Prison for NDT Inspector who lied on test reports

An NDT Inspector has been sentenced to 3 years prison and order to pay $654,000
compensation after admitting to certifying critical welds on submarines without
actually testing them.

Robert Ruks aged 34 was employed as an inspector at the Newport News
shipbuilding yard in Virginia. His worked required him to inspect welds on various
types of navy vessels including critical welds on nuclear submarines.

In 2009 Ruks was interviewed by the US Navy's criminal investigation service after
fellow inspectors had suspected that he was signing off welds that he had not
tested.

During his employment Ruks certified more than 10,000 welds on submarines.
Around 10% of which were hull integrity or SUBSAFE joints involving critical
parts, failure of which could have lead to the loss of a nuclear submarine.

As a result of his actions over 9,500 welds had to be reinspected. During the
retests 14 structural welds were found to be defective and required repairing.
The re-inspection required 18,900 man hours and cost $654,000. As part of
Ruks sentence he will be required to repay that sum to the US Navy.

Shahril to be president, group CEO of merged Sapura-Kencana group

Sapura Group president and chief executive officer Datuk Seri Shahril Shamsuddin will be the president and group chief executive officer of the merged SAPURACREST PETROLEUM BHD and KENCANA PETROLEUM BHD.

According to documents sighted by The Edge FinancialDaily, Sapura group chairman Datuk Hamzah Bakar will be the chairman of the new board while Kenaca’s executive chairman Datuk Mokhzani Mahathir will be appointed the executive vice chairman.

Both the president & group CEO and executive vice chairman will report directly to the board.

Currently, the integration committee for the merger exercise is jointly chaired by Shahril and Mokhzani.

Both companies will be seeking shareholders’ approval at an EGM on Dec 14 for the proposed merger. The Securities Commission has already given its go-ahead for the merger.

In July, the petroleum-related companies announced the merger which would be undertaken by Integral Key Sdn Bhd (IKSB), a special purpose vehicle. IKSB had then made a RM11.85-billion offer to acquire all their assets and liabilities in a share swap. The merger of equals will have a combined market capitalisation in excess of RM10 billion.

According to the documents, Shahril said the integration committee was set up to achieve a successful merger and to formulate the strategic direction of the new merged entity moving forward.

He had also said that it is “critical that we put in place a strong and dynamic organisational structure that would ensure business continuity and realisation of the synergies we hope to derive as a merged entity. I would like to assure each and everyone of you that you will continue to be an important part of the new organisation moving forward”.

Petronas' Explanation Sought On The Channelling Of Gas From Sogt To Bintulu

Petronas today was asked to provide a transparent and detailed explanation on its decision to supply and channel gas from the Sabah Oil and Gas Terminal to the Petronas Liquefied Nitgrogen Gas Complex in Bintulu, Sarawak.

State Assemblyman for Pantai Manis, Datuk Abdul Rahim Ismail made this request to Petronas, saying that the explanation would be important in putting to rest any confusion with regards to the project.

"Some may understand the rationale for the decision, but I fear a majority of them may not understand and we do not want any parties trying to exploit the issue for their own interest," he said when debating the Sabah 2012 Budget at the State Legislative Assembly here today.

Abdul Rahim also urged the state government to form a special committee with the specific role of looking into issues related to the state's oil and gas industry.

"This body must be represented by players from the oil and gas industry, be it government or private sector."

The same body can also take action in representing, safeguarding and advocating the interest of Sabah in matters related to the development of the industry in the state, he said.

Abdul Rahim said the body should also have to capacity and expertise to play advisor and consultant on the industry with the view to taking care of Sabah's interest.

He said the new discovery of oil within 100km offshore Kota Kinabalu by Petronas had the potential of beefing up both the upstream and downstream activities of the state's oil and gas industry.

The former state minister of Agriculture and Food Industries also expects the new oil find to extend the lifespan of oil and gas production in Sabah and make the state an important player in the country's oil and gas industry in the decades to come.

Petronas Chemicals posts RM1.7bn Q2 profit

Petronas Chemicals Group Bhd posted a pre-tax profit of RM1.7 billion on revenue of RM4.638 billion for the quarter ended Sept 30, 2011.

For the six months ended Sept 30, it posted a pre-tax profit of RM2.758 billion on revenue of RM7.983 billion.

It declared an interim dividend of eight sen per share, payable on Dec 22. Petronas Chemicals said moving forward, the results of its operations are expected to be primarily influenced by fluctuations in international petrochemical products prices, global economic conditions and utilisation rate of its production facilities.

The start of the third quarter saw power supply interruption to Ethylene Malaysia Sdn Bhd, which limited its ethylene production for approximately two weeks, it said.

Consistent with previous periods, the Olefins and Derivatives segment will continue to be the key contributor to the Group's results, it added.

Subject to sufficient availability of methane gas, it expects satisfactory results of its operations for the financial period ending Dec 31, 2011.

Shell Sets World Record for Deepest Subsea Oil and Gas Well

Shell Oil Company is now producing oil from the world's deepest subsea well at its Perdido Development, utilizing advanced technology to lead the way in increasing the company's ability to produce more domestic oil and gas resources.

The well, at 9,627 feet below the water's surface, is located in the Tobago Field 200 miles southwest of Houston in the ultra-deep water of the Gulf of Mexico. Tobago is jointly owned by Shell (32.5%, as operator), Chevron (57.5%), and Nexen (10.0%) and is one of three fields producing through the Perdido drilling and production platform.

Tobago breaks the world water depth record for subsea production, previously held by another field in the Perdido Development, the Silvertip field at 9,356 feet of water.

"Energy is fundamental to global economic growth. Providing this energy must be met practically, safely and in an environmentally responsible manner," said Marvin Odum, Upstream Americas Director. "Through our highly skilled workforce and cadre of global geoscientists, Shell has applied its advanced seismic and drilling technologies at Perdido to produce additional sources of oil and gas."

Moored in about 8,000 feet of water, the Perdido platform is jointly owned by Shell (33.34%), BP (33.33%) and Chevron (33.33%) and is the deepest drilling and production facility in the world with a capacity to handle 100,000 barrels of oil per day and 200 million standard cubic feet of gas per day. From Perdido, Shell accesses the Great White, Tobago, and Silvertip oil and gas fields through subsea wells directly below the facility and from wells up to seven miles away. At its peak, Perdido can produce enough energy to meet the needs of more than two million US households. Shell operates Perdido and its satellite fields on behalf of partners Chevron, Nexen, and BP.

This world-class project began with the 1996 lease sale when the technology to develop hydrocarbons at Perdido's water depth did not yet exist. By the time the final investment decision for commercial development was made in October 2006, Shell had pioneered several technological firsts which allowed the company to proceed with ultra deepwater oil and gas production. Development drilling began in July 2007, five years after the discovery of hydrocarbons. Perdido produced its first oil and gas on March 31, 2010.

Perdido Technical Facts and Firsts

Deepest water depth record for an offshore oil drilling and production platform.
First water injection in 8,000 feet of water in the Gulf of Mexico (Great White GB001) helps push oil through the reservoir, from the injector wells to the production wells.
First commercial production from the Lower Tertiary geological formation, which many see as the next big opportunity in deep water.

Deployment of an innovative subsea separation and boosting system that compensates for the low-pressure reservoir and about 2,000 psi of backpressure from the wells. The system includes five specially designed 1,500-horsepower electric pumps embedded in the seafloor to boost production to the surface.

First spar with direct vertical access wells and production hardware on the seafloor at a depth of more than 8,000 feet.

Perdido weighs 50,000-tons and sits in water six times deeper than the height of the Empire State Building.

The entire Perdido project has achieved 13 million man-hours without a lost-time injury, testifying to the effectiveness of the safety regimes put in place by the construction and operating teams.

The Largest And The Heavy It Become : DNV to classify world's largest heavy lift vessel

With its width of nearly 80 metres and length of 275 metres, the Dockwise Vanguard is the first semisubmersible heavy lift vessel to be built in accordance with DNV's new class rules for this type of ship. The vessel has no forecastle, which allows it to carry cargo of unlimited length. Its deckhouse is mainly positioned outside its hull, allowing it to carry 70 metre wide cargo.

Dockwise's new heavy lift vessel, the Dockwise Vanguard, will be able to lift and transport units of up to 110,000 tonnes. The maximum capacity of an existing vessel is 75,000 tonnes.

"As DNV is perceived to be the leading class society when it comes to heavy lift vessels, and as Dockwise is a front runner within this ship segment, the two organisations have cooperated to ensure this new innovative vessel meets all the safety standards," said Torgeir Sterri, DNV Regional Manager Central Europe. "Not only were DNV's existing rules essential for scaling up this unique semisubmersible heavy lift vessel concept, but DNV's risk assessment capabilities were also key to meeting all the SOLAS requirements for this unconventional design."

At the annual gala for the Dutch maritime cluster, the Royal Dutch Association of Shipowners chose the Dockwise Vanguard as the most innovative and daring project launched by the Dutch maritime sector during the past year, the company said. When accepting this award, Dockwise's CEO André Goedée expressed his appreciation of the Dutch flag administration and DNV.

"I am pleased and impressed by the way the owner, flag and class have managed to work together," Goedée said. "By thinking ‘outside the box,' we have been able to form a new concept and bring the whole industry a huge step forward".

The vessel is going to be built by Hyundai Heavy Industries in Korea. Its keel will be laid in December and the vessel is due to be delivered in October 2012, when its first cargo will be ready to be transported from South-East Asia to Brazil.

Ramunia explains ONGC decision

Ramunia Holdings Bhd and its joint venture partner declined to re-tender for a US$190 million (RM602 million) contract with India’s Oil and Natural Gas Corp Ltd (ONGC) due to the long delay in the issuance of the notice of award. The contract was for the construction of up to 10 wellhead platforms.

Ramunia clarified to Bursa Malaysia yesterday that the Ramunia-SEW consortium decided not to participate as ONGC had delayed the notice of award from Sept 2, 2011 to Nov 11, 2011, despite the fact that the consortium was the lowest compliant bidder as declared on Aug 30, beating five other international consortia and one disqualified bidder.

Ramunia had announced on Monday that the consortium would not be participating in the re-tender exercise for the WO-16 cluster and SB-14 wellhead platform project after receiving a new invitation from ONGC to participate in a short re-tender of the project.

Ramunia said in April that Ramunia Fabricators Sdn Bhd had signed a memorandum of understanding with SEW Infrastructure Ltd (India) and in July it announced that the Ramunia-SEW consortium was to bid for this job. If Ramunia had won the job, it would have marked Ramunia’s re-entry into India after a two-year hiatus.

Ramunia was blacklisted by ONGC over issues with a US$685 million field development job in 2008. The two-year blacklist ended in May.

Petronas, Shell in $12 Billion Oilfield Development Deal

Malaysia’s state-owned oil and gas company Petroliam Nasional Bhd. said Friday that it has agreed with Royal Dutch Shell PLC to jointly develop oilfields in Malaysia using enhanced oil recovery techniques.

The companies say the $12 billion project will help the Malaysian national explorer extract a greater portion of oil from its existing reserves and extend the lives of its oilfields.

The Malaysian company, also called Petronas, has been grappling with shrinking output from aging fields and targets capital expenditure of 50 billion ringgit-55 billion ringgit ($15.89 billion-$17.47 billion) a year over the next five years to replace and refurbish them.

Many of its producing Malaysian oil and gas fields are between 19 years and 28 years old.

Last year, Malaysia unveiled a package of tax incentives to boost oil output from mature fields, including cutting tax rates for the development of new oil and gas resources and enhancing recovery from depleted fields.

Petronas said it signed a deal with Shell for two 30-year production-sharing contracts under which the companies will employ enhanced oil recovery methods at oilfields offshore Sarawak and Sabah states in East Malaysia.

They will also develop nine oil fields in the Baram Delta offshore Sarawak and four in the North Sabah development area.

The two projects together may yield an additional 90,000 barrels to 100,000 barrels a day and could be the largest offshore enhanced oil recovery development in the world.

Malaysia, which produced 658,000 barrels of oil and condensates a day as of Jan. 1 last year, is expected to become a net oil importer by 2013 because of declining domestic output.

The projects will increase the average recovery factor in the Baram Delta and North Sabah fields to about 50% from around 36%, halt the decline of Malaysia’s oil output by improving production in the fields and extend the field life beyond 2040, Petronas said.

Petronas Carigali temui minyak di luar pantai Sabah

Cabang eksplorasi dan pengeluaran Petronas, Petronas Carigali Sdn Bhd, telah menemui jumlah minyak yang signifikan di luar pantai Sabah.

Dalam satu kenyataan hari ini, Petronas berkata, penemuan itu dilakukan di telaga Wakid-1 di dalam Blok 2G-2J, kira-kira 100km di timur laut Kota Kinabalu.

Telaga itu digerudi pada 30 Mei, 2011 dan selesai pada 4 Julai, 2011.

Petronas berkata, ia mencapai ketinggian vertikal 3,330m dan mengesahkan kehadiran minyak yang signifikan dan kewujudan takungan gas.

"Tiga ujian pengeluaran dilaksanakan di tiga takungan berlainan yang mengalirkan minyak pada kadar maksimum disatukan 8,200 tong sehari.

"Anggaran awal semasa hidro karbon di kawasan itu dari penemuan itu ialah 227 juta tong bersamaan minyak (mmboe), dengan jangkaan potensi peningkatan,” kata Petronas.

Japanese may decide to shift ops to Sabah

Japanese companies are contemplating moving out of their country and looking at the possibility of investing in Malaysia in view of the high cost of living and high wages in Japan.

Japanese industrialists who are using Thailand as their base are also currently having problem in doing business there as most of their factories have been affected by floods, said Japan Research Industries and Industrial Technology Association (JRI) Director General, Seiji Oshima.

He said this during a visit to the Kota Kinabalu Industrial Park (KKIP) head office in Sepanggar near here to study the investment possibility in Malaysia.

The group of seven officials was led by a Committee Member of the Hiroshima Chamber of Commerce, Tadasuke Tayama.

According to Oshima, Japanese industrialists were also looking at other places such as China, India, Vietnam, Cambodia, Singapore and Indonesia.

Lawrence G Kimkuan, Senior Marketing Manager of KKIP, in briefing the visitors said there were many favourable factors for Japanese investors to consider coming to Malaysia, especially Sabah.

Firstly, he said, Sabah has more land for industrial development.

Moreover, the natural resources in the State are not fully tapped yet.

"There is an abundant supply of raw materials such as silica, rubber, palm oil, oil and gas, bio-tech and timber in Sabah for downstream activities or production of value add products and by-products," Kimkuan told the Japanese study group.

He told them that there is also a quality work force available at wage levels that are lower than states in Peninsular Malaysia. More over, the cost of living in Sabah is also lower compared to some other Asian countries.

Sabah also offers a complete package such as good lifestyle with modern shopping facilities, beaches and islands, majestic Mt. Kinabalu, cheap seafood, beautiful golf courses with lower fees and affordable resorts and hotels.

Not only that, Malaysia also has the advantage of having stability in its political, financial and judicial systems, the KKIP official told them.

During the briefing at KKIP, the Japanese group announced that part of the purpose of their tour of Malaysia was to introduce some of their new technologies. These included the Ultra High Pressure System and the Portable Toilet.

Also present at the briefing was Melvin Disimond, KKIP's Deputy Chief Executive Officer (Operations).

Lynas: MB Pahang dituntut mohon maaf

Gabungan Hentikan Lynas (GHL) menuntut Menteri Besar Pahang Datuk Seri Adnan Yaakob memohon maaf di atas kesilapan beliau menyebut bahawa bahan di Bukit Merah adalah bukan tanah jarang (rare earth) semasa temuramah beliau dengan aktivis Australia Ryan Albrey baru-baru ini.

GHL dalam kenyataan yang diedarkan kepada media menyebut, mereka amat terkilan dengan kenyataan Adnan dalam temuramah tersebut bahawa Asian Rare Earth (ARE) itu hanya merupakan nama syarikat tetapi tidak memproses tanah jarang.

GHL mendakwa, kenyataan Adnan itu merupakan satu tuduhan palsu dan tidak berasas kerana ARE menghasilkan Yttrium daripada Monozite sementara Yttrium pula merupakan bahan mentah untuk menghasilkan tiub untuk televisyen.

“Mengikut definasi International Union of Pure and Applied Chemistry (IUPAC), tanah jarang terdiri daripada 17 jenis bahan, iaitu 15 jenis Lanthanides, Scandium dan Yttrium. Maka jelas bahawa kilang ARE memang menghasilkan tanah jarang, mana pula juga telah mengaut keuntungan besar dengan menggadaikan nyawa dan keselamatan rakyat tempatan.

“Peristiwa pahit Bukit Merah telah memberikan satu iktibar besar kepada Rakyat Malaysia supaya jangan mengulangi kesilapan yang sama. GHL menganggap mungkin Adnan tidak berapa memahami peristiwa Bukit Merah sehingga boleh melontarkan kenyataan yang tidak berasaskan fakta, membuat perbandingan yang meremeh-temehkan perjuangan penduduk, dan menyinggung perasaan mangsa dan keluarga mangsa di Bukit Merah.

“Justeru, GHL menggesa Adnan Yaakob meminta maaf kepada penduduk Bukit Merah atas kesilapan fakta tersebut,” tulis kenyataan tersebut.

Selain itu, GHL juga berasa kesal dengan kenyataan Adnan yang berbaur rasis dan cuba memutarbelitkan isu sebenar di mana dalam temuramah tersebut beliau tidak menolak kemungkinan bahawa Orang Cina di Malaysia cuba bersuhabat dengan negara China untuk menggagalkan projek Lynas Advanced Material Plant (LAMP) supaya China boleh kekal memonopoli pasaran tanah jarang di dunia.

“Ini merupakan satu tuduhan yang serius dan GHL harap Adnan dapat menunjukkan bukti atas dakwaan beliau. Jika tidak, Adnan selaku Menteri Besar Pahang bukan sahaja tidak peka terhadap kesejahteraan dan keharmonian masyarakt majmuk di Malaysia, malah cuba mengkaburi mata orang awam dengan andaian yang tidak berasas malah bersifat perkauman.

“GHL ingin mengingatkan Menteri Besar Pahang bahawa rakyat Kuantan dan Pahang sedang meneliti tindaklaku dan perbuatan Kerajaan BN sekarang. Rakyat Kuantan yang terdiri daripada berbilang kaum dan agama telah menghantar satu mesej yang jelas kepada pihak yang berkuasa bahawa mereka menolak Projek LAMP sepenuhnya.

“Walhal, dalam temuramah tersebut Adnan sendiri mengakui bahawa Negeri Pahang tidak mendapat apa-apa daripada Projek LAMP melainkan cukai tahunan tanah dan cukai pintu sahaja.”

Sementara itu, GHL juga meminta Adnan supaya hentikan percakapan yang bercanggah dari segi logik dan rasional. Misalnya, Adnan berkata semua perkara yang dijalani dalam kehidupan seharian ada risiko. Akan tetapi, Adnan sengaja mengabaikan hakikat bahawa Projek LAMP merupakan risiko lebihan yang disuapkan kepada rakyat dan generasi yang akan datang tanpa persetujuan mereka.

“Dalam temuramah tersebut, secara semberono Adnan juga berkata bahawa keadaan hartanah turun harga merupakan satu perkara yang baik dan menasihatkan siapa yang ada duit untuk membeli hartanah yang sedang turun sekarang.

“GHL menganggap kenyataan-kenyataan yang dibuat oleh Adnan ini hanya menunjukkan kelalaian dan kecetekan pandangan beliau terhadap Projek LAMP serta hak dan kepentingan rakyat justeru GHL meminta Adnan berhenti menjadi jurujual kepada LAMP dengan kata-kata yang manis tetapi tidak masuk akal dan tidak membawa makna.

“Apa yang rakyat harap adalah sikap pihak pemerintah yang akur dan mendengar kepada suara rakyat, tetapi bukan sikap politik yang dangkal dan jijik mainan pemimpin yang hanya mahu terus kekal berkuasa sahaja,” kenyataan tersebut dipetik.

Petronas to add power plant in Rapid

Petroliam Nasional Bhd (Petronas) may add a power plant to its refinery and petrochemical integrated development (Rapid) complex in Pengerang, Johor.

“Rapid will require power. It will also require gas. It will require energy and electricity, so there will be power requirement,” Petronas executive vice-president (gas and power business) Datuk Anuar Ahmad told StarBiz after officiating the Petronas Leadership Centre, a learning arm of the group.

The Rapid project, costing about RM60bil, is expected to be commissioned by the end of 2016. It will have multinational oil and gas companies as joint-venture partners.

On Tuesday, StarBiz quoted sources as saying that Petronas would likely build a power plant to support the petrochemical industry in Pengerang.

According to sources, the national oil company planned to set up the plant on its own or through a joint venture.

On the shortage of gas, Anuar said it would likely to continue in the country for the time being.

“Hopefully, (it will be resolved) when we have the regassification terminal (ready) next August,” he said, adding that the volume would likely to continue to fluctuate as maintenance and services were still ongoing.

“There will always be maintenance. Gas supply level will fluctuate as maintenance takes place,” he said.

According to analysts, the new regassification project in Malacca, which is scheduled for commercialisation in mid-2012, is a long-term solution to address Malaysia's gas supply needs.

Separately, Tenaga Nasional Bhd (TNB) has complained about the gas shortage as its earnings have been severely impacted. It has so far reported two consecutive quarters of losses.

TNB has said the losses stemmed from the need to replace the shortfall in the supply of gas by utilising more oil and distillates, which are five times more expensive than gas. This has resulted in TNB incurring an additional RM2.1bil in costs.

Petronas sah kunjungan SPRM, ‘teliti’ aduan salah laku

Petronas mengesahkan Suruhanjaya Pencegahan Rasuah Malaysia (SPRM) ada mengunjungi pejabatnya baru-baru ini tetapi menafikan ia telah melakukan serbuan ataupun mengambil sebarang fail dari premisnya.

Syarikat minyak nasional berkata kunjungan SPRM itu sebahagian daripada prosedur operasi standard (SOP) apabila ada aduan.

“Ekoran laporan bahawa SPRM telah menyerbu Petronas, kami ingin menjelaskan bahawa tiada serbuan dan tiada fail atau dokumen diambil oleh agensi itu sebagaimana didakwa,” kata Petronas dalam kenyataan kepada media malam ini.

Katanya, pegawai-pegawai SPRM telah berada di ibu pejabat Petronas untuk membantu dalam prosedur laporan maklumat pertama, yang merupakan sebahagian daripada SOP agensi itu ekoran apa jua aduan mengenai salah laku.

Petronas & Shell Ink HOA For New Oil Recovery Production-sharing Contracts

Petronas and Shell Malaysia on FRiday signed a Heads of Agreement (HOA) for two 30-year production-sharing contracts (PSCs) for enhanced oil recovery (EOR) projects in offshore Sabah and Sarawak.

The HOA will see staged work activities and new investments from Shell and its joint-venture partner, Petronas Carigali Sdn Bhd, to extend the life and increase the recovery factor of the Baram Delta and North Sabah fields.

"This new agreement confirms Shell's commitment to continue investing in Malaysia and its position as a heartland for Shell.

"The agreement also provides an opportunity to work together with Petronas on building local knowledge and capabilities in enhanced oil recovery," Shell's chief executive officer Peter Voser said in a statement.

Improvements in the recovery efficiency of oil fields may result in an additional 90 to 100 kilo barrel of oil equivalent per day of oil production and extend the field life to beyond 2040.

The new agreement will build upon the existing Baram Delta and North Sabah production-sharing contracts located offshore Sabah and Sarawak.

Meanwhile, Shell Malaysia chairman Anuar Taib said the new agreement would positively impact Malaysia's oil reserves and benefit the country as well as, adding further value to the nation's upstream oil and gas industry.

"Shell, as a long-term partner in Malaysia's progress, is pleased to be able to continue contributing towards the national aspiration to become a high-income economy," he said.

Petronas Carigali holds 60 per cent equity interest in the Baram Delta production-sharing contract (expiry 2018) and is the operator while Shell holds the remaining 40 per cent stake.

The North Sabah PSC (expiry 2019) is Shell-operated, with each company holding an equal 50 per cent equity interest.

The projected increase in the average recovery factor in the Baram Delta and North Sabah fields will see a rise to 50 per cent from 36 per cent, adding significant value to the upstream industry in Malaysia and sustainable over the coming decades.

The technology employed in the North Sabah fields can potentially lead to the first field-scale offshore Chemical EOR in the world.

To date, Shell has participating interests in 14 PSCs in various offshore blocks in Sabah and Sarawak.

Gas Supply: Petronas Welcomes Third-party LNG Imports

Petroliam Nasional Bhd (Petronas), which is currently developing Malaysia's first liquefied natural gas (LNG) receiving terminal in Melaka, is encouraged to learn that national utility company, Tenaga Nasional Bhd (TNB), is considering to import LNG to part-fuel its power plants.

Petronas' Executive Vice-President of Gas and Power Business Datuk Anuar Ahmad said the terminal, once operational, would have a provision for third-party access for the purpose of importing LNG into the country.

"This is in line with our philosophy of allowing third-party importers to use the terminal to land LNG, which could be sourced from various global suppliers, for their own use," he said.

He was responding to a query from Bernama on reports that TNB, through its fuel procurement subsidiary, TNB Fuel Services Sdn Bhd, is engaging consultants for short-and long-term LNG supply management.

"We hope third parties such as power and utilities providers and other gas consumers would be encouraged to source for their own gas. This would in turn help ease Malaysia's tight supply situation and the dependence on the country's declining gas resources.

"We are therefore encouraged to read reports that TNB, the country's utility giant, is drawing a long-term strategy for LNG supply management, a move that Petronas welcomes," Anuar said.

If adopted, the strategy would be akin to the approach long taken by power and utility players in other parts of the world, particularly those in countries with little or insufficient indigenous gas resources, he said.

In some of these countries, he said, power and utility players would also build their own LNG receiving terminals.

The Melaka terminal, being developed by Petronas Gas Bhd, will have the capacity to process 530 million standard cubic feet of gas per day.

It is scheduled to be commercially operational in August 2012. A second LNG receiving terminal is being planned in Johor, which would allow for similar third-party access arrangements.

Anuar noted that total gas consumption in Malaysia increased by more than 33 per cent from 2000 to 2010, pushed up mainly by the introduction of regulated prices by the Government in 1997 to help Malaysian power and industrial players cushion the impact of the Asian financial crisis.

The new demand was mostly from customers who converted from other fuels to gas, he said, adding that even in the power sector, due to the subsidised prices, power producers would usually dispatch their gas plants first before plants that use other fuels to generate electricity.

"The 1997 crisis came and went, yet the gas prices remain regulated, creating more demand on an already tight gas situation compounded by declining resources. There is no shortage of other fuels in the market. But when you have a subsidised option, people would not go for the more costly alternatives.

"In Malaysia, we have a situation where gas - because it is "cheap" -- is used as a base load for power generation. This is in contrast to other economies where gas, being a clean energy and fetches a premium, the power companies use coal as their base load," he added.

Anuar said the "cheaper" gas prices, however, come with a heavy cost to PETRONAS, which buys the gas from producers at market prices but sells to the power sector and other industries at a heavily discounted prices.

"Up to August 2011, Petronas has foregone revenue amounting to RM103.2 billion for gas supplied to the power sector alone, out of a total of RM143.4 billion arising from price differentials between the market price and the regulated price," he said.

While the demand for natural gas has increased, its production has been declining. From 2006 to 2011, the production rate from Malaysia's existing gas fields declined between six and 29 per cent.

Anuar reiterated that Petronas had as early as 2005 warned the power and non-power industries as well as the regulators of the potential crunch in gas supply, making known its view that over-dependence on gas was not sustainable.

Regular discussions and engagement sessions were also held with the intention that customers could plan ahead necessary measures and actions to mitigate potential impact on their operations and business.

However, the convenience of cheap gas continued to drive demand, he said.

"Because of the high gas utilisation, we have to operate our upstream and downstream facilities at full capacity on a continuous basis for many years without any operating margin. This is simply not sustainable and cannot continue.

"Despite that, we continue to undertake our regular maintenance. Therefore it is incorrect for some parties to say that Petronas and its upstream partners are not doing maintenance and that the tight supply of gas is due only to maintenance issue," he added.

Anuar said as indigenous production was not able to meet demand, Petronas had been purchasing piped gas at market prices from external sources.

From January to August this year, about 37 per cent of Peninsular Malaysia's gas needs were met by imports from Indonesia and from gas developed in the overlapping Malaysia-Thai and Malaysia-Vietnam areas.

However, he warned that securing such supply might soon become a challenge as production at these sources were also decreasing, which would mean less molecules for Petronas to purchase.

"We are positive that our receiving terminal in Melaka, and the one planned for Johor, would help ease the supply situation. However, there is still a need to address the fuel-mix issue for power generation to ensure the security of power supply in the country. We cannot be over-dependent on gas.

"Malaysia's hydrocarbon resources are finite. Petronas believes that everyone has a role to play in making the nation more energy efficient.

Assigning blame on any party will not help. At Petronas, we are doing our utmost to meet our gas supply obligations. If all of us do our bit, we would be able to prolong the life of our resources for the benefit of our children and future generations," he added.

Petronas to cut production loss with PRBI software

Petronas will save production lost due to shutdowns at its plant for inspection by the Department of Occupational Safety and Health (DOSH) with the introduction of its Online Risk-Based Inspection (PRBI) Interface software.

Petronas’ technology and engineering division vice president Dr Colin Wong said the software would be an online approval system for the issuance of certificates of fitness (CF) of DOSH-registered machinery at its plants.

“For example, our refinery plant in Melaka processes around 300,000 barrels (sweet crude oil and condensate) per day and we make around US$5 to US$10 per barrel.
“We need to have one or two shutdowns per year on average.

“We also have the IPC (Integrated Petrochemical Complex) in Kerteh (Terengganu) and Gebeng (Kuantan, Pahang), as well as plants in Bintulu (Sarawak) and Labuan, if we look at the whole country around five shutdowns a year,” he told reporters here yesterday.

He made the remarks after the signing of a Memorandum of Understanding (MoU) between Petronas and DOSH to facilitate the introduction of the software.

Wong signed on behalf of Petronas while DOSH was represented by its director-general Datuk Dr Johari Basri.

Under the terms of the MoU, DOSH would have access to Petronas PRBI software using the Online PRBI Interface, developed to enhance the efficiency of the CF issuance process to Petronas by DOSH.

Wong said with the Online PRBI Interface, DOSH would be able to ulitise and access risk-based data from remote locations and minimise mobilisation and site visits by DOSH personnel prior to the inspection process.

He said Petronas’ Liquefied Natural Gas (LNG) plant in Bintulu would be the first complex to use the PRBI interface.

“Petronas developed PRBI around 10 years ago to provide a central database that facilitates the equipment risk-ranking process through a web-based platform, allowing the data to be conveniently accessed.

“The Online PRBI Interface is a much awaited add-on for PRBI.

“This will also promote the implementation of self-regulation in Malaysia’s oil and gas industry,” he said.

Meanwhile, Johari said the plant has to shut down an average of seven days for an inspection.

“Seven days means a lot of production lost for a company and Petronas’ development of this software is most welcome in making sure they minimise their production loss and help us to inspect then issue the CF for the machinery.

“We inspect around 150,000 machines a year for their CF, and the software speeds up our work.

“DOSH personel still have to go to the plant to inspect but not as often as before, and the period of inspection can also be minimised,” he said.

He also urged other industrial companies in Malaysia to develop similar software to minimise plant shutdown and lost production.

Petronas wants to boost overseas oil & gas ventures

Malaysia's oil and gas firm Petronas wants to "high grade" its international operations by acquiring more valuable assets and exiting from less profitable ventures, the Edge newspaper reported today.

The weekly paper cited Petronas Executive Vice President of Exploration and Production Wee Yiaw Hin as saying the state-linked firm was keen on expanding in Asia, West Africa and South America.

"We actually want to grow our international operations. We will get out of those (countries) where profitability is low. And we have a few more on the list," Wee was quoted as saying.

"Algeria is one. Over there, there is not a big field to develop, costs have gone up, profitability is very weak and its not easy to succeed," he added.

In recent months Petronas has announced plans to develop marginal oil fields back home and exit ventures in Pakistan and Ethiopia, triggering speculation the oil firm was scaling down on international operations.

Petronas, which has a presence in 23 countries, is deriving good value from operations in Sudan, Myanmar, Turkmenistan and Vietnam and is on the lookout for "new basins and a few value growth areas" in these regions, Wee said.

He said Brazil and West Africa are also key targets for Petronas that will continue to grow its international business through government-to-government deals.

"We will (also) go according to business fundamentals, for example, in areas like western Africa and Brazil, which have 21 billion barrels of oil," said Wee, who has worked in Shell for 30 years.

"We have looked at the rocks, we are quite clear that the rocks are good and we are sure there will be success."

The four oil blocks in Iraq that Petronas won the rights to jointly develop will hit first commercial production by early as end 2012, Wee said. – Reuters