The Dewan Rakyat has passed the Petroleum Income Tax (Amendment) Bill 2011 after it was read three times on Wednesday, June 29.
Azmin Ali (PKR-Gombak) raised an objection under Article 46(4) of the standing orders that if 15 or more members object to a decision, a voice vote must follow.
The bill was passed when Deputy Speaker Datuk Ronald Kiandee announced that 45 of 75 voters were for and 29 against.
Earlier, when wrapping up the debate on the bill, Deputy Finance Minister Datuk Dr Awang Adek Hussin said the incentives related to the Petroleum Income Tax Act 1967 included reducing the income tax rate from 38 per cent to 25 per cent for marginal oilfields.
Besides that, capital allowance would be speeded up from 10 to five years for marginal oilfields, and investment allowance given to projects requiring high capital expenditure and technical skills, he said.
"This incentive is to encourage investment for increased national petroleum production and help reduce the management cost of the upstream petroleum industry to attract more exploration activities as well as oilfield development," he said.
The Securities Commission (Amendment) Bill 2011 tabled by Deputy Finance Minister Datuk Donald Lim Siang Chai was also passed by the Dewan Rakyat.
The amendment includes expansion of the commission's surveillance functions and a working outline to recognise foreign auditors and audit firms. - Bernama
Wednesday, 29 June 2011
Tuesday, 28 June 2011
Rozali: O&G revenue to beat water at Puncak Niaga in five years
Puncak Niaga Holdings Bhd plans to have its oil and gas (O&G) division contribute about 60% of the group’s revenue within the next five years, overtaking its core water business.
Puncak Niaga chairman Tan Sri Rozali Ismail said the company would spend US$59 million (RM179.2 million) to acquire two O&G companies, Global Offshore (Malaysia) Sdn Bhd and KGL Ltd, by the end of the year.
“At the end of the year, we hope to finalise the acquisition of 100% of the shares in these companies. These companies have existing business in O&G and have contracts in hand from Petronas. They are good ventures,” he said, adding that the O&G business would become the second core activity for the company.
Global Offshore is 51%-controlled by Selecta Flow (M) Sdn Bhd, a private company and a vehicle of Datuk Khalid Ngah, while the remaining 49% is held by Global Asia Pacific Industries Sdn Bhd, a unit of US-based, Nasdaq-listed Global Industries Ltd.
Global Industries’ largest shareholder is William J Dore who, according to Bloomberg, has a 10.5% stake in the US O&G player.
Global Offshore is an installation and pipelaying contractor and, through its parent company, operates the pipelay barge Hercules, as well as other offshore construction vessels. Rozali said efforts would be made to secure jobs in the O&G sector in Malaysia and other parts of the world, as there is a lot of potential in the sector.
“We are confident that it will contribute substantially. By next year it should contribute about 20% to our revenue and, hopefully, five years down the road it will contribute 60%,” he said.
However, Rozali reiterated that Puncak Niaga’s water, waste-water and environmental businesses remain the company’s core focus and they have much potential despite the differences between the company, the Selangor government and the federal government on the issue of water-sector consolidation in Selangor.
“We assure our shareholders that we are continuing to supply quality water for both industrial and domestic consumers … with the constraints that we have, with limitations in terms of investment and capital expenditure that have been put on hold by the federal and state governments,” he said.
On the issue of Selangor’s water-sector consolidation, Rozali said: “As a company, we have obligations to fulfil under our concession agreement. The state and federal governments have different authorities and responsibilities in this business. Raw water and land are under the state’s purview. Financing, licensing and approving certain budgets and works are under the purview of the ministry and National Water Services Commission (SPAN).
Everybody has their own jobs to do and I hope they follow the spirit of the concession agreement.”
He said any talks on acquisitions must follow the agreement and he would await new suggestions or proposals from both the state and federal governments.
Puncak Niaga is also set to expand its water business overseas. In the pipeline is a project in Cambodia, for which the company hopes to ink a contract in the next few months. It is also exploring opportunities in China, India and Laos.
Puncak Niaga chairman Tan Sri Rozali Ismail said the company would spend US$59 million (RM179.2 million) to acquire two O&G companies, Global Offshore (Malaysia) Sdn Bhd and KGL Ltd, by the end of the year.
“At the end of the year, we hope to finalise the acquisition of 100% of the shares in these companies. These companies have existing business in O&G and have contracts in hand from Petronas. They are good ventures,” he said, adding that the O&G business would become the second core activity for the company.
Global Offshore is 51%-controlled by Selecta Flow (M) Sdn Bhd, a private company and a vehicle of Datuk Khalid Ngah, while the remaining 49% is held by Global Asia Pacific Industries Sdn Bhd, a unit of US-based, Nasdaq-listed Global Industries Ltd.
Global Industries’ largest shareholder is William J Dore who, according to Bloomberg, has a 10.5% stake in the US O&G player.
Global Offshore is an installation and pipelaying contractor and, through its parent company, operates the pipelay barge Hercules, as well as other offshore construction vessels. Rozali said efforts would be made to secure jobs in the O&G sector in Malaysia and other parts of the world, as there is a lot of potential in the sector.
“We are confident that it will contribute substantially. By next year it should contribute about 20% to our revenue and, hopefully, five years down the road it will contribute 60%,” he said.
However, Rozali reiterated that Puncak Niaga’s water, waste-water and environmental businesses remain the company’s core focus and they have much potential despite the differences between the company, the Selangor government and the federal government on the issue of water-sector consolidation in Selangor.
“We assure our shareholders that we are continuing to supply quality water for both industrial and domestic consumers … with the constraints that we have, with limitations in terms of investment and capital expenditure that have been put on hold by the federal and state governments,” he said.
On the issue of Selangor’s water-sector consolidation, Rozali said: “As a company, we have obligations to fulfil under our concession agreement. The state and federal governments have different authorities and responsibilities in this business. Raw water and land are under the state’s purview. Financing, licensing and approving certain budgets and works are under the purview of the ministry and National Water Services Commission (SPAN).
Everybody has their own jobs to do and I hope they follow the spirit of the concession agreement.”
He said any talks on acquisitions must follow the agreement and he would await new suggestions or proposals from both the state and federal governments.
Puncak Niaga is also set to expand its water business overseas. In the pipeline is a project in Cambodia, for which the company hopes to ink a contract in the next few months. It is also exploring opportunities in China, India and Laos.
Monday, 27 June 2011
Bumi Armada sets IPO at RM2.80-RM3.15
Malaysian oil and gas services provider Bumi Armada has set a price range of RM2.80 to RM3.15 per share for its public offering next month, raising as much as US$906 million (RM2.7 billion), according to a term sheet seen by Reuters today.Bumi Armada is an offshore support specialist, and is the only Malaysian company that owns floating production storage and offloading (FPSO) vessels, which carry a premium lease rate.
Bumi Armada was privatised in 2003 by tycoon T. Ananda Krishnan, and a planned relisting in 2008 was delayed due to the global financial crisis.
CIMB is the joint global co-ordinator and bookrunner for the offering. — Reuters
Saturday, 25 June 2011
Kencana 3Q net profit jumps 81% to RM56.42m
KENCANA PETROLEUM BHD’s earnings rose 81% to RM56.42 million in the third quarter ended April 30, 2011 from RM31.17 million a year ago underpinned by the progress achieved for the oil and gas contracts.
It said on Friday, June 24 that revenue rose 34.7% to RM377.83 million from RM280.37 million. Earnings per share were 3.08 sen versus 1.92 sen a year ago.
“Compared to the corresponding quarter ended April 30, 2010 of RM280.37 million and RM36.5 million, revenue and profit before tax had increased by approximately 35% and 91% respectively in the current quarter.
“This is mainly due to higher progress achieved for contracts in hand on the back of bigger order book and better management of relevant costs as well as contribution from drilling services,” it said.
For the nine-months, earnings increased by 69% to RM159.38 million from RM94.3 million while revenue increased by 31.5% to RM 1.06 billion from RM811.51 million.
Its cash and cash equivalents increased to RM809.50 million as at April 30 from RM222.39 million on July 31, 2010.
It said on Friday, June 24 that revenue rose 34.7% to RM377.83 million from RM280.37 million. Earnings per share were 3.08 sen versus 1.92 sen a year ago.
“Compared to the corresponding quarter ended April 30, 2010 of RM280.37 million and RM36.5 million, revenue and profit before tax had increased by approximately 35% and 91% respectively in the current quarter.
“This is mainly due to higher progress achieved for contracts in hand on the back of bigger order book and better management of relevant costs as well as contribution from drilling services,” it said.
For the nine-months, earnings increased by 69% to RM159.38 million from RM94.3 million while revenue increased by 31.5% to RM 1.06 billion from RM811.51 million.
Its cash and cash equivalents increased to RM809.50 million as at April 30 from RM222.39 million on July 31, 2010.
Friday, 24 June 2011
Transocean Report Blames BP for Gulf Spill
Transocean, the Swiss company that owned the rig lost in last year’s oil spill in the Gulf of Mexico, issued an extensive report on the disaster on Wednesday that largely blames BP, the well’s owner.
Related
The conclusions of the 854-page, two-volume report may not be particularly surprising, considering the enormous liability in civil lawsuits and possible federal criminal charges.
The report does attribute some errors to Transocean, but the “incident,” it states, was caused by “a succession of interrelated well design, construction and temporary abandonment decisions that compromised the integrity of the well and compounded the risk of failure.”
Temporary abandonment is the process of plugging the well after the initial drilling so that new equipment can be brought in to complete the well in order for production to begin; the report states that BP engineers produced at least five such plans for the well from April 12 to April 20, the day of the blast.
All of those decisions, “many made by the operator, BP, in the two weeks leading up to the incident,” were “driven by BP’s knowledge that the geological window for safe drilling was becoming increasingly narrow.” Halliburton, which was in charge of the operation to seal off the well, did not properly test the cement used in that process, and BP did not verify the results, according to the Transocean report.
The report stated it did not “represent the legal position of Transocean, nor does it attempt to assign legal responsibility or fault,” a statement that was greeted with seeming incredulity by a spokesman for BP.
The spokesman, Scott Dean, called the report an “advocacy piece” that underplayed Transocean’s role and “cherry-picked the facts in support of its litigation strategy.”
BP, he said, “has stepped up to its responsibilities and cooperated with all official investigations regarding the accident,” while Transocean “continues to take every opportunity to avoid its responsibilities.”
Other reports, including BP’s own, have found a larger role for Transocean. A report in April by the United States Coast Guard spread the blame broadly among companies involved in the well, citing problems at Transocean that included inadequate maintenance and training and a “poor safety culture.”
The blowout of the Deepwater Horizon rig killed 11 workers and spread millions of gallons of oil across gulf waters and beaches.
James P. Roy, a lead lawyer for lawsuits against BP and others in federal court over the spill, called the new report “a valuable addition to the search” for why the rig blew out, although “it is not 100 percent comprehensive.”
Related
The conclusions of the 854-page, two-volume report may not be particularly surprising, considering the enormous liability in civil lawsuits and possible federal criminal charges.
The report does attribute some errors to Transocean, but the “incident,” it states, was caused by “a succession of interrelated well design, construction and temporary abandonment decisions that compromised the integrity of the well and compounded the risk of failure.”
Temporary abandonment is the process of plugging the well after the initial drilling so that new equipment can be brought in to complete the well in order for production to begin; the report states that BP engineers produced at least five such plans for the well from April 12 to April 20, the day of the blast.
All of those decisions, “many made by the operator, BP, in the two weeks leading up to the incident,” were “driven by BP’s knowledge that the geological window for safe drilling was becoming increasingly narrow.” Halliburton, which was in charge of the operation to seal off the well, did not properly test the cement used in that process, and BP did not verify the results, according to the Transocean report.
The report stated it did not “represent the legal position of Transocean, nor does it attempt to assign legal responsibility or fault,” a statement that was greeted with seeming incredulity by a spokesman for BP.
The spokesman, Scott Dean, called the report an “advocacy piece” that underplayed Transocean’s role and “cherry-picked the facts in support of its litigation strategy.”
BP, he said, “has stepped up to its responsibilities and cooperated with all official investigations regarding the accident,” while Transocean “continues to take every opportunity to avoid its responsibilities.”
Other reports, including BP’s own, have found a larger role for Transocean. A report in April by the United States Coast Guard spread the blame broadly among companies involved in the well, citing problems at Transocean that included inadequate maintenance and training and a “poor safety culture.”
The blowout of the Deepwater Horizon rig killed 11 workers and spread millions of gallons of oil across gulf waters and beaches.
James P. Roy, a lead lawyer for lawsuits against BP and others in federal court over the spill, called the new report “a valuable addition to the search” for why the rig blew out, although “it is not 100 percent comprehensive.”
Thursday, 23 June 2011
Vietnam, Malaysia to pump oil from Diamond field
Vietnam and Malaysia are expected to start commercial production soon at a new oil field off Vietnam's southern coast after tests showed good crude oil reserves, a Vietnamese state-run newspaper reported on Thursday.
Drilling since April 2011 at the Diamond field in the 01-02 block, 162 km (100 miles) northeast of the southern province of Ba Ria-Vung Tau, has found oil and gas and assessment of the field's recoverable reserves was now under way, the New Energy newspaper said.
It gave no specific output details for the field. Block 01-02, where Ruby, Pearl and Topaz oilfields are operational, is being developed by Malaysia's Petronas Carigali (PVCL) and Petrovietnam Exploration Production Corp (PVEP), units owned by state-run oil firms in the two countries.
Ruby, Pearl and Topaz now pump a combined 20,000 barrels per day, said the newspaper, which is run by the Vietnam Oil and Gas Association.
Petronas and PVEP have had success in developing Block 01-02 and are expected to bring in "greater achievements", Petrovietnam Chairman Dinh La Thang was quoted by the newspaper as saying during a visit to the field on Tuesday.
State-run Petronas, which wholly owns PVCL, has an 85 percent stake in the production-sharing contract of block 01-02 while PVEP, the exploration and production arm of state oil and gas group Petrovietnam, has 15 percent, the report said.
Drilling since April 2011 at the Diamond field in the 01-02 block, 162 km (100 miles) northeast of the southern province of Ba Ria-Vung Tau, has found oil and gas and assessment of the field's recoverable reserves was now under way, the New Energy newspaper said.
It gave no specific output details for the field. Block 01-02, where Ruby, Pearl and Topaz oilfields are operational, is being developed by Malaysia's Petronas Carigali (PVCL) and Petrovietnam Exploration Production Corp (PVEP), units owned by state-run oil firms in the two countries.
Ruby, Pearl and Topaz now pump a combined 20,000 barrels per day, said the newspaper, which is run by the Vietnam Oil and Gas Association.
Petronas and PVEP have had success in developing Block 01-02 and are expected to bring in "greater achievements", Petrovietnam Chairman Dinh La Thang was quoted by the newspaper as saying during a visit to the field on Tuesday.
State-run Petronas, which wholly owns PVCL, has an 85 percent stake in the production-sharing contract of block 01-02 while PVEP, the exploration and production arm of state oil and gas group Petrovietnam, has 15 percent, the report said.
Wednesday, 22 June 2011
Australia’s military looks north to protect oil and gas
Australia is looking to boost its military power in the northwest to protect its booming offshore oil and gas sector and counter new challenges from China and the Indian Ocean, Defence Minister Stephen Smith said today.
The shift, being considered in a defence posture review, could see new amphibious assault ships and the planned Joint Strike Fighters based across Australia’s sprawling north and western coastlines, where resource companies have invested billions in offshore oil and gas projects.
The posture review would also consider strategic challenges from the Indian Ocean rim and reflect the growth of military power in the Asia Pacific, although Smith said the shift was not focused on China’s rising muscle.
“We are confident China will emerge as ... a responsible stakeholder. As the Chinese would say, into a harmonious environment. We are confident of that,” Smith said. “There is more than one country in the Asia Pacific.”
The United States, Australia’s top strategic ally, also plans to increase its Asia Pacific presence. Smith said Australia’s review would complement a similar review under way in Washington.
China’s growing military power has alarmed other countries in the region, especially Japan and Taiwan. In March, China said it would boost defence spending by 12.7 per cent in 2011 and has made modernising its navy a priority.
India is also building a blue-water navy to extend its strategic reach, while modernising its armed forces.
Australia is considering building up to 12 new long-range submarines and has committed US$7.6 billion (RM23.1 billion) for three powerful air warfare destroyers, due in service from 2015.
Australia is also aiming to buy 100 Lockheed Martin F-35 Joint Strike Fighters, to complement the fleet of F/A-18 Hornets and Super Hornets, currently based in Queensland, New South Wales and the remote Northern Territory.
The boom resource state of Western Australia has a major navy base near the capital Perth, and is home to the country’s elite Special Air Service forces, but there are no major military bases in the state’s north, facing Asia.
Smith said security of energy resources from offshore oil and gas projects off Western Australia and the Northern Territory posed a new security challenge.
“I do see very much an expanding petroleum resources industry off the coast of northwest Western Australia and off the coast of the Northern Territory as a significant security consideration,” he said.
“There is a prospect we will see more defence assets in Western Australia.”
The region includes the Gorgon oil and gas fields, operated by Chevron , Woodside’s northwest shelf oil and gas fields, the Browse basin targeted by Royal Dutch Shell and Woodside’s Sunrise oil and gas fields.
Australia currently has more than US$200 billion of proposed liquefied natural gas export projects in the pipeline, and the industry is eyeing a production goal of 60 million tonnes per annum by 2020, triple current production levels.
“This is the appropriate time to do a force structure review, because of the strategic and security factors of the modern era,” Smith said. “As circumstances change, our posture needs to change.” — Reuters
The shift, being considered in a defence posture review, could see new amphibious assault ships and the planned Joint Strike Fighters based across Australia’s sprawling north and western coastlines, where resource companies have invested billions in offshore oil and gas projects.
The posture review would also consider strategic challenges from the Indian Ocean rim and reflect the growth of military power in the Asia Pacific, although Smith said the shift was not focused on China’s rising muscle.
“We are confident China will emerge as ... a responsible stakeholder. As the Chinese would say, into a harmonious environment. We are confident of that,” Smith said. “There is more than one country in the Asia Pacific.”
The United States, Australia’s top strategic ally, also plans to increase its Asia Pacific presence. Smith said Australia’s review would complement a similar review under way in Washington.
China’s growing military power has alarmed other countries in the region, especially Japan and Taiwan. In March, China said it would boost defence spending by 12.7 per cent in 2011 and has made modernising its navy a priority.
India is also building a blue-water navy to extend its strategic reach, while modernising its armed forces.
Australia is considering building up to 12 new long-range submarines and has committed US$7.6 billion (RM23.1 billion) for three powerful air warfare destroyers, due in service from 2015.
Australia is also aiming to buy 100 Lockheed Martin F-35 Joint Strike Fighters, to complement the fleet of F/A-18 Hornets and Super Hornets, currently based in Queensland, New South Wales and the remote Northern Territory.
The boom resource state of Western Australia has a major navy base near the capital Perth, and is home to the country’s elite Special Air Service forces, but there are no major military bases in the state’s north, facing Asia.
Smith said security of energy resources from offshore oil and gas projects off Western Australia and the Northern Territory posed a new security challenge.
“I do see very much an expanding petroleum resources industry off the coast of northwest Western Australia and off the coast of the Northern Territory as a significant security consideration,” he said.
“There is a prospect we will see more defence assets in Western Australia.”
The region includes the Gorgon oil and gas fields, operated by Chevron , Woodside’s northwest shelf oil and gas fields, the Browse basin targeted by Royal Dutch Shell and Woodside’s Sunrise oil and gas fields.
Australia currently has more than US$200 billion of proposed liquefied natural gas export projects in the pipeline, and the industry is eyeing a production goal of 60 million tonnes per annum by 2020, triple current production levels.
“This is the appropriate time to do a force structure review, because of the strategic and security factors of the modern era,” Smith said. “As circumstances change, our posture needs to change.” — Reuters
Monday, 20 June 2011
Malaysia’s limited oil and gas reserves are running dry, spelling trouble for the government as it relies on national oil company Petronas for nearly half its revenue, said a leaked United States diplomatic cable.
According to the cable released by whistleblower website WikiLeaks, a Petronas board member admitted to US embassy officers here in 2008 that the company “feels tremendous pressure to grow its business in order to maintain Malaysia’s political status quo.”
“Petronas wants to stay insulated from politics but must comply with GOM (the government of Malaysia) policy,” Datuk Mohd Azhar Osman Khairuddin, now a vice president at Petronas, was quoted as saying in the cable published in full by the Malaysia Today news portal today.
“Azhar told us that Malaysian O&G reserves are not large and are running out soon. (Note: Conoco Philips Malaysia confirmed that without new discoveries, Malaysian oil production will decline at approximately 10 per cent per year, from 550,000 bpd in 2008 to roughly 490,000 bpd in 2009 and 450,000 bpd in 2010.)
“Azhar noted that revenues from Petronas accounted for 45 per cent of the GOM budget last year and stated that the GOM is over-reliant on Petronas to fund its operations,” said the document classified by the embassy’s then economic counsellor, Matt Matthews.
Petronas made a pre-tax profit of RM90.5 billion for the year ending March 31, 2011. On top of taxes, Petronas has been paying the government a dividend of RM30 billion since 2009, up from RM24 billion in 2008, RM20 billion in 2007, RM13 billion in 2006 and just RM9.1 billion in 2005.
However, a new proposal expected to take effect in 2013 will see dividends paid by the state-owned oil company fixed at 30 per cent of net profit.
According to the cable, Azhar said that Petronas wanted to invest in productive O&G assets to “promote future profitability rather than be spent now on domestic programmes for political gain.”
“He described Petronas as a stabilising force in Malaysia and in Asean regionally and his desire that the USG recognise the important role Petronas plays in maintaining political stability in the region,” the report added.
According to the leaked document, embassy officials had met Malaysian oil and gas firms due to concerns over business activities in Iran but Petronas said it had no active investments in the Islamic republic.
However, Petronas said in April last year that it sold spot volumes of gasoline from third party traders and suppliers to customers in Iran.
The cable also quoted a foreign ministry official as saying that “Malaysian firms go to Iran with suitcases of money to purchase oil and gas concessions from the Iranians. He said that they bring too much cash to count the money, so they weigh it to determine if the amount is correct.”
It named principal assistant secretary and America desk officer Muhammad Radzi Jamaludin as saying that two private companies, SKS Ventures and Amona, claimed they had no financing sources for their projects in Iran.
However, Radzi “did not offer why Malaysian firms would purchase such concessions for projects they were unable to finance.”
According to the cable released by whistleblower website WikiLeaks, a Petronas board member admitted to US embassy officers here in 2008 that the company “feels tremendous pressure to grow its business in order to maintain Malaysia’s political status quo.”
“Petronas wants to stay insulated from politics but must comply with GOM (the government of Malaysia) policy,” Datuk Mohd Azhar Osman Khairuddin, now a vice president at Petronas, was quoted as saying in the cable published in full by the Malaysia Today news portal today.
“Azhar told us that Malaysian O&G reserves are not large and are running out soon. (Note: Conoco Philips Malaysia confirmed that without new discoveries, Malaysian oil production will decline at approximately 10 per cent per year, from 550,000 bpd in 2008 to roughly 490,000 bpd in 2009 and 450,000 bpd in 2010.)
“Azhar noted that revenues from Petronas accounted for 45 per cent of the GOM budget last year and stated that the GOM is over-reliant on Petronas to fund its operations,” said the document classified by the embassy’s then economic counsellor, Matt Matthews.
Petronas made a pre-tax profit of RM90.5 billion for the year ending March 31, 2011. On top of taxes, Petronas has been paying the government a dividend of RM30 billion since 2009, up from RM24 billion in 2008, RM20 billion in 2007, RM13 billion in 2006 and just RM9.1 billion in 2005.
However, a new proposal expected to take effect in 2013 will see dividends paid by the state-owned oil company fixed at 30 per cent of net profit.
According to the cable, Azhar said that Petronas wanted to invest in productive O&G assets to “promote future profitability rather than be spent now on domestic programmes for political gain.”
“He described Petronas as a stabilising force in Malaysia and in Asean regionally and his desire that the USG recognise the important role Petronas plays in maintaining political stability in the region,” the report added.
According to the leaked document, embassy officials had met Malaysian oil and gas firms due to concerns over business activities in Iran but Petronas said it had no active investments in the Islamic republic.
However, Petronas said in April last year that it sold spot volumes of gasoline from third party traders and suppliers to customers in Iran.
The cable also quoted a foreign ministry official as saying that “Malaysian firms go to Iran with suitcases of money to purchase oil and gas concessions from the Iranians. He said that they bring too much cash to count the money, so they weigh it to determine if the amount is correct.”
It named principal assistant secretary and America desk officer Muhammad Radzi Jamaludin as saying that two private companies, SKS Ventures and Amona, claimed they had no financing sources for their projects in Iran.
However, Radzi “did not offer why Malaysian firms would purchase such concessions for projects they were unable to finance.”
Malaysia’s oil drying up, Petronas told US envoys
The Petronas executive said the oil firm was forced to comply with the government’s policies. — Reuters pic
According to the cable released by whistleblower website WikiLeaks, a Petronas board member admitted to US embassy officers here in 2008 that the company “feels tremendous pressure to grow its business in order to maintain Malaysia’s political status quo.”
“Petronas wants to stay insulated from politics but must comply with GOM (the government of Malaysia) policy,” Datuk Mohd Azhar Osman Khairuddin, now a vice president at Petronas, was quoted as saying in the cable published in full by the Malaysia Today news portal today.
“Azhar told us that Malaysian O&G reserves are not large and are running out soon. (Note: Conoco Philips Malaysia confirmed that without new discoveries, Malaysian oil production will decline at approximately 10 per cent per year, from 550,000 bpd in 2008 to roughly 490,000 bpd in 2009 and 450,000 bpd in 2010.)
“Azhar noted that revenues from Petronas accounted for 45 per cent of the GOM budget last year and stated that the GOM is over-reliant on Petronas to fund its operations,” said the document classified by the embassy’s then economic counsellor, Matt Matthews.
Petronas made a pre-tax profit of RM90.5 billion for the year ending March 31, 2011. On top of taxes, Petronas has been paying the government a dividend of RM30 billion since 2009, up from RM24 billion in 2008, RM20 billion in 2007, RM13 billion in 2006 and just RM9.1 billion in 2005.
However, a new proposal expected to take effect in 2013 will see dividends paid by the state-owned oil company fixed at 30 per cent of net profit.
According to the cable, Azhar said that Petronas wanted to invest in productive O&G assets to “promote future profitability rather than be spent now on domestic programmes for political gain.”
“He described Petronas as a stabilising force in Malaysia and in Asean regionally and his desire that the USG recognise the important role Petronas plays in maintaining political stability in the region,” the report added.
According to the leaked document, embassy officials had met Malaysian oil and gas firms due to concerns over business activities in Iran but Petronas said it had no active investments in the Islamic republic.
However, Petronas said in April last year that it sold spot volumes of gasoline from third party traders and suppliers to customers in Iran.
The cable also quoted a foreign ministry official as saying that “Malaysian firms go to Iran with suitcases of money to purchase oil and gas concessions from the Iranians. He said that they bring too much cash to count the money, so they weigh it to determine if the amount is correct.”
It named principal assistant secretary and America desk officer Muhammad Radzi Jamaludin as saying that two private companies, SKS Ventures and Amona, claimed they had no financing sources for their projects in Iran.
However, Radzi “did not offer why Malaysian firms would purchase such concessions for projects they were unable to finance.”
Sunday, 19 June 2011
Malaysia's 1st deepwater oilfield producing less than expected
Malaysia's first deepwater field is producing less than expected due to sand in the oil although output should recover by this year, the Business Times reported on Wednesday, citing its operator Murphy Oil Corp .
"The workover programme should be completed this year and production rates back to the planned level," a Murphy spokesman was quoted as saying.
"We have three well shut-ins due to fines migration coming through the sandscreens and being produced with the oil. It is important to keep the fines materials out of the surface process equipment."
Murphy was not immediately available for comment.
Murphy's Kikeh field offshore Malaysia's Borneo state of Sabah has a current gross production of around 52,000 barrels of oil per day. The report did not say how much production had dropped to.
The shutting in of three oil wells at the Kikeh field has seen crude oil exports fall 11.5 percent in the first quarter, local media quoted a government minister as saying this week.
The Kikeh discovery is the first deepwater discovery in the Southeast Asian country, which has now embarked on a drive to boost deepwater oil production and reverse flagging domestic production.
Located in almost 4,400 feet of water, the Kikeh Field lies in the southern part of Block K. Murphy has an 80 percent working interest in Blocks K and H with a combined cover over six million acres since 2002.
Petronas Carigali, a wholly owned exploration and production arm of Petronas , holds the remaining 20 percent.
Saturday, 18 June 2011
Sabah, Sarawak may lose oil, gas forever
Sabah and Sarawak will lose their oil and gas resources “forever” if the Petroleum Act 1974 is not amended, United Borneo Front (UBF) leader, Jeffrey Kitingan, said.He said that the two states have already experienced “100% losses” of their oil and gas resources under the Petroleum Act.
He added that unless MPs and party leaders in the two states compel the federal government to amend the Act now, the states will “lose forever” their reserves.
He said both the Sabah and Sarawak governments have absolute rights to seek a review or even a repeal of the Petroleum Act.
“But whether the Petroleum Act itself is constitutional, given the position of Sabah arising from the Malaysia Agreement 1963 and the safeguards given to the state by the founding fathers of Malaysia, is debatable.
“If the Act is to be continued, Sabah and Sarawak should be entitled to nothing less than 50% of the profits derived from the oil and gas assets.
“The Sabah government should be entitled to a share in Petronas, given that the state is a stakeholder in the profits derived by Petronas compared to non-oil producing states.
“The monies invested by Petronas in Sudan, Iran, Iraq and other overseas ventures are derived partly from profits obtained from Sabah and Sarawak’s oil and gas assets.
“Similarly, profits from Sabah’s assets have helped Petronas establish its subsidiaries, some of which are now listed on Bursa Malaysia and generate more profits for Petronas ,” he said.
Urgent steps
Jeffrey said that so far the two states had not been benefiting from the oil-related industry and must take urgent steps to address the issue with the Barisan Nasional (BN) government.
If they failed to so, he said, both states will continue to lose rights to profits from oil and gas derived from their territories.
“In reality, Sabah and Sarawak have suffered a 100% loss of their oil and gas because under the Petroleum Act, all the oil and gas reserves in the states are lost forever… they are vested in Umno-controlled Petronas.
“In return, Petronas pays the state governments a measly and miserable 5% of the revenue reaped by Petronas.
“The 5% so-called oil royalties cannot adequately compensate the total loss of the oil and gas assets which, by right, should benefit all Sabahans and Sarawakians first and not Petronas,” Jeffrey said in a statement to FMT.
He said that the revenue of Petronas is based on operational profits and as such, it is a gross injustice to Sabahans and Sarawakians that they only get 5% of the profit while 95% of it goes to Petronas.
Jeffrey also said that in January 2011, Sabah Chief Minister Musa Aman had announced that the state contributed 26.9% of the 637,000 barrels of crude oil produced per day in Malaysia.
“In the 2011 Sabah state budget, the chief minister projected the oil royalties (5%) to be RM721.7 million, of which all will be used for the annual expenditure of the state.
“Not a single sen is saved or invested for the future of Sabah and Sabahans.
“In Norway, the bulk of the oil revenue from its North Sea oilfields is saved and invested, making Norway one of the largest investors in the whole of Europe.”
“This means that every Norwegian owns the asset (oil) extracted long before he or she is born,” he said.
Mind-boggling
Jeffrey said that the oil and gas problem in Sabah and Sarawak was compounded by the lack of transparency in the dealings.
He added that there was also a lack of political will to establish an oil and gas industry, especially in Sabah.
“The latest arrangement to divert Sabah’s natural gas from Kimanis, Papar, to Bintulu, Sarawak, for processing is mind-boggling.
“The RM4 billion Kimanis-Bintulu gas pipeline and the billions spent on expanding the Bintulu LNG plant could very well have been invested in a new processing plant in Sabah where Sabahans could reap the benefits of the future spin-offs from such an investment,” Jeffrey said.
Friday, 17 June 2011
Oil worker dies after falling from North Sea rig
An oil worker has fallen to his death from a North Sea rig.The 37-year-old fell to his death on the Brent Charlie rig near Lerwick
The incident happened at 11.20am on Thursday on the Brent Charlie oil rig which is 116 miles north-east of Lerwick, in the East Shetland Basin.
Grampian Police confirmed that the man involved was 37-years-old and not local to the area. It is believed he worked for BIS Salamis and that was working from ropes on the oil platform when he fell.
He was pulled from the water after the alarm was raised by work colleagues.
Aberdeen Coastguard said that a Norwegian search and rescue helicopter from another oil platform went to the scene.
A Shell spokeswoman said: "Shell UK Ltd can confirm that a man rescued from the North Sea this morning after falling overboard from the Brent Charlie platform subsequently died on board the standby vessel Ocean Spey.
"The man was recovered from the water after workmates raised the alarm. Workers on the Shell-operated platform were called to muster when the alarm was raised.
"All personnel have been accounted for and the relevant authorities have been notified."
A report will be submitted to the procurator fiscal in due course.
Johor oil terminal in rescue talks with investor, says contractor
Asia Petroleum Hub (APH) is in talks with an investor to fully finance its troubled multibillion-dollar oil terminal in Johor, one of its main contractors said today.Muhibbah Engineering Bhd said in a filing to Bursa Malaysia that APH “has identified an investor and was in negotiations with the investor to fully finance the completion of the APH hub project, including making due payments to contractors.”
Singapore Business Times (BT) had reported on Wednesday that financier CIMB Bank had placed APH under receivership over a RM1.4 billion three-year bridge loan granted in 2006.
APH drew down RM840 million for project costs but executives told BT that costs had escalated and APH was looking for investors for a further RM2 billion in new financing.
Muhibbah is one of the contractors for the petroleum hub and bunkering facility at the reclaimed island of Tanjung Bin with receivables for work and related costs amounting to RM 370.8 million at the end of last year.
Its share price sank by 20 per cent to RM1.52 yesterday following the report, its steepest drop in more than three years.
However, the shares recovered this morning and were last traded at RM1.60 with over 9 million shares done before trading was halted for one hour from 10.39am.
“As this is a oil and gas project with a secured business and the said investor due to finalise its financing transaction with APH, there are reasonable grounds to hold that the receivables are recoverable in due course,” Muhibbah said in its filing.
BT had reported that the move to put APH under receivership could spell the end for the development which was once billed as one of the world’s largest fully integrated terminals with a storage capacity of 924,000 cubic metres.
CIMB Research had said the worst case scenario for Muhibbah was that it would have to write down RM300 million owed by APH which could push it into losses for the 2011 financial year.
APH had awarded Muhibbah the contracts for marine piling and jetty works worth RM820 million.
The research house added however that APH is likely to negotiate for more time to resolve the matter and rope in a new investor.
The BT report also said that a tussle has emerged over the ownership of APH, involving its majority shareholder, private terminal operator KIC Oil and Gas, Malaysian tycoon Tan Sri Syed Mokhtar Albukhary, and an apparently Umno-linked company called Trek Perintis.
The report added that more than three years ago, the Cabinet decided that Seaport Terminal, a private company controlled by Syed Mokhtar should be allowed to take up a 35 per cent stake in the project but the tussle between Seaport and KIC has not as yet been resolved.
Tuesday, 14 June 2011
KNM Group total book order RM5.5b at end-May
KNM GROUP BHD’s total book order rose to RM5.5 billion as at May this year, of which RM1.4 billion in orders were secured in 2010.It said on Monday, June 13 that bulk of the orders was secured in the second half of last year, totaling RM3.10 billion. The remaining RM1 billion of orders were secured in the first half of 2010 and earlier.
KNM added that as at January this year it had tendered for RM16 billion of orders and based on a 20% success rate, that would translate into RM3.2 billion.
Monday, 13 June 2011
Subsea 7 wins Petronas contract in Malaysia
Subsea 7 reported the award of the Kumang Cluster Project by Petronas Carigali to Subsea 7 Malaysia Sdn Bhd. This award further cements Subsea 7's position in Asia Pacific and Middle East Region.The project involves the transportation and installation of subsea structures, 5km of umbilical cable, pipeline jumpers and electrical flying leads, including the pre-commissioning of an existing 24" 5km pipeline and new umbilical in the Kumang Field.
The workscope comprises project management and engineering associated with the installation of the subsea equipment. A combined team from Subsea 7 and PETRONAS Carigali will deliver the project enabling greater development and understanding of deepwater technologies and allow most operations to be completed utilizing diverless intervention techniques. The work involves a high level of Malaysian content and will be managed by Subsea 7's office in Kuala Lumpur.
The project will be completed in two phases utilizing Rockwater 2 in 2011.
Dick Martin, Subsea 7's Vice President for Asia said, "Subsea 7 is delighted to be awarded the contract by PETRONAS Carigali to work on this prestigious project. This award underlines and further enhances our reputation in Malaysia in particular to provide safe and quality services to strategic partners such as PETRONAS Carigali."
Sunday, 12 June 2011
Petronas Chemicals banks on three projects to strengthen its position
Petronas Chemicals Group Bhd is banking on three future projects to boost its capacity that is expected to strengthen its footing as a market leader in the petrochemicals industry in South-East Asia.
The three projects are the refinery and petrochemical integrated development (Rapid) in Pengerang, Johor, specialties chemicals project with BASF SE and a fertiliser plant in Sabah.
President and chief executive officer Dr Abd Hapiz Abdullah said its parent company Petroliam Nasional Bhd (Petronas) was now doing a feasibility study on the US$20bil Rapid project. The study is expected to be completed by the end of next year.
“Once we have that in place, we will then make a decision on whether we want to take on the petrochemical aspects of the project.
“Rapid's capacity is significant in size about three million tonnes annually,” he told a briefing during a media visit to Petronas Chemicals' plant in Kertih on Thursday.
Currently, Petronas Chemicals' annual capacity stands at 11.5 million tonnes.
On the venture with BASF, Abd Hapiz said the project was also now undergoing a feasibility study, which should be completed within this year. “By then, we will know how to move forward with the project,” he said.
Last December, Petronas signed a memorandum of understanding with BASF to do a joint feasibility study to produce specialty chemicals in the country. The tie-up could cost up to RM4bil.
Additionally, Petronas Chemicals' RM1bil fertiliser plant in Sipitang, Sabah, is expected to be operational in the third quarter of 2014.
The Sabah ammonia-urea plant can produce 2,100 tonnes of ammonia and 3,500 tonnes of urea a day.
Abd Hapiz did not rule out the possibility of selective acquisitions, if any, as part of Petronas Chemicals' growth strategies.
“As of now, we do not have any concrete plan yet but our balance sheet is robust and that supports us to be selective in this area of growth,” he said, adding that as at the end of its financial year ended March 31, the company's cash stood at RM8bil.
On the industry outlook, Abd Hapiz said he was comfortable with the demand for certain products.
He said urea demand was quite strong although there were new capacities cropping up.
“Polymer demand, on the other hand, is forecast to be relatively flat in the next one to two years.
“The calamity in Japan has also created some upsurge in short-term demand, especially from the construction industry,” he said, adding that demand in North and Latin America was also quite strong.
Regionally, in addition to India and China, Abd Hapiz said the demand from Indonesia and Vietnam was on the rise.
Petronas Chemicals is one of the two listed units of Petronas. For the financial year ended March 31, Petronas Chemicals achieved a net profit of RM2.99bil and revenue of RM14.6bil.
The company contributed about 6% of Petronas' revenue.
The three projects are the refinery and petrochemical integrated development (Rapid) in Pengerang, Johor, specialties chemicals project with BASF SE and a fertiliser plant in Sabah.
President and chief executive officer Dr Abd Hapiz Abdullah said its parent company Petroliam Nasional Bhd (Petronas) was now doing a feasibility study on the US$20bil Rapid project. The study is expected to be completed by the end of next year.
“Once we have that in place, we will then make a decision on whether we want to take on the petrochemical aspects of the project.
“Rapid's capacity is significant in size about three million tonnes annually,” he told a briefing during a media visit to Petronas Chemicals' plant in Kertih on Thursday.
Market leader: An aerial view of one of Petronas Chemicals’
plants in Kertih, Terengganu.
Currently, Petronas Chemicals' annual capacity stands at 11.5 million tonnes.
On the venture with BASF, Abd Hapiz said the project was also now undergoing a feasibility study, which should be completed within this year. “By then, we will know how to move forward with the project,” he said.
Last December, Petronas signed a memorandum of understanding with BASF to do a joint feasibility study to produce specialty chemicals in the country. The tie-up could cost up to RM4bil.
Additionally, Petronas Chemicals' RM1bil fertiliser plant in Sipitang, Sabah, is expected to be operational in the third quarter of 2014.
The Sabah ammonia-urea plant can produce 2,100 tonnes of ammonia and 3,500 tonnes of urea a day.
Abd Hapiz did not rule out the possibility of selective acquisitions, if any, as part of Petronas Chemicals' growth strategies.
“As of now, we do not have any concrete plan yet but our balance sheet is robust and that supports us to be selective in this area of growth,” he said, adding that as at the end of its financial year ended March 31, the company's cash stood at RM8bil.
On the industry outlook, Abd Hapiz said he was comfortable with the demand for certain products.
He said urea demand was quite strong although there were new capacities cropping up.
“Polymer demand, on the other hand, is forecast to be relatively flat in the next one to two years.
“The calamity in Japan has also created some upsurge in short-term demand, especially from the construction industry,” he said, adding that demand in North and Latin America was also quite strong.
Regionally, in addition to India and China, Abd Hapiz said the demand from Indonesia and Vietnam was on the rise.
Petronas Chemicals is one of the two listed units of Petronas. For the financial year ended March 31, Petronas Chemicals achieved a net profit of RM2.99bil and revenue of RM14.6bil.
The company contributed about 6% of Petronas' revenue.
Petronas Plans FLNG Project FID by Year-End
Petronas is planning to take a final investment decision on a floating liquefied natural gas facility by the end of the year, in a move that could make it first to market with floating LNG production in early 2015, the state-owned company’s chief executive said Wednesday.That would put Petronas at least a year ahead of scheduled first production from Anglo-Dutch major Shell’s recently approved Prelude FLNG facility in Australia.
“We will get the first commercial cargo by early 2015, with the project completed by 2014,” CEO Shamsul Azhar Abbas said, speaking at the company’s report of its financial results for the year ended March 31.
He acknowledged that the timeline is “tough to get.”
The project will be 100% owned by Petronas and will be located in western Malaysia with a capacity of 1.2 million mt/year. He did not specify the gas field that would supply the feedstock for the plant.
“We reckon 1.2 million mt to be the most optimum size as far as floating LNG is concerned,” Shamsul said, adding that, as the company becomes more familiar with the technology, it could scale up the size of any future floating LNG projects.
Shell took its final investment decision on its 3.6 million mt/year Prelude floating LNG project off northwestern Australia in May. That floating facility will also be able to handle 1.3 million mt/year of condensate and 400,000 mt/year of LPG.
Shell’s FLNG facility will be 488 meters long and weigh around 600,000 mt, and has been designed to withstand category five cyclones. The first commercial cargo is expected in 2016.
Neither Shell nor Petronas have provided the cost details of their projects, although Shell has said its development cost for Prelude is competitive with other new LNG projects, which typically run to $3-3.5 billion per 1 million mt/year of LNG capacity.
“We are not in a position to go for that level of sophistication as yet,” said Shamsul, referring to the size of the Shell project.
Petronas and its shipping subsidiary MISC awarded a front-end engineering and design contract for a floating LNG unit to France’s Technip and South Korea’s Daewoo Shipbuilding & Marine Engineering in February.
The FEED contract for the FLNG unit, which will have a capacity of around 1 million mt/year and be located in Malaysia, is scheduled to be completed by the second half of 2011, Technip said at the time.
A spokeswoman for Technip said then that there was no timeline for executing the project, as that would depend on when Petronas reaches a final investment decision.
Saturday, 11 June 2011
Seadrill Secures a New Contract in Malaysia
Seadrill has been awarded an 18 month contract by Murphy Sabah Oil Co Ltd for the semi tender rig West Menang to operate on the Kikeh Spar deepwater field in Malaysia. Estimated contract value is approximately US$100 million (including mobilization and modification of approximately US$14 million), and the commencement is scheduled for later this quarter.
Seadrill has also exercised an option to build a new tender barge at the COSCO Nantong Shipyard in China. The new unit, T17, is scheduled for delivery in the first quarter 2013. Total project price is estimated at US$115 million, which includes project management, drilling and handling tools, spares and capitalized interest.
T17 is similar to the two tender rigs Seadrill ordered from COSCO on February 28 this year, with enhanced drilling capabilities allowing for higher drilling efficiency including the advantage of a light weight drilling equipment set.
Alf C Thorkildsen, CEO in Seadrill Management AS, says in a comment, "Based on the market outlook, also reflected in the West Menang contract, we are confident in strengthening our tender rig fleet further and that the new unit T17 will be another valuable investment going forward."
Seadrill has also exercised an option to build a new tender barge at the COSCO Nantong Shipyard in China. The new unit, T17, is scheduled for delivery in the first quarter 2013. Total project price is estimated at US$115 million, which includes project management, drilling and handling tools, spares and capitalized interest.
T17 is similar to the two tender rigs Seadrill ordered from COSCO on February 28 this year, with enhanced drilling capabilities allowing for higher drilling efficiency including the advantage of a light weight drilling equipment set.
Alf C Thorkildsen, CEO in Seadrill Management AS, says in a comment, "Based on the market outlook, also reflected in the West Menang contract, we are confident in strengthening our tender rig fleet further and that the new unit T17 will be another valuable investment going forward."
Friday, 10 June 2011
Petronas Finds New Oil & Gas Fields Offshore Sarawak
PETRONAS has made major oil and gas discoveries through the drilling of NC3 and Spaoh-1 wells in Blocks SK316 and SK306 offshore Sarawak.
In March 2010, successful drilling of the NC3 wildcat well and a subsequent appraisal well brought significant discovery for PETRONAS in Block SK316 with early estimation of 2.6 trillion standard cubic feet (tscf) of net gas in place. The wells were each drilled to a depth of almost 4,000 metres below sea level. Additionally, production flow test results of the wells demonstrate that the field is technically producible.
The Spaoh-1 well of 3,000m drilling depth, located in Block SK306, shows similar promise. It was drilled in December 2010 and found both oil and gas. The preliminary evaluation indicates around 100 million barrels (mmstb) of oil and 0.2 tscf of gas in place, respectively. Currently, the well is being prepared for production testing.
These discoveries support PETRONAS’ strategy to intensify exploration activities in Malaysia and is expected to further enhance exploration potential offshore Sarawak.
In the next three years, over 50 exploration wells are expected to be drilled offshore Malaysia by PETRONAS and its production sharing contractors. These activities, especially if they result in discoveries, are expected to spur business opportunities in the oil and gas industry and will promote upstream investment in the country.
In March 2010, successful drilling of the NC3 wildcat well and a subsequent appraisal well brought significant discovery for PETRONAS in Block SK316 with early estimation of 2.6 trillion standard cubic feet (tscf) of net gas in place. The wells were each drilled to a depth of almost 4,000 metres below sea level. Additionally, production flow test results of the wells demonstrate that the field is technically producible.
The Spaoh-1 well of 3,000m drilling depth, located in Block SK306, shows similar promise. It was drilled in December 2010 and found both oil and gas. The preliminary evaluation indicates around 100 million barrels (mmstb) of oil and 0.2 tscf of gas in place, respectively. Currently, the well is being prepared for production testing.
These discoveries support PETRONAS’ strategy to intensify exploration activities in Malaysia and is expected to further enhance exploration potential offshore Sarawak.
In the next three years, over 50 exploration wells are expected to be drilled offshore Malaysia by PETRONAS and its production sharing contractors. These activities, especially if they result in discoveries, are expected to spur business opportunities in the oil and gas industry and will promote upstream investment in the country.
Shell plans over $1b new investments in Malampaya facility
Shell plc announced plans of pumping in fresh investment of $1 billion to $1.2-billion for the phase 2 of the Malampaya deep water gas-to-power project. The investment plan, which will also require eventual 'cash call' on Shell's partners at Service Contract (SC) American firm Chevron Corporation and state-run Philippine National Oil Company (PNOC) was sounded off by Simon P. Henry, chief financial officer of the multinational oil giant during a talk at the Makati Business Club.
The equity sharing arrangement of the consortium-members in Shell Philippines Exploration B.V (SPEX) would be45-percent each for Shell and Chevron; and 10-percent for PNOC.
Company executives explained that this is in line with the plan to extract additional gas from the Malampaya field that could run a new 300-megawatt power facility for roughly 25 years.
Part of the capital outlay would also be for refurbishment works on existing well to ensure gas supply reliability for the three existing gas sale purchase agreements (GSPAs), of which committed supply is now fuelling 2,700 megawatts of capacity for the electricity needs of the Luzon grid.
In a separate interview, Department of Energy (DoE) Undersecretary Jay M. Layug noted that the investment plan of the Malampaya consortium has already been submitted to them for approval.
"There's no need for new drilling, what they will do would be refurbishment of existing well to ensure reliability of gas supply for the three committed GSPAs, because remember, these are for 24 to 25 years," he stressed.
The magnitude of investment could be spread over five years, the energy official has explained, referencing on the workplan submitted by the Malampaya field service contractors to the DoE.
For the anticipated additional gas production, he stressed that the government's instruction would be for the consortium to already start seeking out new GSPAs with prospective takers.
The energy official added that the SC 38 group "may bid out the GSPA" to one or two parties or offer it on a negotiated deal, "as long as the process is transparent" and everybody interested would be afforded fair play.
The phase 2 of the Malampaya project, Layug further noted, would be anchored more on reinforcing the field's capability to sustain its life as anticipated over 24 years and set some level of security on the volume of gas supply already committed to buyers.
In the 1990s, the Shell-led consortium first invested $1.2 billion for the upstream component of the Malampaya venture. For the downstream, which included the power plants of First Gas group and Korea Electric Power Corporation, total investments hovered at $3.3 billion or for a total of $4.5 billion.
Wednesday, 8 June 2011
Opec divided as Saudi pushes for oil increase
Saudi Arabia faced stiff resistance today from Opec producers opposed to an increase in oil supplies that help ease crude prices.Under pressure from consumer countries to contain fuel inflation, Saudi Arabia hopes to push the Organisation of Petroleum Exporting Countries to lift its production target by 1.5 million barrels a day at a meeting today, Gulf delegates said.
Riyadh has support from its Gulf Arab allies Kuwait and the United Arab Emirates to meet rising demand in the second half of the year.
“There is a need for more supply in the market,” Kuwait’s Oil Minister Mohammad al-Busairi told Reuters. “I expect demand to be strong in the third and fourth quarter.”
As Opec’s biggest producer and the only one with any significant spare capacity, Saudi usually gets its way.
But four countries — long-time price hawks Iran and Venezuela plus Ecuador and Iraq — have said publicly they see no need to increase output. All want to keep oil prices above US$100 (RM300) a barrel. Brent crude traded at US$116 a barrel today.
“We do not agree with production being increased now, we must continue to consolidate balance in the market and we have to defend fair prices,” Venezuelan President Hugo Chavez said on Tuesday in Ecuador.
Iran is represented by caretaker oil minister Mohammad Aliabadi, a close ally of President Mahmoud Ahmadinejad and is expected to take a tough line against an increase.
At a minimum, Gulf producers want to close the 1.4 million bpd gap between Opec’s two-and-a-half year old official production limit of 24.8 million bpd and actual output, estimated by Opec in April at 26.2 million.
Beyond that, it will be up to Saudi Arabia to deliver more oil.
Regardless of the policy decision, Riyadh will pump more.
A Gulf official said Saudi was planning to up outut by at least 500,000 bpd in June to 9.5-9.7 million bpd.
Saudi output was last as high in the middle of 2008 after oil prices set a record US$147 a barrel, shortly before recession sent prices crashing.
Backing the Gulf producers are Nigeria and Algeria who sit on a committee that has recommended a one-million-bpd increment.
The numbers suggest more oil is required to stop oil prices rising again.
Opec’s Vienna secretariat is forecasting that demand in the second half of the year will be 1.7 million bpd higher than current cartel output. — Reuters
Monday, 6 June 2011
Malaysia to attract oilfield services players
Malaysia hopes to attract 10 to 20 major international companies in the oilfield services and equipment (OFSE) industry to bring about 10% of their business operations here.
“This could translate to around 40% of their regional activities and would mean positioning Malaysia as a cost-competitive base for engineering, procurement and construction as well as a strategic base for installation activities in the Asia-Pacific region,” said Deputy Prime Minister Tan Sri Muhyiddin Yassin in his key note address at the Oil and Gas Asia 2011 conference yesterday.
“To achieve such lofty ambitions, we are fully aware that there is a need for a one-stop government body with sufficiently deep industry knowledge and expertise that focuses on coordinating and promoting the Malaysia OFSE industry,” he said.
The deputy prime minister said the one-stop government body, the Malaysia Petroleum Resource Corp (MPRC), will look into creating an attractive business environment for multinational companies by ensuring administrative ease for the OFSE industry and promote the local OFSE industry abroad.
The establishment of MPRC was mooted by the Performance Management and Delivery Unit (Pemandu) in the Prime Minister’s Department. Details of the corporation have yet to be announced.
Muhyiddin said there are a significant number of business opportunities in the oil, gas and energy sector in Malaysia because the country’s offshore producing fields are more mature than those of its neighbours.
“There will be tremendous commercial opportunities for maintenance and replacement of assets in addition to development of new fields, which will continue to drive growth in this key sector,” he said.
The global OFSE market is valued at RM800 billion, he said, with growth of 25% a year in recent years. The Asian market for oil services alone has grown by about 20% annually over the last decade.
“The sector outlook continues to be bright, driven by the upbeat outlook for offshore exploration activity in Southeast Asia, tight gas development across Asia and the liquefied natural gas (LNG) boom in Australia,” he said.
“This could translate to around 40% of their regional activities and would mean positioning Malaysia as a cost-competitive base for engineering, procurement and construction as well as a strategic base for installation activities in the Asia-Pacific region,” said Deputy Prime Minister Tan Sri Muhyiddin Yassin in his key note address at the Oil and Gas Asia 2011 conference yesterday.
“To achieve such lofty ambitions, we are fully aware that there is a need for a one-stop government body with sufficiently deep industry knowledge and expertise that focuses on coordinating and promoting the Malaysia OFSE industry,” he said.
The deputy prime minister said the one-stop government body, the Malaysia Petroleum Resource Corp (MPRC), will look into creating an attractive business environment for multinational companies by ensuring administrative ease for the OFSE industry and promote the local OFSE industry abroad.
The establishment of MPRC was mooted by the Performance Management and Delivery Unit (Pemandu) in the Prime Minister’s Department. Details of the corporation have yet to be announced.
Muhyiddin said there are a significant number of business opportunities in the oil, gas and energy sector in Malaysia because the country’s offshore producing fields are more mature than those of its neighbours.
“There will be tremendous commercial opportunities for maintenance and replacement of assets in addition to development of new fields, which will continue to drive growth in this key sector,” he said.
The global OFSE market is valued at RM800 billion, he said, with growth of 25% a year in recent years. The Asian market for oil services alone has grown by about 20% annually over the last decade.
“The sector outlook continues to be bright, driven by the upbeat outlook for offshore exploration activity in Southeast Asia, tight gas development across Asia and the liquefied natural gas (LNG) boom in Australia,” he said.
Sunday, 5 June 2011
SapuraCrest stomping the yard in Labuan
SapuraCrest announced that it has signed an agreement with Realmild Sdn Bhd and Labuan Shipyard & Engineering Sdn Bhd (LSE) to subscribe to a 50% stake in LSE. The yard is sited on 13ha of land within the port of Victoria Harbour in Labuan with deepwater access. Its annual capacity is 36,000 tonnes.Although it is positive, the announcement did not come as a surprise. In an update on Oct 21, 2010, following our US roadshow with management, we wrote that mergers and acqusitions might be on the cards and that a venture into the oil and gas fabrication segment would make the most commercial sense, especially if the company plans to add new drilling rigs and/or pipelay barges to its fleet. All the existing rigs and barges were built by fabricators in Europe and Asia.
We take a favourable view of the acquisition as it could help expand SapuraCrest’s local and regional presence and fast-track its bottom line growth. We are also encouraged that the new business is oil and gas-related and involves a promising segment that SapuraCrest does not have exposure to. The company currently operates in the drilling, installation of pipelines and facilities and marine services segments.
SapuraCrest paid RM25 million for the 50% stake in LSE, which we understand has broken even following a rough patch in recent years. The remaining 50% stake is held by Umno-linked Realmild, which had been leasing the yard from the Ministry of Finance (MoF) for a reported RM7 million per year. We believe SapuraCrest and Realmild will now jointly lease the yard from the MoF. We understand that LSE has a modest order book of around RM250 million, which SapuraCrest hopes to expand over the next 12 months. Already, Petra Energy Bhd has indicated its interest in using the yard’s facility for minor fabrication works. Petra Energy and LSE were to sign the agreement yesterday at the 13th Asian Oil, Gas and Petrochemical Engineering Exhibition at the Kuala Lumpur Convention Centre. Petra Energy executive director and CEO Kamarul Baharin Albakri was quoted as saying that the yard was selected for its strategic location and proximity to oil production facilities in Sabah.
SapuraCrest’s move into fabrication is not a threat to Kencana Petroleum Bhd, which operates a fully-equipped yard in Lumut. Given the low level of activities at the LSE yard in recent years, SapuraCrest’s management expects the yard to be fully developed in three years. With its 13ha yard and RM250 million jobs in hand, LSE is currently not batting in the same league as Kencana, which has a yard sprawling 89ha and an order book of RM1.5 billion.
Pending substantial new orders at the LSE yard, we maintain our forecasts and target price of RM5.12. We continue to value SapuraCrest at a 40% premium over our 14.5 times target market price-earnings ratio given its marginal field venture and superior growth. The stock remains an “outperform” and our top oil and gas pick in view of the potential catalysts of this new venture, more marginal field work and fleet expansion.
On Jan 31, a consortium comprising Petrofac (Malaysia) Sdn Bhd (50%), SapuraCrest (25%) and Kencana (25%) secured the nine-year, US$800 million (RM2.4 billion) Berantai marginal field contract. SapuraCrest’s transport and installation works are being executed as scheduled, helped by its in-house pipelay barges. Results for 1HFY12 should include a maiden contribution from the project.
Saturday, 4 June 2011
Lundin Petroleum farms-in to Malaysian Petronas oil block
Lundin Petroleum says its Malaysian subsidiary has entered an agreement with Petronas Carigali Sdn to acquire a 75 per cent interest in an offshore oil block.The company also says it will operate the Block PM307 offshore Peninsula Malaysia.
Petronas would hold the remaining 25 per cent interest in the Block.
Lundin says the block covers an area of just over 6,000 square kilometres and contains a proven oil discovery.
Lundin Petroleum now operates a total of 6 Blocks in Malaysia divided into 2 core areas.
Company president Ashley Heppnstall says the agreement is an important step forward in Lundin Petroleum's pursuit of "organic growth opportunities in Malaysia and South East Asia."
Lundin Petroleum is a Swedish independent oil and gas exploration and production company with assets in Europe, South East Asia, Russia and Africa.
Friday, 3 June 2011
Chevron says four killed in UK refinery explosion
Oil major Chevron said on Friday that four people were killed and one person was seriously injured in an explosion at its refinery in southwest Wales.The blast occurred at the 220,000 barrel per day Pembroke refinery on Thursday. Chevron did not provide any details on the operational status of the refinery.
Police said a fire broke out after an explosion in a storage tank during maintenance. An adjacent storage tank was also damaged.
"We will take every step possible to determine the series of events that led to this tragic incident," Chevron said.
Chevron put the refinery up for sale last year to lower its exposure to the refining business.
U.S. refiner Valero Energy Corp agreed in March to buy the refinery and other assets in a $730 million deal expected to close in the third quarter.
Petronas Buys Stake in Canada Gas Fields
Petronas, agreed to pay as much as C$1.07 billion ($1.1 billion) for a stake in Progress Energy Resources Corp. (PRQ)’s British Columbia natural-gas fields. The companies will also form a joint venture to explore exporting the fuel.Petronas will pay C$267.5 million for a 50 percent share in the Altares, Lily and Kahta fields in the Montney Shale region, Calgary-based Progress said in a statement today. The Malaysian company also will fund 75 percent of development costs for the fields during the next five years, up to $C802.5 million.
“The Montney is a very good asset and this looks like a strategic move to build up a large export facility,” said Kim Page, an analyst at Wellington West Capital Markets Inc. in Toronto who has a “buy” rating on Progress and owns shares. “The price seems a little richer than recent deals, but these assets also have a higher liquid content.”
Petronas, based in Kuala Lumpur, will own 80 percent of a joint venture that will study the feasibility of building a terminal in British Columbia to export gas by tanker, Progress said. Shipping the fuel by tanker would allow exports to Asia and other markets not accessible by Canadian pipelines. Apache Corp., the Houston-based owner of gas fields in the province’s Horn River basin, has proposed a similar terminal near Kitimat, British Columbia.
Progress rose to a 52-week high, gaining as much as 12 percent, the most in 20 months. The shares rose 91 cents, or 6.5 percent, to C$14.89 at 10:37 a.m. on the Toronto Stock Exchange.
“This is a breakthrough for Progress,” Chief Executive Officer Michael R. Culbert said in the statement. “Canada is poised to take a larger role on the world’s energy stage. Developing export options for Canadian natural-gas producers is a logical step.”
The Montney Shale, which lies beneath British Columbia and Alberta, holds an estimated 49 trillion cubic feet of gas, according to an April 5 report by the U.S. Energy Information Administration. Producers inject water, sand and chemicals into shale, a dense rock formation, to extract gas.
Thursday, 2 June 2011
BP finalizes study for new LNG train
Oil and gas giant BP is waiting for certainty over its gas reserves to go ahead with its plan to build a third liquefied natural gas (LNG) train at the Tangguh LNG plant in Papua, upstream oil and gas regulator BPMigas said.“The company is currently in the final phase of studying the reserves at the Tangguh gas field to check whether it can supply gas to the planned train,” BPMigas spokesperson Gde Pradnyana told reporters via text message on Monday.
He continued that the construction of the train could only be started after the company ensured that the gas reserves would be sufficient to supply the planned train and there were certain purchasing contracts with buyers.
The planned train will have a total production capacity of 3.8 million tons per annum.
Tangguh is a massive gas project located in the Bintuni Bay area in West Papua with total proven gas reserves of 14.4 trillion cubic feet.
The Tangguh LNG plant consists of two production units, each with capacity of 3.8 million tons of LNG per year.
BP started the first production unit, Train 1, in February 2009 and the second, Train 2, in July 2009.
BP is the operator of the Tangguh field, holding a 37.16 percent stake in the project. Other partners are MI Berau B.V. (16.3 percent), China-based CNOOC (13.9 percent), Nippon Oil Exploration (Berau) (12.23 percent), KG Berau/KG Wiriagar (10 percent), LNG Japan Corporation (7.35 percent) and Australia-based Talisman (3.06 percent).
BPMigas says that the Tangguh gas field has been the fourth largest contributor to national gas production. The agency expects the field will produce 879.57 million standard cubic feet per day (mmscfd) in 2011, up from the previous target of 859.16 mmscfd.
BP announced that it will invest around US$10 billion over the next ten years to crank up production at the Tangguh LNG plant and explore the country’s coal-bed methane (CBM) potentials, according to a report from Bloomberg.
BP chief executive officer Bob Dudley affirmed his company’s commitment to continuously
invest in Indonesia after meeting with President Susilo Bambang Yudhoyono and Energy and Mineral Resources Minister Darwin Zahedy Saleh on Friday.
“Our focus in investment is Tangguh in Papua, which we know we handle with great care as that’s already a very large project for BP,” he said.
The company, which has operated in Indonesia for more than 35 years, reported that as of today, it has invested around $7 billion.
Dudley said that the company would develop CBM blocks in Kalimantan. The company had signed four CBM production sharing contracts (PSC) in the Barito basin.
The $5 billion Tangguh project, which shipped its first LNG cargoes in 2009, has multi-year contracts to supply 2.6 million tons a year to China, 1.15 million tons a year to South Korea and an agreement to supply as much as 3.7 million tons a year to Sempra Energy, Bloomberg says.
Indonesia is currently the world’s third largest LNG exporter after Qatar and Malaysia.
Wednesday, 1 June 2011
New acquisitions to spur consolidation for MMHE’s growth
The recent signing of the memorandum of understanding (MOU) between Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) and Sime Darby Engineering (Sime Darby) puts MMHE on an optimistic growth track.To recap, MMHE entered into a MOU with Sime Darby for the proposed acquisition of a 130 acres fabrication yard in Pasir Gudang, Johor at a provisional price of RM399 million to be satisfied entirely in cash.
On a separate note, Petronas also entered into an MOU with Sime Darby to acquire the 170 acres fabrication yard in Teluk Ramunia for a cash consideration of RM296 million.
According to the research arm of Kenanga Investment Bhd (Kenanga Research) the overall acquisition and its combined purchase price of RM695 million for both Pasir Gudang and Teluk Ramunia was fair. The overall 300 acres of yard space translated into an attractive price of RM2.3 million per acre.
OSK Research Sdn Bhd (OSK Research) in its research noted yesterday that the acquisition of these projects were well within expectations as Petronas had plans to consolidate the fabricators, be it their yards or their licences.
The research house expected this acquisition by MMHE to materialise as the company had strong orders but lacked sufficient yard space to perform its fabrication jobs due to its existing high utilisation rate of above 80 per cent.
In addition to that, the acquisitions were part of Petronas’s initiatives to encourage the local boys to grow bigger in order for them to compete in the international arena.
Kenanga Research noted that MMHE is currently in a strong net cash position of RM1.45 billion and thus, the purchase of new yard spaces would instantly boost its total annual tonnage capacity to 130,000 metric tonnes (mts).
The research house further added that more importantly, the newly added capacity presented instant enlarged capacity to take on higher tonnage projects from both domestic and regional. This could be done without having to wait for its yard optimisation programme to complete in 2014.
“We believe the strategic acquisition is timely as it prepares to take on two large domestic contracts which are the Tapis rejuvenation and Malikai deepwater platform,” the research firm said.As for Petronas’ acquisition of the Teluk Ramunia yard, OSK Research concluded that this acquisition was to provide additional resources to support ancillary infrastructure in line with its initiatives for the greater southern Johor development.
“In our view, having Teluk Ramunia would provide the company with additional land for its Pengerang project. In fact, we understand that the distance between the yard and project site is only about 20 kilometres,” OSK Research highlighted.
Although satisfactory due diligence was required before the acquisitions could go through, analysts at OSK Research did not see this process failing. Furthermore, analysts believed that these acquisitions could well had been part of the company’s plans in the earlier days since its existing utilisation rate had exceeded 80 per cent.
Therefore, the research house factored in some of MMHE’s new jobs into its financial year 2012 (FY12) forecast. These projects included a portion of the RM1.15 billion contract to construct the KBB Topsides for the Kebabangan Northern Hub Development Project, which was awarded to Sime Darby in April 2011.
Hence, OSK Research upgraded the FY12 earnings by 14 per cent. The research house pegged MMHE at a fair value of RM8.23 based on the existing price earnings ratio (PER) of 25 times FY12 earnings per share (EPS) following the FY12 earnings upgrade.
Kenanga Research on the other hand pegged MMHE at an upgraded target price of RM7.90 as analysts had rolled over its valuation to FY12 basis, based on an EPS of 31.6 sen and a PER of 25 times.