Petronas Carigali discovers additional oil fields in Bertam

Petronas Carigali Sdn Bhd and Lundin Oil have jointly discovered additional oil fields, under a production sharing contract, (PSC) at Block PM 307 of the Bertam oil field.

He said the oil field, located 160 kilometres offshore Peninsular Malaysia, is opposite the state of Pahang at the depth of 76 metres.

PM 307 PSC is operated by Lundin Malaysia which holds a 75 percent interest and Petronas holds the remaining equity.

"This is very significant because we never discovered oil in commercial quantity at Penyu Basin and this is a major breakthrough.

"Based on the findings of commercial and technical feasibility studies, crude oil production will begin at the oil fields in the third quarter of 2014 with a projected output of between 17,500 and 20,000 barrels per day," Najib told reporters after chairing the Biotechnology Implementation Council meeting here.

The Prime Minister said with the additional discovery, the Bertam oilfield is estimated to have oil reserves of 64 million barrels.

Najib, who is also Finance Minister, said Pahang was expected to receive a special payment of RM100mil a year, once production begins in the third quarter of 2014.

"This discovery proved there is oil and gas at the Southern region of the Malay Basin towards the Penyu Basin.

"The oilfield is located on the continent shelf which is under the jurisdiction of the Federal government.

"This is our policy to distribute oil wealth with five percent cash payment to Pahang," he added.

Meanwhile, Ramlan A Malek, Vice-President, Petronas Nasional Bhd, Exploration & Production Business, Petroleum Management said the commercial and technical feasibility studies were expected to be completed in the second quarter of next year.

He also said this was the first oil discovery in the Pahang state. - Bernama

Petronas agrees to Canada extension on C$5.17b Progress bid, sources say

Malaysian state oil firm Petronas has agreed to the Canadian government’s extension of a review of its C$5.17 billion (RM15.6 billion) bid for gas producer Progress Energy Resources, said two Petronas sources familiar with the deal.

The decision was made by a regular monthly Petronas board meeting, the sources told Reuters, adding the Malaysian firm is also studying additional steps to reassure Canada that the proposed acquisition will have a “net benefit” for the country, the sources said.

“Petronas will go all the way to secure this deal. It is important to Petronas that the deal is done,” one of the sources said.

Canada blocked Petronas’ bid for Progress Energy this month after Industry Minister Christian Paradis said it was not likely to bring a ‘net benefit’ to the country. He gave Petronas 30 days to make additional representations.

Progress CEO Michael Culbert has blamed a “communications breakdown” for Canada’s surprise rejection of the deal, and said he was optimistic the deal could get back on track. — Reuters

Bumi Armada's Nigeria contract extended one-yr

Bumi Armada Bhd's contract to provide its floating production, storage and offloading (FPSO) unit in the Okoro-Setu field, off Nigeria, has been extended another year.

It said on Tuesday Afren Energy Resources Ltd had exercised the first of the five one-year extensions from the original contract for the FPSO Armada Perkasa with effect from July 1, 2013.

The Malaysia-based international offshore oil and gas services provider said the contract extension was estimated at RM100mil.

Bumi Armada CEO Hassan Basma said its Armada Perkasa unit had been operating for Afren since 2008 with 99.8% uptime and it achieved its 1,000 days without loss time injuries in July this year.

"This contract extension underscores our international expansion and consolidation in our strategic markets of Africa, particularly in the Gulf of Guinea," he said.

The Armada Perkasa, which is 211.2 m long and weighs 58,557 deadweight tonnes, has a production capacity of 27,000 barrels per day of liquids and storage capacity for 360,000 barrels.

ROC announces successful Balai Cluster appraisal well offshore Malaysia

BC Petroleum Sdn Bhd (BCP), the Company incorporated to operate and manage the Balai Cluster Risk Service Contract (RSC) in Malaysia, has drilled the Bentara-2 well to a total depth of 2755 metres TVDss (TD) and has encountered hydrocarbons. Shareholders of BC Petroleum (BCP) are ROC (48%), Dialog Group (32%) and PETRONAS Carigali (20%). 

The Bentara-2 well is the first well in the predevelopment phase drilling and is located in the Bentara field, offshore East Malaysia. The Bentara-2 well reached TD on 21 October 2012.

Initial assessment based on preliminary logging results indicates an estimated net hydrocarbon pay in excess of 100 metres across a total interval of 650 metres. The logs indicate the presence of multiple hydrocarbon bearing reservoirs. The well confirms the downdip extension of the hydrocarbon columns observed in the Bentara structure. 

Following conclusion of the logging programme, the well will be cased and completed in preparation for well testing.

Rolf Stork, the Chief Operating Officer for ROC, and also Chief Executive Officer for BCP, said: 'This is a very pleasing start to the drilling programme and represents another positive milestone for both ROC and BCP operations in the region.'

The Balai Cluster RSC consists of four fields: Balai, Bentara, West Acis and Spaoh fields. The drilling of the appraisal wells is part of the pre-development phase which commenced in early 2012. On successful completion of the pre-development phase and agreement on the economic viability of the fields, BCP will submit a field development plan and progress to development of the fields. 

Govt wants Petronas to revise bid or do its best for Canadian project

The government wants Petronas, Malaysia’s national oil and gas company, either to rebid or do its best to ensure the success of its C$5.17 billion acquisition of Canadian firm, Progress Energy Resources Corp.

Minister of Energy, Green Technology and Water, Datuk Seri Peter Chin Fah Kui said, “There is a 30-day period which they can still talk to the authorities.

“Well I suppose they (Petronas) have been working very hard on that project, of course it will be like a setback to them,” he told reporters after participating as one of the panelists at the Singapore Energy Summit here yesterday.

The event was held in conjunction with Singapore International Energy Week.

Chin was asked to comment on whether Canada’s decision to block Petronas’ bid for gas producer Progress Energy Resources was a setback.

The minister said he did not know of the process but “I was told that there is a 30-day period”.

Asked whether Petronas would appeal, Chin said,”I am sure because of this sizeable investment that they have been proposing … I am sure that they will conduct everything possible from their angle that is needed.

“Be it to revise bid or whatever is needed, this is something I can only tell as somebody who sits in the oil and gas committee, I feel it is important for them to do something about it,” said Chin, who is a member of the oil and gas committee.

When asked on Malaysia’s outlook on energy demand in the next three to five years, Chin said,“We are talking about 2015-16 that is our projection for the next line up in terms of demand.

He said Malaysia will need another 4,500 megawatts by 2016.
“We have just recently conducted bidding process for the 4,500 megawatts,” he added. — Bernama

Raise Sabah’s oil royalty, urges assemblyman

Datuk Syed Abas Syed Ali has called for a doubling of Sabah’s oil royalty payments by Petroliam Nasional Bhd (Petronas) from the present five per cent, saying it would enable more effective implementation of the state’s development agenda.

“Failing that, a 50 per cent increase to 7.5 per cent would also be good. I am confident this matter can be negotiated, and the increase need not be implemented immediately,” he said when debating the Sabah State Budget 2013 at the State Legislative Assembly here today.

Syed Abas also expressed gratitude to the corporate sector for investing in the state, citing Petronas which he said has helped the state government’s efforts to develop the state’s economy and enhance the people’s well-being.

 – Bernama

Petronas sets up new unit - Exploration Production Operations Maintenance (EPOM)

A newly set-up subsidiary of Malaysia’s state operator Petronas Carigali is set to take over the operations of the Gumusut Kakap semi-submersible production unit from Malaysia’s beleaguered shipping outfit, MISC, 

Petronas is understood to have set up a separate unit, called Exploration Production Operations Maintenance (EPOM), to take over the production semisub operations and maintenance from MISC’s subsidiary, FPSO Ventures. 

The Malaysian state operator is set to pick up 50% equity stake from MISC in the delayed project through another wholly-owned subsidiary, EP Ventures Solutions. 

MISC estimates the Gumusut Kakap production semisub now costs in excess of $2 billion, including $290 million of cost over-run from multi-year delays on the project delivery. 

The equity offload to another Petronas subsidiary is viewed by industry observers as a move to improve the cash position of MISC. 

Credit agencies including Standard & Poor’s and Moody’s subsequently uplifted the ratings on MISC after the proposed disposal.

Petronas Rejection Casts Doubt on Cnooc $15.1 Billion Bid

Canada’s rejection of a bid by Malaysia’s state oil company for Progress Energy Resources Corp. (PRQ) casts doubt on Beijing-based Cnooc Ltd.’s $15.1-billion takeover of Nexen Inc. (NXY) and raises questions about the openness of Prime Minister Stephen Harper’s government to foreign investment.

Industry Minister Christian Paradis said in a statement he wasn’t satisfied the C$5.2 billion ($5.23 billion) acquisition by Petroliam Nasional Bhd., known as Petronas, is in Canada’s interest. Harper’s Conservative government reviewed the bid under its foreign takeover law, which says transactions must be judged to have a “net benefit” to Canada.

“The implication now is that the government does not want a foreign national oil company to acquire Canadian companies,” said Eric Nuttall, a portfolio manager with Sprott Asset Management LP in Toronto. “For a Conservative government to make this decision is mind-boggling. The amount of capital that that decision wipes out is stunning.”

The Petronas rejection marks the second time in two years Harper’s administration has denied a multi-billion dollar overseas bid. The government blocked BHP Billiton Ltd. (BHP)’s $40 billion hostile offer for Potash Corp. (POT) of Saskatchewan Inc. in 2010 after the province’s premier, Brad Wall, opposed it.

Canadian Finance Minister Jim Flaherty said Petronas still has the opportunity to negotiate with government officials to salvage its rejected bid for Progress.

“The proposals have to be correct, and certain conditions from time to time will be proposed by the minister of industry and it’s his responsibility, and I think that’s what’s going on in this particular application.” Flaherty told CTV.

Undermines Message
The ruling undermines Harper’s message that Canada welcomes foreign investment, investors said. Harper has called it a “national priority” to sell more natural resources to Asia, to boost growth in the world’s 11th-largest economy by diversifying exports away from the slower-growing U.S. market, which consumes three-quarters of Canada’s shipments abroad.

Canada’s gross domestic product of $1.74 trillion exceeds Malaysia’s annual output of $279 billion, according to data compiled by Bloomberg.

Selloff Coming
Current projects in Canada’s oil-sands, part of the third- largest oil deposits in the world, require investments of C$220 billion, the Canadian Energy Research Institute said in a March report.

Canada needs an “immense” amount of capital to develop its oil and gas, Natural Resources Minister Joe Oliver said on Sept. 4. “We don’t have enough capital in this country so we are welcoming capital from outside,” he said after a speech in Toronto.

The Petronas decision will probably prompt a selloff in shares of Progress and Nexen, as well as companies such as Encana Corp. (ECA) and Talisman Energy Inc. (TLM) that have been perceived as takeover targets, said Sachin Shah, a merger arbitrage strategist at Tullett Prebon Americas Corp. in New York.

“This is going to put a pall on basically the whole energy sector, and maybe even materials -- gold, copper, silver,” Shah said in a telephone interview. “If he wants to look for net benefit, watch what happens Monday. Billions of dollars are going to be lost.”

Outpacing Index
Progress shares closed at C$21.65 on Oct. 19 in Toronto, down 0.9 percent and below the C$22 a share offer from Petronas. The company’s stock is up 64 percent this year, while the S&P/TSX Energy Sector index is little changed over that period. Nexen shares dropped 1.5 percent to $25.40 in New York, 7.6 percent less than the $27.50 offered by Cnooc. It was the biggest drop in three months for Nexen, paring the year-to-date gain to 55 percent.

Investors should buy Progress shares if they fall as far as C$17, said Catharine Sterritt, a Toronto-based risk arbitrage strategist at Bank of Nova Scotia, in an e-mailed report.

Patti Lewis, a spokeswoman for Nexen, and Peter Hunt, a spokesman for Cnooc, did not immediately return e-mails seeking comment.

Petronas has 30 days to appeal or provide additional concessions, at which point the government will make a final decision, according to the statement by Paradis. The company can be given more time if both parties agree.

Surprise Decision
“We’re very surprised by the decision,” Progress Chief Executive Officer Michael Culbert said by phone from Calgary after the decision was released minutes before the midnight review deadline on Oct. 19.

Petronas will appeal the ruling and Progress will “help where we can help,” Culbert said. “We believe that the transaction is of net benefit to Canada. Progress will continue to work with the federal government to prove that point.”

Still, some investors say it’s hard to decipher the government’s intentions without any explanation for the rejection. Investment Canada Act rules prevent Paradis from commenting, aside from saying the deal didn’t provide a net benefit.

Petronas completes acquisition of two companies in Philippines

Petronas Dagangan Bhd (PDB) has completed the acquisition of Petronas Energy Philippines Inc (PEPI) and Duta Inc (Duta) in accordance with the terms of the share sale and purchase agreements dated June 1, 2012.

In a statement today, PDB said following the completion of the acquisition, PEPI and Duta will be held by it via its newly-incorporated, wholly-owned investment holding company, PDB (Netherlands) B.V.

Its managing director/chief executive officer, Aminul Rashid Mohd Zamzam, said the strategic regional expansion plan was part of PDB's effort to expand its market reach and geographically diversify revenue and earnings base.

"PDB is confident of growing its presence in the region by leveraging on Petronas' strong brand in these countries and utilising its shared supply.

"Moreover, we will also be able to tap into PDB's 30 years of experience, scale and technical capabilities to drive our growth," he said.

The two companies are part of the six downstream companies in South-East Asia which PDB acquired earlier in June 2012.

Canada Rejects Petronas’s Bid for Progress Energy

Canada blocked Petroliam Nasional Bhd.’s C$5.2 billion ($5.23 billion) takeover of Progress Energy Resources Corp. (PRQ), saying the bid by the Malaysian state-owned company wasn’t in Canada’s national interests.

In what investors say is a test case for the $15.1 billion bid by Cnooc Ltd. of China for Calgary-based Nexen Inc. (NXY), the Canadian government said it “was not satisfied that the proposed investment is likely to be of net benefit to Canada,” according to an Oct. 19 statement from Industry Minister Christian Paradis. The minister couldn’t comment further.

The rejection is Canada’s second in two years following the 2010 failure of BHP Billiton Ltd. (BHP)’s $40 billion bid for Potash Corp. of Saskatchewan Inc. In both decisions, government officials gave little explanation for their reasoning.

“It could be the death knell of Nexen if the grounds are around reciprocity and state-owned enterprises,” said Jack Mintz, director of the University of Calgary’s School of Public Policy. Canada’s foreign-investment rules remain vague and “the government needs to send a clear signal on what’s on and what’s off in terms of foreign investment.”

Prime Minister Stephen Harper has touted Canada as an energy superpower and is seeking deeper trade ties with China and India to diversify exports away from the slower-growing U.S. market, which consumes three-quarters of Canada’s exports. Canada’s foreign-takeover law requires acquisitions offer a “net benefit” to the country.

Petronas Appeal

“We’re very surprised by the decision,” Progress Energy Chief Executive Officer Michael Culbert said by phone from Calgary after the decision was released two minutes before a midnight deadline for the review.

Petronas will appeal the ruling and Progress Energy will “help where we can help,” Culbert said. “We believe that the transaction is of net benefit to Canada. Progress will continue to work with the federal government to prove that point.”

Azman Ibrahim, a spokesman for Petronas in Kuala Lumpur, declined to comment when contacted by Bloomberg News.

Canada’s gross domestic product of $1.74 trillion exceeds Malaysia’s annual output of $279 billion, according to data compiled by Bloomberg.

Progress Energy closed at C$21.65 on Oct. 19 in Toronto, down 0.9 percent and below the C$22 a share offer from Petronas. Nexen shares dropped 1.5 percent to $25.40 in New York, 7.6 percent less than the $27.50 offered by Beijing-based Cnooc. It was the biggest drop in three months for Nexen.

‘Welcoming Investment’

Harper said Sept. 6 his government is preparing a “policy framework” for foreign investment to clarify issues raised in takeovers such as Cnooc’s offer for Nexen. A decision on that friendly bid is expected next month. Two calls to the mobile phone of a Cnooc spokeswoman went unanswered.

Under the Investment Canada Act, the government reviews all foreign takeovers valued at more than C$330 million to determine whether they are in the country’s interest. 

In weighing whether an acquisition provides a “net benefit,” the government considers several factors, including the impact on economic activity and employment; the degree of participation of Canadians in the acquired business; the impact on productivity and technology development and the effect on competition.

Petronas has 30 days to appeal or provide additional concessions, at which point the government will make a final decision, according to the statement by Paradis. Bank of America Merrill Lynch advised Petronas, while Bank of Montreal (BMO) worked with Progress.

‘Shocking’ Decision

“Canada has a long standing reputation for welcoming foreign investment,” Paradis said in the statement. “The government of Canada remains committed to maintaining an open climate for investment.”

The Petronas decision is “shocking” said Gordon Currie, an analyst at Salman Partners in Calgary. “I don’t yet know what the government’s reasoning is, but this has implications for the Nexen and Celtic deals, and may cause a ’chill’ on future transactions with foreign investors.”

Exxon Mobil Corp., the world’s largest energy company by market value, said Oct. 17 it had agreed to buy Celtic Exploration Ltd. (CLT) for C$2.86 billion in cash and stock, adding oil and gas production in Canada’s Montney and Duvernay shale.

“The Industry Minister has created a real mess,” said opposition New Democratic Party lawmaker Peter Julian. “I don’t think that anyone can have any confidence in what they will come up with for a decision on Cnooc and Nexen,” he said.

‘Look Tough’

The government may have used Petronas to “look tough” before accepting Cnooc’s bid, while in the past the government has “rubber stamped” other investments, Julian said. Canada has only blocked three foreign takeovers in 27 years.

The Petronas rejection comes a day after the country’s telecommunications regulator blocked a C$3 billion takeover of Astral Media Inc. (ACM/A) by BCE Inc. (BCE), both of Montreal. The regulator said the purchase would give BCE too much clout in the market for specialty television and radio.

Progress Energy agreed in late June to the takeover by Petronas, as Malaysia’s state-owned oil and natural-gas company is known, after rejecting two acquisition proposals from a “multi-national oil company,” according to a July 20 regulatory filing. The board of Progress, a Calgary-based natural gas producer, was in talks with the unidentified company until June 11, about two weeks before the Petronas deal was announced.

Progress then received an unsolicited proposal from a third party, according to a July 27 statement. That prompted Petronas to sweeten its offer to C$22 a share, valuing Progress at C$5.16 billion.

Montney Shale

Petronas closed a deal with Progress in August 2011 to develop Montney assets, paying C$267.5 million up front for a 50 percent interest and committing to spend another C$802.5 million to fund development.

The two companies also worked together to potentially develop a liquefied natural gas export project for the west coast. The terminal that would be located in Prince Rupert, British Columbia, is among more than a handful proposed by oil and gas companies for Canada’s Pacific coast, and could export two billion cubic feet of gas a day by 2018, according to research analysts at Calgary investment bank Peters & Co. Ltd.

Canada should create clearer rules on foreign investment such as whether bids from state-owned enterprises will be treated differently, said Mintz of the University of Calgary.

“I wonder how much Nexen shares are going to drop on Monday,” he said.