Saturday, 31 December 2011

Petronas in talks with oil majors for petchem tie-up

Petronas is in talks with several global oil majors including Shell and Exxon Mobil to develop petrochemical plants within its $20 billion refinery complex in southern Malaysia, two sources with direct knowledge of the matter said.

Malaysia's national oil company is also talking to Japanese firms Itochu Corp and Mitsubishi Corp as well as to Dow Chemical Co the largest U.S. chemical maker as it seeks to tap surging Asian demand and diversify its earnings, the sources told Reuters.

Petronas is expected to make a decision on the partnerships by mid-2012, which signals it is quickly moving beyond the feasibility stage of the project.

"Petronas is getting a lot of interest for the joint venture undertakings," said one source who declined to be identified as the talks are ongoing.

"They have moved to the basic engineering and design stage and after this the tendering process for building the complex will start," the source added.

Petronas, Shell and Mitsubishi officials in Malaysia declined to comment. Itochu, Dow Chemical and Exxon Mobil were not immediately available to comment.

Petronas first unveiled the Refinery and Petrochemicals Integrated Development (RAPID) project in May and has said the complex will be commissioned by end-2016, which both sources said was on track.

The $20 billion complex is to be built in southern Johor state which borders Singapore -- the largest oil trading hub in Asia.

The project is key to Petronas' plan to join the likes of India's Reliance Industries in grabbing a larger share in the $395 billion global market for specialty chemicals -- high value raw materials used in products from diapers to higher performance tires and LCD televisions.

"In terms of markets for petrochemicals coming from RAPID, Petronas is aiming for Myanmar, Bangladesh and parts of the subcontinent," said a second source.

"The potential is there as these are huge markets or in the case of Myanmar, just opening up."


The RAPID project will include a 300,000 barrel-per-day refinery that produces naphtha, gasoline, jet fuel, diesel and fuel oil. The first source said the crude feedstock would come mostly from Petronas' equity projects in Sudan, Chad and eventually Venezuela instead of Malaysia's own higher quality and expensive crude, domestic production of which is slowing.

The crude feedstock from Petronas equity projects will also be channeled into the petrochemicals and polymer complex, including a 3 million ton-per-year (tpy) naphtha cracker and petrochemical derivatives facility focusing on synthetic rubber.

"Over 1 million tons will be for ethylene and propylene and the rest for high grade specialty chemicals," said the first source.

"Synthetic rubber is a big thing. Nearly 90 percent of a tire is made of synthetic rubber because natural rubber production is declining in Asia, so there is an opportunity for Petronas," the source added.


The RAPID project gives Petronas' downstream operations a better chance of staying afloat in times of economic downturns and poor margins as it allows Malaysia's only Fortune 500 company to tap into its global feedstock sources, analysts say.

"From a Petronas perspective, there is vertical integration opportunity," said Andrew Wong, lead analyst covering Petronas at Standard & Poor's in Singapore.

"I think the expectation for a recovery in the petrochemical sector in 2011 did not quite happen due to the external factors and there is concern whether the project will come on-stream at a good point in time of the global economic cycle," he added.

Industry players have said Malaysia and Petronas' ramp-up of oil infrastructure in the southernmost tip of the country will create a "Greater Singapore" trading hub that allows the region to keep up with competitors like China.

Petronas is counting on interest from Japanese firms which are looking to relocate their plants or re-invest outside their home base after the March tsunami and earthquake triggered uncertainty over future energy supply, the second source said.

"The interest has particularly been strong from the usual Japanese players in the petrochemical market. This project has started at the right time," the source added.

Saturday, 17 December 2011

LNG terminal project in Lahad Datu to offer spin-off opportunities

Petronas’ plan to set up a liquefied natural gas (LNG) re-gasification terminal in Lahad Datu will not only solve power shortage in the district but also bring spin-off opportunities to it.

Assistant Minister to the Chief Minister, Datuk Datu Nasrun Datu Mansur, said he was aware of the proposed Petronas mega project and people in Lahad Datu fully supported it.

He said the proposed terminal, which would enable LNG to be imported and regasified for supply to the Lahad Datu Power Plant, would also be a boon to the industrial sector in the district.

“Most importantly, the occasional power disruption in the district will definitely be solved once the project is completed, and is also good for the business sector,” he added.

Nasrun, who is also state assemblyman for Lahad Datu, said the setting up of the two high impact projects was indeed very timely, especially after the government scrapped the plan to build a proposed RM2 million coal powered electricity station at Silam.

“At present, electricity supply is adequately distributed in most parts of Lahad Datu district, except for certain islands and some remote villages.

“The setting up of the Lahad Datu Power Plant and LNG regasification terminal, will definitely bring significant changes to Lahad Datu in terms of power stability,” he told Bernama, here.

He also urged Petronas to consider supplying the LNG direct to consumers in Lahad Datu via gas piping, like what was being introduced in Bintulu, Sarawak.

“I’ll be grateful if Petronas could also consider giving job opportunities to the locals, especially contractors when it embarks on the LNG terminal project,” Nasrun said.

Petronas recently announced its plan to construct an LNG terminal in Lahad Datu, which would be connected to the Lahad Datu Power Plant.

It would be jointly built by a Tenaga Nasional Bhd (TNB) consortium consisting of Petronas and a state entity.

Sabah’s projected electricity requirement by 2020 was about 1,500 megawatt and the completion of the Kimanis and Lahad Datu Power Plants was expected to contribute an additional 600 megawatts.

The two Petronas multi-billion projects were expected to be completed in 2013 and 2015 respectively.

Meanwhile, Assistant Rural Development Minister, Datuk Haji Sairin Karno, said Petronas should not be ‘distracted’ from carrying out its oil and gas (O&G) activities in Sabah by negative comments.

“By and large, Petronas has done a good job (to develop the O&G industry in Sabah) and it should continue doing so, as the people and the state are also benefiting from the group’s activities,” he added.

Sairin, who is also Liawan state assemblyman, said it was normal for any important organisation like Petronas to come into public scrutiny, more so after being successful in developing Sabah’s O&G resources.

“We cannot deny that O&G has generated substantial revenue due to Petronas’ involvement, which has in turn allowed us (Sabah) to receive petroleum royalties,” he added.

According to Petronas, Sabah had received petroleum royalties of RM6.8 billion since 1976 while the group’s total investment to develop the state’s O&G industry was RM63 billion.

Friday, 16 December 2011

Reserves shrinking, Malaysia turns to marginal oilfields

A deep-sea platform is seen in Brazilian waters. Malaysia is also
venturing into deeper and deeper waters in search of more oil.

Malaysia is expected to award at least four to five licences to develop smaller fields next year as it looks to halt a decline in crude oil and natural gas production, a senior government official said.

The government has been developing deep-water fields, rejuvenating old areas and introducing incentives to develop so-called marginal fields once deemed less profitable to explore in a bid to increase output as global energy use climbs.

It awarded licences to develop two marginal fields this year, and will double that number in 2012.

“Our production is declining so we want to find more oil to maintain that production level,” Mohd Emir Mavani, a director in charge of the energy industry at the government’s Performance Management and Delivery Unit, told Reuters in an interview late yesterday.

“What we want to do is maintain our production at 650,000 barrels per day.”

Crude oil output in Southeast Asia’s second-biggest oil and gas producer is seen rising 3.3 per cent next year, reversing a decline in 2011, the government forecast in its economic report in October.

Oil production is expected to recover to 620,000 bpd, after an estimated six per cent drop this year to 600,000 bpd, extending a 3.1 per cent decline in 2010, according to the estimate.

Mohd Emir said the marginal fields would be developed by joint-ventures between foreign and Malaysian companies on a risk-sharing basis.

The smaller fields typically produce about 30,000 barrels per day, he said.

Marginal oil fields “will grow, not only in Malaysia”, he said. “We also have Vietnam and Indonesia who equally have this kind of opportunity.”

In August, Malaysian state oil firm Petroliam Nasional awarded the Balai Cluster marginal oil field offshore Sarawak to a venture involving Dialog Group, Australia’s ROC Oil Co and Petronas’s exploration arm .

It was the second marginal field awarded by Petronas this year after a group comprising Kencana Petroleum, SapuraCrest Petroleum and Petrofac won the Berantai marginal field in January.

Mohd Emir is also chief executive of Malaysia Petroleum Resources Corp, which is tasked with developing the energy services sector.

The organisation aims to attract RM450 million of investments in the oil and gas services industry next year, after beating its goal of drawing RM320 million of investments this year.

Vitol was among the companies that pledged investments in Malaysia, Mohd Emir said.

Tuesday, 13 December 2011

Leighton Offshore opens engineering business in Malaysia - wins US$10 million Iraq contract

Leighton Offshore has officially launched a new engineering business in Malaysia. DPS Leighton Engineering Sdn Bhd (LE), a fully owned PMC subsidiary of Leighton Offshore, provides engineering and PMC solutions for Leighton’s international EPCIC and LOFS business.

Leighton’s detailed engineering and PMC arm has grown from the former oil and gas engineering consulting business of DPS Bristol (Malaysia) Sdn Bhd, which was acquired by Leighton.

LE will also be providing technical, procurement and management support to DPS Consultant Malaysia Sdn Bhd, which provides oil and gas consultancy services in Malaysia.

Leighton Offshore's CEO, Peter Cox, said: “We are growing our oil and gas business internationally from our headquarters here in Malaysia, and strengthening our engineering and PMC capacity is a core element in our growth strategy”.

Mr Cox also announced that Leighton Engineering has already been awarded its first contract with a value of approximately $US10 million to undertake the detailed engineering of two offshore platforms for the Sealine project for Iraq’s South Oil Company, which is being managed here in Kuala Lumpur by a dedicated Leighton project team.

The Leighton engineering team will also assist with the procurement and follow on engineering for the two platforms.

The Sealine project involves the design, construction and installation of two offshore platforms, a 75km, 48in oil pipeline and a single point mooring system and follows on from the US$800 million ICOEEP project currently being undertaken by Leighton Offshore.

“We have made a business decision to focus our engineering and EPIC capability here in Kuala Lumpur, where there is a wealth of oil and gas experience and a competitive engineering talent base for oil and gas projects, and we are proud to be bringing world class projects, such as the Sealine project to be performed here supporting investment and new jobs in Malaysia,” Mr Cox said.

Leighton also officially opened its new office at G Tower on Jalan Tun Razak in Kuala Lumpur and unveiled its new logo. “The new logo gives us a strong and distinctive look which reflects our heritage and is relevant to the oil and gas industry. Our new offices in G Tower, Malaysia’s first Green building (BCA Gold Greenmark) reflect our commitment to sustainability and our confidence in our strong growth prospects here in Malaysia”, added Mr Cox.

Carigali makin mahal

Perbelanjaan bagi carigali dan pengeluaran minyak di Malaysia dijangka mencecah RM45 bilion dengan kadar pertumbuhan sebanyak 16.6 peratus pada tahun 2012.

Segmen pertumbuhan itu merangkumi projek-projek laut dalam, meluaskan penemuan minyak (EOR) dan lapangan marginal.

Menurut Pengarah Tenaga dan Sistem Kuasa Frost & Sullivan, Subramanya Bettadapura, pembekal pasaran minyak dan gas (O&G) yang bakal menerima manfaat pada 2012 adalah firma kejuruteraan, penyedia perkhidmatan penggerudian, kapal sokongan luar pesisir dan sebagainya.

‘‘Petronas telah memperoleh kejayaan hasil program eksplorasi mereka pada tahun ini dengan penemuan O&G di Sabah dan Sarawak.

‘‘Mereka kekal komited dengan strategi memberi tumpuan kepada usaha eksplorasi di perairan domestik dan telah menyediakan belanjawan sebanyak RM300 bilion untuk lima tahun akan datang sebagai modal perbelanjaan bagi mengekalkan paras pengeluaran dan beberapa pertumbuhan di sepanjang nilai rantaian integrasi bagi sektor tersebut

Bettadapura dalam kenyataannnya di sini berkata, usaha eksplorasi akan diteruskan terutama di kawasan blok perairan cetek dan dalam pada 2012.

‘‘Petronas dan rakan kongsinya dijangka akan menggerudi 20 telaga eksplorasi semasa 2012 dan projek laut dalam Malaysia kedua Gumusut/Kakap akan bermula pada awal 2012.

‘‘Manakala projek Malikai bakal bermula pada 2014 serta dua lagi projek laut dalam Jangas dan Kebabangan juga bakal bermula pada tahun tersebut,’’ jelasnya.

Selain itu, Petronas dengan kerjasama ExxonMobil serta Shell telah mengambil pendekatan agresif untuk memulihkan semula (rejuvenate) lapangan matang.

‘‘Petronas dan Shell Malaysia akan membelanjakan RM36 bilion ke atas untuk projek-projek EOR dan pembangunan lapangan baharu untuk mengekalkan pengeluaran.

‘‘Perbelanjaan di bawah program ini pada tahun hadapan dijangka sekitar RM3 bilion,’’ katanya.

Projek luar pesisir Sabah dan Sarawak akan menyediakan peluang kepada penyedia perkhidmatan domestik untuk membina kemampuan teknikal bagi segmen tersebut.

Sementara itu perbelanjaan ExxonMobil untuk 2012 hingga 2013 bagi program pemulihan dijangka sekitar RM2 bilion dengan kos jangkaan sebanyak RM3 bilion.

Pembangunan lapangan marginal bakal menyaksikan pelaburan berterusan pada 2012 dengan fokus mengekalkan pengeluaran minyak.

Projek North Malay Basin merupakan sebahagian inisiatif pembangunan untuk meneroka dua lapangan marginal dan sembilan lapangan dengan kandungan karbon (C02) yang tinggi dijangka bernilai RM15 bilion.

Penilaian kesesuaian untuk pusat penapisan dan penyimpanan (Projek Rapid) di Johor sedang dilalukan.

Terminal penerima dan gas semula cecair (re-gasification) gas asli cecair (LNG) akan dijadikan sebagai sebahagian daripada projek Rapid.

Keputusan pelaburan akhir untuk projek itu akan dibuat pertengahan 2012 dengan anggaran nilai sebanyak RM60 bilion.

Friday, 9 December 2011

Kencana raih kontrak RM1b

KENCANA Petroleum Bhd meraih kontrak bernilai RM1 bilion daripada firma perkhidmatan gas dan minyak Amerika Syarikat (AS), Bechtel International Inc.

Ia adalah kontrak terbesar bagi penyedia perkhidmatan minyak dan gas bersepadu tempatan itu bagi tahun ini.
Kontrak yang diperoleh menerusi anak syarikat milik penuhnya, Kencana HL Sdn Bhd itu adalah bagi kerja fabrikasi dan pemasangan struktur serta komponen untuk kemudahan pemprosesan gas asli cecair (LNG) di Australia.

Di bawah kontrak itu, Kencana HL akan melaksanakan kerja fabrikasi, memasang, menguji dan memuatkan modul peralatan proses untuk Kemudahan Loji Projek Wheatstone yang terletak di utara Ashburton (berdekatan Onslow), di Australia Barat.

Projek Wheatstone, satu daripada projek industri minyak dan gas terbesar di Australia, adalah usaha sama antara anak syarikat Chevron di Australia (73.6 peratus), Apache (13 peratus), Kuwait Foreign Petroleum Exploration Company (tujuh peratus) dan Shell (6.4 peratus).

Kencana dalam kenyataannya di Bursa Malaysia berkata, projek itu akan dilaksanakan Kencana HL di limbungan fabrikasinya di Lumut Perak selama 29 bulan.
“Penyerahan struktur dan komponennya pula akan dilakukan secara berperingkat mulai suku ketiga 2014 hingga suku ketiga 2015,” katanya.

Kontrak di Australia itu adalah yang kelima diperoleh oleh Kencana bagi tahun ini.

April lalu, Kencana menerusi Kencana HL, meraih kontrak bernilai RM208 juta daripada Kebabangan Petroleum Operating Company Sdn Bhd (KPOC) bagi kerja fabrikasi struktur kecil untuk projek pembangunan Hab Utara Kebabangan di pesisir pantai Sabah.

Menerusi Kencana HL juga, Kencana turut memperoleh kontrak pembangunan platform lapangan minyak Cendor, di luar pesisir Terengganu bernilai RM216 juta pada Mac lalu.

Sebulan sebelum itu, Kencana turut memperoleh kontrak daripada Petrofac E&C Sdn Bhd untuk projek kejuruteraan, pemerolehan, pembinaan dan pelaksanaan (EPCC) Mobile Offshore Production Unit (MOPU) dan Wellhead Support Structure (WESS), bernilai RM115 juta di luar pantai Terengganu.

Awal tahun ini pula, Kencana menerusi pakatannya bersama Sapura Energy Ventures dan Petrofac Energy Developments Sdn Bhd (PED), turut dianugerahkan kontrak kerja perkhidmatan berisiko (RSC) bagi pembangunan telaga minyak kecil milik PETRONAS di luar pesisir pantai Terengganu.

Dengan projek terbaru yang diperolehnya di Australia itu, jumlah keseluruhan kontrak yang diperoleh Kencana setakat ini adalah bernilai kira-kira RM3.5 bilion.

Saturday, 3 December 2011

Petronas Q2 net profit up 53% at RM18bil

Petronas posted a 53.8% jump in net profit to RM18.3bil for its second quarter ended Sept 30, 2011 from RM11.9bil a year ago due to higher prices across its product range. However, the impact of the better prices was partially offset by the stronger ringgit against the US dollar.

The second-quarter revenue also increased by 26% to RM71.8bil from RM57bil previously.

Dividends paid to the Government amounted to RM21bil year-to-date, which is about half of Petronas' year-to-date net profit totalling RM40bil. Dividends paid by Petronas will be capped at 30% of its net profit in the financial year ending Dec 31, 2013 (FY13) after an agreement with the latter earlier this year.

“For this calendar year we are (expecting) to pay a total of RM30bil to the Government. That amounts to around 50% of Petronas' profits. Going forward, we have to spend a lot on capital expenditure (capex). We have to find the balance between capex and paying out dividends,” Petronas executive vice president for finance Datuk George Ratilal said in a presentation of its financial performance yesterday.

Petronas expects to rake in RM70bil to RM75bil in profits before tax by the year-end.

The national oil company said its overall performance had improved as reflected in the higher return on average capital employed of 23.6% in the year to Sept 30 from 17.5% in previously.

“We have a strong balance sheet,” said Ratilal. Petronas said in the media presentation that its balance sheet remained robust with total assets growing by 7.6% quarter-on-quarter to RM472.4bil with total debt/total assets ratio remaining at 0.11 times.

It said its year-on-year cash from operations rose 61% to RM47.4bil compared with the same period last year due to higher earnings while year-on-year capital expenditure spending rose by 43% to RM24bil.

Petronas had earlier announced that it was changing its financial year-end from March 31 to Dec 31, which would mean the company would have only a nine months in FY11.

President and CEO Datuk Shamsul Azhar Abbas said he remained cautious on the global economy moving forward and that current oil prices of above US$100 remained “too strong” for the fragile world economy.

He expected the world economy to deteriorate further due to the dire economic situation in the West and weakening economic indicators in China.

“We will not be surprised if the second recession comes next year. If you were to ask me what would be the projection of crude oil prices next year, we maintain it is going to be in the range of US$85 to US$87 per barrel,” Shamsul said, explaining later that this was the price range used for Petronas' forecast for 2012 as well.

On the international front, Shamsul said the company was “taking a hit” on gas production in Egypt and Sudan due to political uprisings in these countries. It is also exploring opportunities in Myanmar, where it already has a local partner, although negotiations are still at the early stages.

Petronas also said it was exploring business opportunities in Japan after the Fukushima nuclear incident there, which would increase demand for power generation from non-nuclear sources.

Petronas Gas to furnish Sabah with new LNG terminal

Petronas Gas Bhd (Petronas Gas) president has officially announced the building of a liquefied natural gas (LNG) terminal in Lahad Datu to cater for the new Sabah east coast gas plant and new industries in that area.

The announcement was the first from the company, following Sabah state officials’ talks about adorning Sabah with a LNG terminal.

“We understand that this terminal will have a rated capacity of one million tonnes per annum,” added OSK Research Sdn Bhd (OSK Research) in its research report.

The research house believed that its capacity could go up, pending assessment of demand prior to the commencement of construction. Petronas Gas was believed to be the big winner, being the operator of the first LNG terminal in Melaka, as well as the owner and operator of LNG terminals in Pengerang and Lahad Datu.

The research report subsequently took a positive stance on the company’s chances of winning Lumut as well.

“This is the first time we have heard of the Lumut terminal, though it would certainly be no surprise if an LNG terminal emerges there,” the report added after noting the presence of the numerous gas-fired power plants and the existence of deep draft ports in the area.

There had been news of a floating LNG plant in Kanowit by 2015 and another in Sabah by 2016. These plants had been on the drawing board since 2007. OSK Research believed that its subsidiary, MISC Bhd would want to be the operator of these terminals.
To account for the potential earnings from Pengerang and Lahad Datu, the research house had bumped up its terminal growth rate for the company to 3.5 per cent as it pegged a fair value of RM15.52 per share, pending further details on the contract.

While no contract had been signed to confirm the other LNG import terminals in the country, the company remained OSK Research’s top utility pick. Its appeal was enhanced by its defensive business nature as well as its safe growth angle, seeing that gas shortage in the Peninsular was expected to be more acute in the coming years.

Friday, 2 December 2011

Petronas eyes onshore Burma amid profits

Petronas is looking to expand its operations in Burma onshore and has submitted a bid for a field there, the Malaysian state-owned company said on the day it posted a 54% rise in quarterly profits.

"At the moment in Myanmar we are only offshore and the business has been quite good," Reuters quoted Wee Yiaw Hin, Petronas’ executive vice-president of exploration and production, as saying on Thursday.

"There has been recently a bid on the onshore block and we are looking at opportunities to go onshore in Myanmar," Wee said after announcing Petronas' quarterly earnings.

In August, Burma, also known as Myanmar, closed one of its largest exploration tenders in years, just a few months after it launched a spate of political reforms.

Wee said the bidding process will end sometime next year and that he was unaware of any other Malaysian companies bidding for the same blocks, Reuters reported.

Meanwhile, the South-east Asian giant said it made about 18.3 billion ringgit ($5.75 billion) in the quarter ending 30 September.

That was up from 11.9 billion ringgit in the same period last year and came on quarterly revenues of 71.8 billion ringgit, a 26% increase from a year ago.

The increase was driven by higher realised prices for crude and other commodities such as LNG, Petronas said, and came despite a downtick in production.

Petronas produced 2.03 million barrels of oil equivalent per day in the quarter compared to 2.12 MMboepd a year ago – a drop of 7%.

The fall in production was a result of lower reservoir performance and higher downtime, Petronas said.