas-fired power plant in Malaysia

Alstom has signed a 11-year Long Term Service Agreement (LTSA) worth approximately EUR150 million (US$205 million), with Teknik Janakuasa Sdn. Bhd. (TJSB), the wholly owned O&M subsidiary company of Malakoff Corporation Berhad, Malaysia’s largest independent power producer (IPP).

The LTSA covers all nine GT13E2 Gas Turbines and the scope includes the supply of new hot gas path components and provision of reconditioning services for all major inspections over the term of the contract.

The Lumut power plant is located in Segari in the state of Perak, west of the Peninsula Malaysia. It consists of three combined cycle blocks each equipped with three GT 13E2 units running on natural gas with oil as back-up fuel. With a total electricity output of 1943 MW, it is the largest GT13E2-based combined cycle power plant worldwide.

This contract follows an earlier 7-year service agreement with TJSB for the Lumut plant, which has been in operation since 2004.

“The extension of the service contract at Lumut reflects TJSB’s confidence in Alstom’s support and our successful performance. The well proven cooperation between TJSB and Alstom will ensure continued safe operation and high availability of the Lumut power plant,” remarked Hans-Peter Meer, Senior Vice President, Alstom Thermal Services.

Thursday, 15 September 2011

Petronas to build S$1.99b petrochemical complex in Brunei

Malaysia's state oil company Petronas plans to build a US$1.6 billion (S$1.99 billion) petrochemical complex in Brunei with Germany's BASF, Bernama reported yesterday, quoting Malaysian Prime Minister Najib Razak.

No further details on the complex were immediately available. Bernama said Petronas' unit Malaysia Marine and Heavy Engineering would also build a fabrication yard in Brunei but did not give a value for it.

"Both projects will have positive impact on both countries, particularly the job opportunities to be created," Mr Najib was quoted as saying during his annual visit to the oil-rich sultanate. He said the new plant will create at least another 650 jobs, adding that Sarawak is also looking into ways to sell and channel electricity into Brunei.

The news comes as Petronas yesterday officially started oil-drilling in Brunei waters near the Sarawak-Brunei border boundary in a historic joint-production sharing deal with the sultanate's national oil company, PetroleumBrunei, The Star newspaper reported.

Yesterday also saw the start of construction of a RM25 million (S$10.16 million) bridge across Sungai Pandaruan to link Brunei's Temburong district with Limbang district in Sarawak, the report said.

Mr Najib said the new bridge link would be crucial to the development of the northern Sarawak-Brunei-Sabah region, spurring greater movement of people and cargo from one state to the other in an efficient manner, the report added.

Wednesday, 14 September 2011

Petronas starts drilling for oil in Brunei waters

Petronas officially started drilling for oil in Brunei waters near the Sarawak-Brunei border boundary on a joint-production basis with PetroleumBRUNEI (PB).

Petronas also secured a US$1.6bil (RM4.8bil) project in Brunei to construct a petrochemical processing plant.

Prime Minister Datuk Seri Najib Tun Razak, who announced this at a press conference here yesterday, said Sultan Hassanal Bolkiah had agreed that Petronas undertake these huge projects with PB.

“The Brunei Government has agreed that Petronas will start drilling for oil in the CA1 and CA2 areas and in Block M, which is outside CA1 and CA2.

“The Sultan has also agreed that Petronas start a petrochemical plant on a 60ha site in Pulau Muara Besar inside Brunei, together with PetroleumBRUNEI.

“That project will be worth US$1.6bil.

“Petronas will also start a fabrication yard in Brunei.

“These are among the various new milestones Malaysia and Brunei have achieved,” he added.

Najib said the new petrochemical plant would result in the creation of at least 650 jobs, adding that Sarawak was looking into ways to sell and channel electricity into Brunei.

He said Malaysia and Brunei had also agreed to speedily resolve issues of fishermen encroaching into each country's territorial waters in the South China Sea.

Yesterday saw the start of construction of a RM25mil transboundary bridge across Sungai Pandaruan to link Brunei's Temburong district with Limbang district in northernmost Sarawak.

Works Minister Datuk Shaziman Mansor, Sarawak Public Utilities Minister Datuk Amar Awang Tengah Ali Hassan and their Brunei counterparts were at the site to witness the groundbreaking ceremony.

Tuesday, 13 September 2011

Maersk Drilling gets US$51m Petronas Carigali contract

Maersk Drilling, a unit of the A.P. Moller - Maersk Group, has secured a US$51 million contract from Petronas Carigali Bhd to provide a jack-up rig.

It said on Tuesday, Sept 13 that Maersk Drilling had signed a contract to provide Petronas Carigali with a 375 ft high pressure, high temperature jack-up rig Maersk Convincer for work offshore Malaysia.

“The firm contract duration is one year and the contract also includes two one-year options. The maximum contract value for the firm one-year period is approximately US$ 51 million including mobilisation fee,” it said.

Maersk said the contract was expected to start in the beginning of the fourth quarter 2011 following a two-year survey scheduled to be carried out upon completion of the rig’s present contract in Vietnam.

The chief executive officer of Maersk Drilling and member of the executive board of the A.P. Moller – Maersk Group, Claus V. Hemmingsen said:

“We see this contract as a good opportunity to demonstrate our skills within HPHT drilling and we hope it can pave the way for strengthening our position in the flourishing Malaysian market.”

Saturday, 10 September 2011

Majors to team up on Brunei gas field

Mitsubishi, Shell and three other oil firms will spend 700 billion to 800 billion yen ($9 billion to $10.3 billion) to jointly develop a large-scale natural gas project in Brunei, according to reports.

The partners, which include Malaysia's Petronas, Murphy Oil and ConcocoPhillips, will spend 70 billion yen to drill seven test wells over the next two to three years to determine the size of the reserves, Japan's Nikkei business daily reported on Friday.

Previous appraisals put the reserves at a few trillion to around 12 trillion cubic feet, making it viable for commercialisation, Reuters quoted the daily as saying.

Development on the project will start in 2013, with production to kick off the following year, the paper said.

The Japanese trading house will shoulder up to 50 billion yen of the total development costs, Reuters reported.

The project is expected to produce 500,000 barrels of oil per day and 4 million tons of LNG per year at its peak, representing roughly 6% of Japan's total LNG needs, according to the Nikkei report.

Mitsubishi holds a 6.25% interest in the 5000 square kilometre offshore natural gas block, while Petronas is the largest stakeholder with a 45% interest.

Shell owns 12.5%, Murphy has a 30% stake and ConcocoPhillips' share is 6.25%, Nikkei said.

Mitsubishi plans to export natural gas from the new field to Japan and may build another liquefaction plant in Brunei, Reuters quoted Nikkei as saying.

Sunday, 4 September 2011

Petronas and TNB need to find a better solution

EVERY argument has a flip side. No two ways about it.

When it comes to the issue of gas supply (or lack thereof) in the country's power sector, we've seen both sides of the coin publicly played out by two state-owned giants which, as it appears, have widely divergent interests.

In recent weeks, national utility Tenaga Nasional Bhd (TNB), which buys gas from national oil company Petroliam Nasional Bhd (Petronas), has been drumming the point that there's a gas crunch in the power sector a shortfall of a worrying 30% in gas supply to the system.

This has compelled the power company to look for alternative and more expensive fuel sources which has cranked up its cost severely, crimping its financials. (Gas is supplied to the power sector at a subsidised price, hence it's cheaper than most other fuel sources. The cut in gas supply is largely due to maintenance activities).

On the other side of the fence sits Petronas which since the Asian Financial Crisis has been supplying gas at a subsidised price, foregoing some RM20bil annually in potential revenue.

Petronas chief Datuk Shamsul Azhar Abbas recently rapped the gas subsidy as “distortionary” and “inefficient”. Its biggest beef, understandably, is that the subsidy hits it right at the pocketbook; it involves a jaw-dropping sum of RM133bil between 1997 (when the subsidy first kicked in) and March 2011. For this reason, rightly or wrongly, many perceive that Petronas has far less commercial incentives to pump more gas into the power system.

Should this protracted tug-of-war between both stalwarts concern us?

Truth is both Petronas and TNB are not necessarily on the opposing ends of the battle ring. TNB is amenable to gas prices being raised to better reflect market rates so long as it's able to pass the additional cost to consumers.

And if Petronas gets to sell its gas at market rates to the power sector, chances are it could even supply a lot more than previoulsy agreed. In short, if status quo is to be averted, gas prices need to be gradually raised and consumers will have to brace for higher electricity bills.

But who would dare raise electricity tariffs at a time when consumers are already pinched by rising cost of living?

That being the case, it is indeed curious why the two government-controlled enterprises would engage in such fruitless rhetoric.

Here's the conundrum everyone recognises the root of the problem (subsidies) but lacks courage to resolve it.

Meanwhile, there's no buy-in from the two key industry players Petronas and TNB. And that in itself should be of grave concern. Worst case scenario, the country could once again find itself in a perfect storm massive blackouts.

Was TNB being effective in its communications when it recently issued a profit warning due to the gas curtailment or was it simply being alarmist? Was Petronas' retaliation that gas subsidies which ensure cheap power need to be dismantled as “nothing comes for free” a calculated remark to fuel the possibility of higher electricity rates or purely impulsive?

Perhaps, they were simply and effectively communicating their respective predicaments (and craftily throwing the ball in the Government's court to make the tough decision).

Meanwhile, the plan to introduce nuclear civil power to meet the country's electricity needs appears to be re-surfacing after ducking from criticism post-Japan's nuclear disaster. It is reported that the Government is mulling over the idea of hiring a public relations agency to gather support for nuclear power. This has not been officially confirmed nor denied as yet.

There's a fine line between public relations and propoganda machines. For this reason, such actions stand the risk of backfiring, even on the most genuine of intents. Over-ridingly, what's essential is to put forth a plan that's clearly argued and well substantiated to the folks. People need to have faith in the plan and in the makers of the plan. But they loath these nasty surprises, a plan being hijacked by political one-upmanship and more spins.

Opinions are highly divergent and split on the topic of nuclear power. So, it's important for the Government to show that it's willing to listen to public concerns, fears and reservations. It's a good strategy to have it “all out in the open” with intense dialogue and discussions between the public and the government machinery from the onset.

Seriously, do we really need PRs to tell us that?

Saturday, 3 September 2011

President Aquino kicks-off Malampaya’s next-phase development

Batangas City - President Benigno Aquino III kicked-off the next-phase development of the Malampaya Deepwater Gas-to-Power project with a visit to its Onshore Gas processing Plant in Batangas on August 9, 2011, where he witnessed the signing of the first contract awarded for the project by the Service Contract 38 (SC38) consortium.

An Executive Order creating Inter-Agency Committees to ensure success of the national government project, critical to ensure continuous supply of 40-50% of Luzon’s power requirements, was also presented by the Department of Energy (DOE).

Malampaya’s next-phase development aims to maintain the level of production and maximise the recovery of indigenous natural gas from the Malampaya and Camago reservoirs.

“Malampaya Phase 2” will entail drilling and development of two additional wells by 2014; “Malampaya Phase 3” will involve the installation of a new platform where additional equipment and facilities will be housed by 2015.

The projects, entailing new investments, are seen to further benefit the Philippines in energy self-sufficiency and government revenues, and will continue to be a major source of power for Luzon’s energy requirements in the years to come.

After the presentations, President Aquino expressed his commitment for the Malampaya project and the approval of the upstream Executive Order.

Production of natural gas to fuel three gas-fired power stations with a combined capacity of 2,700 MW commenced in October 2001 and has been providing benefits, including meeting 40-50% of Luzon’s power generation requirements, reduced oil imports, stable supply of energy, unprecedented government revenues and cleaner source of power.

Friday, 2 September 2011

Petronas slams ‘distorted’ gas subsidy policy

National oil company Petroliam Nasional Bhd (Petronas) has criticised the federal government for continuing to subside gas in a bid to woo foreign direct investments (FDIs), saying the policy was “distorted” and “inefficient”.

President and chief executive Shamsul Azhar Abbas said the continued reliance on cheap gas has not helped to encourage power producers and consumers to pursue efficiency.

“Something has to be done to change their mindset,” he told reporters after announcing the company’s first-quarter financial results at its headquarters here today.

“If you were TNB (Tenaga Nasional Bhd) and there is an increase in demand for electricity, which one do you go for? Two dollar gas or 10 dollar coal?”

Shamsul said the government’s policy to keep gas prices low has forced Petronas to fork out some RM20 billion worth of subsidies while the gas supply system was being distorted due to taxation of up to “zero (reserve) margin”.

He questioned the need to give cheap power to foreign companies investing in Malaysia when investors in Singapore have done well to cope with gas sold at market prices.

This reflected the prevailing inefficiency in the country’s power policy.

“So why is it that over here they require subsidies in order to survive? Something is just not right.

“It just goes to show the amount of inefficiency that’s prevailing within the system. And all this distortion is created by the (gas) subsidy,” he said.

Onus on government

Weak domestic market caused by the low spread of high-tech industries has forced the government to rely heavily on Petronas for revenues. The national oil company contributes some 45% to the government’s coffers annually.

The oil giant turned heads last June when it made a firm stand and decided to pay 30% of its net profit starting from 2013 as it could no longer remain competitive should it continue to slash its revenues for subsidies.

Shamsul said that the liquefied petroleum gas (LPG) subsidy cut in June was a step in the right direction and hoped that such efforts would continue until gas prices reach market parity by June 2015.

He added that the onus is on the government to remove the “subsidy mentality” in consumers and praised Prime Minister Najib Tun Razak’s move to dismantle its costly subsidy regime albeit slowly.

“Nothing comes for free,” he said.

Najib has pledged to cut subsidies and widen the tax base as part of its effort to trim a 20-year record public debt of 7% of GDP in 2009.

Meanwhile, Petronas said its net profit increased to 48.6% for the first quarter on the back of higher crude oil prices triggered by political turmoil in the Arab states.

Net profit jumped to RM21.66 billion for the quarter ended June 30 from RM14.6 billion in the same period last year, while revenue rose 24.6% to RM72.97 billion.