Sabah needs to develop own oil and gas sector

Sabah should utilize the natural gas to be sourced from the Sabah Oil and Gas Terminal (SOGT) project in Kimanis to develop its own high revenue oil and gas industry, said Minister of Industrial Development Datuk Raymond Tan Shu Kiah.

Tan said he had forwarded a proposal to Petronas to have some of the gas from the SOGT to be given to Sabah to attract investors to come in and tap the resource to set up their operations in the State.

“If gas is available, industry players will be coming in to set up their activities here. People who are using gas will come in and other players will come in too to provide the support facilities and services, people like the suppliers.

“This is what we are hoping to do and we will continue to generate interest in this field by telling investors and industry players what are the opportunities available here,” he told reporters after visiting Sabah’s first Asean Oil and Gas Expo (AGEX) at Sabah Trade Centre here yesterday.

The three-day event, which ends on Saturday, features a wide array of international exhibitors including those from Malaysia, Singapore, UK, US, China, Korea, Italy, Germany, Taiwan and Japan.

Tan stressed Sabah would not need to send all its gas to Bintulu provided it can develop industrial activities to utilize the highly priced natural resource.

Although the pipes were already being built to send gas to Bintulu as planned, he said the gas can be made available for Sabah so it can attract investors to come in.

“But we have to do something to allow the industry to be developed, otherwise that will be all we do, sending our gas to Bintulu and receiving royalty.

“It would be much better for us (to have our own oil and gas industry) than to just send the gas to Bintulu. That is why there is an urgency to have industrial activities started in Sabah to tap the gas from SOGT,” he said, noting that works to set up the Terminal in Kimanis were progressing well.

According to Tan, Petronas has been very supportive of Sabah’s effort to develop its own vibrant oil and gas industry and has agreed to find a workable solution to allow Sabah to keep some of its own gas.

Tan (left) visiting one of the exhibition booths at the Sabah Trade Centre

“We want oil and gas to create economic activities in Sabah, in line with efforts to generate downstream activities and create high income community.

“It is not just the landing of gas in Sabah but also the planning of oil and gas activities in the State and this includes efforts to provide the infrastructure and human resources required,” said Tan.

He said Petronas was willing to assist Sabah in developing trained and skilled human resources for its oil and gas industry through various levels of training programmes.

He added the company was willing to invest further in Sabah’s human resources development and the CEO himself has asked him to discuss the matter with the Chief Minister Datuk Seri Musa Haji Aman.

On AGEX, he said the event was timely as it brought major names in oil and gas sector into Sabah where investment opportunities can be highlighted or even discovered.

Currently the biggest oil and gas exhibition in Borneo, the event is expected to receive at least 5,000 visitors and generate sales of up to RM100 million.

“The organizer is very brave as a project of this nature is never a small undertaking and it is very significant as Sabah needs to know and bring in the players in the industry.

The exhibitors here are well known brands in oil and gas, with most of them suppliers and partners of Petronas.

“We will continue to organize this kind of activity to create awareness on the opportunities available in oil and gas Sabah,” he said.

Source : Sabah Times

New Oil Spill Hits Michigan Kalamazoo River

Raul Vervuzco of Eagle Services uses a suction hose to

clean oil from atop the Kalamazoo River

Michigan and the Gulf Coast don't have much in common -- except a battle against oil-infused waters.

The Kalamazoo River is the new recipient of 800,000 gallons of crude oil, resulting from an underground pipeline in the Midwest, spanning across Canada and the United States. Estimates suggest approximately 19,500 barrels surged through the river and its surrounding area as a result. The pipeline is owned by a company called Enbridge Energy Partners. Discovered on Monday morning, the leak was plugged shortly thereafter as the pipeline's operators ceased oil flow through the line.

Several residents have been compelled to evacuate, and officials have closed access to the river. Cleanup efforts on behalf of Enbridge are now being doubled as federal and state officials begin the push to stop the oil's infiltration into the water before it hits a nearby lake.

Patrick Daniel, Enbridge's chief executive announced: “Our intention is to return your communities to its state before the spill”. He also offered: “We still have a lot to work to do.”

Steady crude oil prices spur deepwater projects in M'sia

Deepwater drilling for oil in Malaysian waters is moving into high gear with the arrival of specialised drillships in the coming months, analysts said.

Yesterday Petronas Carigali Sdn Bhd’s head of deepwater development Rosli Hamzah was quoted in Singapore as saying that Transocean Ltd’s drillship Deepwater Expedition would arrive in Malaysian waters in September, while the second ship Frontier Phoenix was scheduled to be in by November.

“The average day rates for drillships capable of operating at depths over 4,000 ft (1.2km) are presently around US$425,000 a day. This is above semi-submersible day rates of US$309,000 and US$399,000 a day,’’ AmResearch analyst Alex Goh said yesterday.

Transocean is the world’s largest offshore drilling contractor with 139 mobile offshore drilling units plus three ultra-deepwater units under construction.

Rosli said Malaysia needed three drillships between 2010 and 2015 as deepwater areas will make up for as much as 40% of the country’s oil output in 10 years.

Currently deepwater accounts for 4% of Malaysian oil and gas production that totalled about 1.6 million barrels of oil equivalent a day.

Crude oil production stood at about 657,000 barrels a day, down from more than 750,000 barrels a day a few years back.

Deepwater exploration and production (E&P) is a relatively new venture in this region. Deepwater project often refers to drilling activities at depth of 1,000 ft below the oceon floor.

With crude oil price in the international market keeping above US$70 per barrel, this previously prohibitively expensive and risky venture appears to be the main part of Petronas’ gambit to boost the country’s stagnant domestic oil reserves of 20 billion barrels of oil equivalent.

The drillships’ arrival, according to AmResearch’s Goh, highlighted Petronas’ commitment to re-direct capital expenditure to its home market. As it is, the first deepwater oil production in the country, known as Kikeh field 110-km off the Sabah coast, started production about three years ago.

Recent reports suggested that development activities at the Gumusut and Kakap fields are picking up pace, and the two fields are targeted for production in 2012.

Meanwhile, early estimate showed the next three deepwater fields in Malikai, Kebabangan and Jangas would cost a further RM13bil to develop, CIMB Research said in a recent review on the industry.

Petronas has budgeted RM40bil on capex for the year ending March 31, 2011, and some estimate suggested that RM11bil would be spent on deepwater projects over the next few years.


Source : The Star

BP posts $17bn loss after oil spill

BP has reported a record quarterly loss of $17bn in the wake of a major oil spill that it has been trying to stop for months with limited success.

The company also announced it planned to sell assets worth up to $30bn over the next 18 months and cut its net debt to between $10bn and $15bn in that period.

News of one of the biggest losses in British corporate history came on Tuesday as BP named a US executive to replace Tony Hayward, the company's chief executive blamed for failing to deal with the worst oil spill in US history.

The company said that Robert Dudley, who is managing director and is in charge of the oil spill clean-up, would take over Hayward's position as of October 1.

"We are going to hold ourselves to a higher standard. I suspect that the American people and the regulators in the United States will hold us to a higher standard. That seems reasonable to me and we are going to respond to that and we are going to change," Dudeley said in an interview with ABC News.

"I think sometimes events like this shake you to the core, the foundation, and you have two responses: one is to runaway and hide; the other is to respond and really change the culture of the company and make sure all the checks and balances are there, just to make sure this does not happen again."

Dividend payments

The company said it would consider its position on future dividend payments at the time of its fourth-quarter results.

Analysts had expected BP to set aside tens of billions of dollars to cover the cost of the April 20 oil rig explosion that killed 11 people, ruined the Gulf's fishing and tourism industries, and polluted the Gulf shoreline with slimy goo.

Dudley said the accident that lad to the oil spill "came out of nowhere", and dismissed the company's safety record as outdated.

"Many of those accidents occurred about a half-a-decade ago and that's what you see rolling through in terms of those safety violations,” Dudley said.

• $32.2 billion set aside for cleanup costs
• BP plans to sell $30bn in assets over next 18 months
• $16.97bn lost in second-quarter earnings
• Company stock down 37.7% over last three months

"When Tony Hayward did come in he laid the foundations for a strong focus on safe and reliable operations and the company has been moving in that direction, it takes some time."

After BP's announcement of a replacement, Hayward said: "I believe that it is not possible for the company to move on in the United States with me remaining as the face to BP.

"So I think that for the good of BP, and particularly for the good of BP in the United States, it is right for me to ... step down."

Hayward is reportedly leaving with a total pay-off and pension package worth around $18.5m, and will be appointed as a non-executive director at TNK-BP as part of his departure deal.

He became a controversial figure due to his handling of the environment crisis that developed after after an explosion in April that killed 11 workers and caused the Deepwater Horizon rig to sink.

The destroyed wellhead in the Gulf of Mexico seabed gushed millions of barrels of oil into the waters off the southern US coast.

Public relations gaffes

BP capped the leaking well last week after a series of failed attempts to stem the leak over the last three months.

Hayward has been criticised for a string of public relations gaffes during the crisis, at one point included telling reporters "I want my life back".

BP said that it "will be a different company going forward, requiring fresh leadership", but defended the outgoing chief's performance.

"The BP board is deeply saddened to lose a CEO whose success over some three years in driving the performance of the company was so widely and deservedly admired," BP Chairman Carl-Henric Svanberg said in a statement.

Dave Kansas, the Wall Street Journal's European markets editor in London, told Al Jazeera that Dudley had been favourite for the post of chief executive because of his handling of the clean-up.

"He [Dudley] grew up on the Gulf coast in Mississippi ... he's received high praise from some of the government officials around the BP situation," he said.

"The PR piece of this looks like it's probably sliding into a place that BP would like."

He said that having an American take the chief executive slot was also important for the company given the widespread criticism it has faced from politicians and the public across the US.

Clean-up costs

Despite the steep costs of cleaning up the massive oil spill and the expected government fines, BP has sought to reassure investors that it continues to remain a strong company.

David Strahan, an energy analyst and author of the book The Last Oil Shock, backed up those assertions.

"There's no way this company's going to go bust as a result of this, despite the eyewatering size of the numbers," he told Al Jazeera.

But he said the amount BP has set aside to cover costs may not be large enough.

"I'm not sure that they have yet set aside enough to cover all of their liabilities, although I don't doubt that they could fund them, even if their numbers go up," he said.

Of the $32bn set aside, $20bn has already been pledged to payout claims made by those affected by the spill. The company's has also spent around $4bn of that money containing the disaster, leaving only $8bn for fines and other costs.

The news of Hayward's departure followed a weekend announcement that BP would finish installing the last bit of pipe into a relief well engineered to help permanently plug its oil spill in the Gulf of Mexico in the coming week.

Once the pipe is cemented in place, BP is supposed to begin a "static kill" sealing process in the first week of August.

The operation aims to seal the well by pumping heavy drilling mud through the blowout preventer valve system that sits on top of the well and then injecting cement inside to seal it.

Source : Al-Jazeera

MISC submits applications for Malaysia Marine listing

MISC Bhd has submitted applications to the Securities Commission (SC) and the International Trade and Industry Ministry for the proposed listing of subsidiary Malaysia Marine and Heavy Engineering Holdings Bhd (MHB).

The group said in a statement that it has also submitted an application to the SC's syariah advisory council for the nod to classify MHB's entire enlarged issued and paid-up share capital as a syariah-compliant security on completion of the proposed listing.

MISC, the world's biggest owner of liquefied natural gas tankers, recently said it intended to list 25.5 per cent of MHB on Bursa Malaysia's Main Board by the fourth quarter.

It would sell sell 9.1 per cent, or 146 million MHB shares, to institutional investors, and 16.4 per cent, or 262 million shares, to the public.

MHB posted a net income of RM279 million in financial year ended March 31 2010, compared with RM278 million previously.

Source : Business Times

MISC to offer 25pc of engineering unit via IPO

MISC Bhd, the shipping arm of the state oil firm Petronas, will sell a 25.5 per cent stake in its heavy engineering unit under a proposed initial public offering (IPO).

MISC said on a statement late on Friday that it will sell 146 million shares of its unit Malaysia Marine and Heavy Engineering Holdings (MMHE) to institutional investors via a bookbuilding exercise.

The public issue will comprise of 262 million shares and will involve MISC shareholders.

“The proposed listing will enable MISC and its subsidiaries to accelerate the growth of its offshore and heaving engineering divisions,” MISC said.

The IPO is expected to be completed in the fourth quarter and will boost MMHE’s share capital to RM2.5 billion, the shipping company said.

MMHE will also make a cash dividend payout of RM300 million to MISC.

MISC said it plans to use the proceeds from the share sale to institutional investors as capital expenditure while proceeds from public will fund an upgrade of its yard in Johor and additional expenditure for operations in Turkmenistan.

MISC hired Credit Suisse and Maybank for the IPO that was expected to raise over US$300 million (RM960 million), said IFR, a Thomson Reuters service. — Reuters

Source : The Malaysian Insider

BP boss set to quit with a £10m pension

Under the terms of his contract, Mr Hayward is entitled

to current salary and benefits on his departure

Tony Hayward was in talks over the weekend about leaving his position as chief executive. His departure is due to be finalised at a board meeting today. A public announcement is likely by tomorrow morning.

Talks about Mr Hayward’s exit have centred on his severance package, which is politically sensitive and could prompt a new row with the American government.

The 53-year-old’s pension pot will pay out £584,000 a year when he turns 60, but the terms of his departure from BP could allow him to draw down the pension earlier.

The BP board is eager to avoid further political criticism but Mr Hayward is believed to want the severance deal to reflect his 28 years of service to the company, which could run into millions.

The chief executive faced heavy criticism for his handling of the Gulf of Mexico oil spill after saying the environmental impact would be “very, very modest” and “I want my life back”.

Following Mr Hayward’s comment on the crisis, President Obama said: “He wouldn’t be working for me after any of those statements.”

Under the terms of his contract, Mr Hayward is entitled to “current salary and benefits” on his departure, which would be at least £1.04 million.

Last year, he earned a total of £4.56 million – including the £1.04 million salary, a £2.09 million annual bonus, a £852,000 long-term incentive payment and £440,000 from cashing in 220,000 share options. BP is keen to avoid a Royal Bank of Scotland style controversy for “rewarding failure”.

A political row broke out in 2008 when the pay-off for Sir Fred Goodwin, the shamed RBS chief executive, was disclosed. Sir Fred’s pension pot was doubled to £16 million, guaranteeing him £693,000 a year for the rest of his life.

The man who replaced Mr Hayward as the leader of BP’s response to the Deepwater Horizon crisis, Bob Dudley, is expected to be confirmed as the company’s new chief executive.

Mr Dudley grew up in Mississippi and would become the first non-British BP chief executive. In the role, he will have the task of restoring the company’s battered finances and reputation, allowing it to fight off any hostile takeover.

Mr Dudley has overseen an improvement in BP’s fortunes during the Gulf of Mexico crisis. The company has stopped oil seeping from the seabed and is close to completing a relief well that should seal off the leak.

The departure of Mr Hayward is expected to be announced alongside the company’s half-year results tomorrow. BP is forecast to post a pre-tax loss of up to $25 billion (£16 billion), which would be the biggest ever quarterly loss by a British company, after making provisions for the cost of the oil spill.

Source : Telegraph.co.uk

Venezuela threatens oil cut to US

Hugo Chavez, Venezuela's president, has threatened to cut off oil exports to the United States if US-allied Colombia launches a military attack against his country.

"If there was any armed aggression against Venezuela from Colombian territory or from anywhere else, promoted by the Yankee empire, we would suspend oil shipments to the United States even if we have to eat stones here," Chavez said on Sunday.

He added that he had cancelled a trip to Cuba because he had intelligence revealing that "the possibility of an armed aggression against Venezuelan territory from Colombia" was higher than it has been "in 100 years".

Chavez, a leftist and vocal critic of the United States, broke off diplomatic relations with Colombia last week over claims by the outgoing Colombian President Alvaro Uribe, a close US ally, that his country harbours Colombian rebels.

'Bogus show'

Uribe had said that top commanders of the rebel Revolutionary Armed Forces of Colombia, or Farc, have taken refuge in Venezuela and were launching attacks against Colombian troops.

The Colombian government had presented photos, videos and maps of what it said were Colombian rebel camps inside Venezuela to the Organisation of American States.

Chavez has dismissed the accusations as a bogus show intended to smear his government and has said that Uribe could be trying to lay the groundwork for an armed conflict with Venezuela.

The Colombian government denies seeking a conflict and says it went to OAS with its evidence about the rebels last week because Chavez's government had not taken steps to address the situation.

The United States threw its support behind its key ally Colombia, calling Chavez's decision to sever diplomatic relations and put border troops on alert "a petulant response" to Bogota's accusations.

Source : Al-Jazeera

Fuel Pump Problems Continue To Spread

Embattled Pertamina, under fire for a rash of explosions involving

state-subsidized gas cylinders, is facing further criticism for the poor

quality of its Premium gasoline

Blue Bird has been joined by another taxi company as well as an auto distributor in complaining about broken fuel pumps in their cars causing breakdowns, while state oil company PT Pertamina continued to stand behind its Premium gasoline, saying it was not the problem.

Express Group president director Daniel Podiman said on Sunday that about 40 of the company’s taxis were suffering broken fuel pumps each day. All of the affected cars were Toyota Limos, the same model used by the Blue Bird Group.

“This has been happening for the last few weeks. However, we can’t conclude whether the problem is caused by poor-quality Premium fuel supplied by Pertamina or by Toyota’s fuel pumps,” Daniel said.

Also speaking on Sunday, PT Hyundai Motor Indonesia president director Jongkie Sugiarto said the distributor had seen a sudden rise in requests for fuel pumps over the past few weeks. “Yes, there is a surge in fuel pump demand based on reports from our dealers, but we don’t know what’s causing it,” he said.

He said Hyundai was investigating what type of cars were experiencing the problem, where they were filling up and the damage to their pumps.

Last week, Blue Bird, the country’s largest taxi company, announced that 1,200 of its Toyota Limo taxis had experienced pump failures since early June. It blamed substandard Premium fuel for a build-up of sediment in the pumps and said Pertamina may be liable for repair costs, which it estimated at Rp 20 billion ($2.2 million).

Both Blue Bird and Express purchase subsidized Premium gasoline exclusively from Pertamina at discounted rates. Blue Bird buys around 5.7 million liters of fuel per month for its 11,000 taxis nationwide, according to Pertamina.

The oil company, meanwhile, has strenuously denied allegations that its Premium fuel is to blame for the fuel pump problems.

Speaking on Friday, Pertamina president director Karen Agustiawan challenged Blue Bird to prove that Pertamina had downgraded the quality of its Premium fuel.

“Whoever thinks that our Premium fuel is bad can go ahead and prove it. But if it turns out that Pertamina is right and they are wrong, I will sue them,” she said.

Karen said recent spot tests of fuel had proven that the quality of Premium fuel was well within the range the government deems acceptable.

Last week, Pertamina undertook checks on Premium gas sold at 16 stations in Greater Jakarta to monitor for possible quality problems with the fuel. On Friday, it announced that levels in all of the tested samples met state requirements for octane and sulphur content. Low octane in fuel can clog fuel pumps as can high levels of sulphur, eventually leading to breakdowns.

Johny Darmawan, president director of PT Toyota Astra Mobil, said on Friday that he was aware that Pertamina had carried out quality tests on its fuel. “However, we are still wondering why there are so many cars experiencing breakdowns, and not just Toyotas,” he said.

Johny said the company planned to sit down with Pertamina next week in an attempt to find a solution to the problem. In the meantime, the car distributor was focusing on fulfilling the increased demand for fuel pumps, he said.

Commenting on the fuel pump debate, Danang Parikesit, chairman of the Indonesian Transportation Community, blamed the ongoing problems on insufficient government oversight and called for independent testing of the fuel as soon as possible.

“The Energy and Mineral Resources Ministry needs to increase scrutiny on Premium fuel quality. If it can’t do that, it should appoint an independent watchdog to it,” he said.

Source : Jakarta Post

Related articles : Pertamina to Cease Imports of Petroleum In 2017 After Refinery Projects Are Completed

MISC to offer 25.5% of MMHE

MISC Bhd is proposing to list wholly-owned Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) on the Bursa Malaysia main market via the offer for sale of 25.5% or 408 million of the enlarged paid-up capital of 1.6 billion shares.

Maybank Investment Bank Bhd on behalf of MISC said the proposed initial public offering (IPO) scheme would involve an increase in MMHE’s authorised share capital to RM2.5bil comprising five billion 50 sen shares and a one-into-two share split of existing shares.

MMHE proposed to undertake a cash dividend payout of RM300mil to MISC and a bonus issue of 1.3 billion shares of about 40.245 bonus shares for every one MMHE share.

Upon completion of the proposals under the IPO scheme, MMHE would undertake a proposed IPO involving an institutional offering and a public issue.

The institutional offering would comprise 146 million shares or a 9.12% stake in the company at a price to be determined via a bookbuilding exercise. The public issue would comprise 262 million new shares or a 16.38% stake in the company, of which 32 million shares or a 2% stake would be allocated via balloting to the public.

Source : The Star