Petronas Chemicals Group Bhd (PChem) and German chemicals giant BASF are investing US$500mil (RM1.5bil) in an integrated aroma ingredients production facility in Gebeng, Kuantan, expanding on an existing joint venture (JV) there.
The project, which is subject to a final investment decision by the board of PChem before the end of the year, will be executed on a 60:40 basis between BASF, the world’s largest chemicals maker, and PChem.
Both companies already have a JV in the form of BASF-Petronas Chemicals Sdn Bhd, which operates a complex in Gebeng, Kuantan, that produces acrylic monomers, oxo products and butanediol, also on a 60:40 basis.
PChem said in a statement to the stock exchange yesterday that the new aroma ingredients plant would enable the firm to meet growing global demand in the flavour and fragrance industry, especially in Asia.
The proposed complex will comprise a plant for citral and the precursor plants, which will be integrated with PChem and BASF’s facilities in Gebeng.
They will also invest in downstream production for aroma ingredients, including a new world-scale plant for L-menthol and a plant for citronellol.
To be developed in phases, the first plant will be operational by 2016, creating some 110 new employment opportunities.
“The integrated aroma chemicals complex would open up a new business frontier for PChem, tapping into the flavours, fragrance and pharmaceutical markets.
“This indeed presents exciting prospects for the company, as we endeavour to provide innovative customer solutions,” PChem chairman Datuk Wan Zulkiflee Wan Ariffin said.
“The Gebeng expansion adds further value creation to our existing product streams, and we are strengthening the JV by leveraging on our strategic partner’s technology and expertise in the aroma ingredients,” president/CEO Dr Abd Hapiz Abdullah said.
BASF is one of the leading producers of aroma ingredients worldwide, with a product range that includes geraniol, citronellol, linalool and L-menthol.
Aroma ingredients are sold to the flavour and fragrance industry and used mainly in home and personal care products and fine fragrances, as well as in the food industry.
SapuraKencana Petroleum Bhd, Malaysia's biggest oil and gas (O&G) services company, is bidding for RM18.3bil (US$6bil) of new contracts in countries mainly outside South-East Asia as it seeks to double its order book.
The Selangor, Malaysia-based company, with existing orders of US$6bil, sees growth in South America, East and West Africa, and India, chief executive officer Datuk Shahril Shamsuddin said in an interview in Singapore. About 40% of the contracts it's bidding for are in Brazil, while another 30% are for work in India and Africa, he said.
SapuraKencana won shareholder approval yesterday for its US$2.9bil purchase of the tender-rig operations of Seadrill Ltd. The deal will make it the world's largest operator of tender rigs with 51% of market share.
Shahril is overseeing the acquisition about 10 months after SapuraKencana was formed by the RM11.9bil (US$3.9bil) merger of two Malaysian O&G companies.
“Moving ahead, the major acquisitions have already been made,” Shahril said in an interview with Rishaad Salamat on Bloomberg Television's On the Move Asia'.
“The main objective now is to consolidate.” The stock fell 1% to RM3.05 in Kuala Lumpur trading at 11:24 am local time. It's advanced 45% since it began trading on May 17, compared with the 10% rise in the FBM KLCI Index.
Tender rigs are barges that carry drilling equipment to oil platforms at sea which can be removed when work is completed, Shahril said. This gives SapuraKencana the option of flexible vessels that can move from one site to another without the need for a permanently installed drilling package, he said.
Investors approved the Seadrill deal including the placement of 587 million new SapuraKencana shares at 2.80 ringgit apiece, the Malaysian company said in a statement yesterday. SapuraKencana gains 13 tender rigs as part of the acquisition, in addition to the 5 rigs it owns with Seadrill under a joint venture, Shahril said. After the transaction it will operate 21 tender rigs, including five under construction.
SapuraKencana was created last year following the merger between SapuraCrest Petroleum Bhd. and Kencana Petroleum Bhd. The chairman of the latter is Datuk Mokhzani Mahathir, the son of former Malaysian Prime Minister Tun Dr Mahathir Mohamad. - Bloomberg
Shareholders of Sapura Kencana Petroleum Bhd are expected to approve its acquisition of the entire tender rig segment belonging to Seadrill, the leading Norwegian global drilling company, at the upcoming extraordinary general meeting on April 23, analysts said.
In what is surely a strategic acquisition that will position it as a world leader for tender rigs, they see no problem in getting shareholders approval, given the solid shareholding by owners and friendly parties.
The significance of this EGM is that it will be a watershed meeting for the company, the analysts said.
Shareholders' approval for the deal means that the merger and acquisition exercise becomes formalised and final.
In effect, it means the deal is done and the only remaining formalities are the transfer of monies and paperwork.
Analysts have said that as such, this massive deal worth US$2.9 billion would have been completed in a record six months or so.
The loan financing is in place and there is also a share issuance to satisfy the deal.
With the completion of the deal, Sapura Kencana becomes the world leader in the tender rig segment - the first time a Malaysian company has reached such a status.
Tender rigs are used in drilling up to a depth of 6,500 feet.
The deal enables one representative from Seadrill to sit on the Sapura Kencana board, bringing on a wealth of international experience, expertise and market connections.
Under the deal, Seadrill's stake in Sapura Kencana will rise to 12.5 percent from 6.4 percent.
The two companies won a Brazilian pipe laying vessel deal for US$1.4 billion and are awaiting results for another similar tender in Brazil.
Now Sapura Kencana can go into new markets such as in Africa and Mexico, armed with their tender rigs.
The work force will also expand to about 10,000.
Since the deal was announced, the company's share price has been rising with research houses clearly denoting it as a "buy" stock.
Against such a backdrop, shareholders would be eager to close the deal quickly and get on with what is surely a lucrative global business venture.
-- BERNAMA
KUALA LUMPUR: Australia-listed Mission NewEnergy Ltd's subsidiary has served a winding-up petition on KNM Group Bhd's unit, claiming the latter failed to pay A$3.80mil (RM12.2mil).
Misson NewEnergy said in a statement to the Australian Stock Exchange on Monday its subsidiary Mission Biofuels Sdn Bhd had served the petition to wind up KNM Process System Sdn Bhd over the sum plus interest.
It claimed the amount was related to liquidated ascertained damages under the engineering, procurement, construction and commissioning contract (EPCC) of Mission's second biodiesel refinery in Malaysia.
"These invoices were presented to KNM (KNM Process System) over the last two years and despite a letter of demand served on KNM by Mission Biofuels' solicitors, KNM has failed to pay," it said.
The hearing of the winding-up would be on July 18.
Dayang Enterprise Holdings Bhd (Dayang) is a strong contender for the soon-to-be awarded Pan Malaysia Hook-Up and Commissioning (HUC) tender worth between RM8 to RM10 billion, RHB Investment Bank said in a research report.
Following an internal coverage revamp, the investment bank said it was revisiting its financial model and expected RM400 million in annual order book replenishment for Dayang Enterprise, which provides offshore maintenance services, minor fabrication and offshore hook-up and commissioning services.
The Pan Malaysia HUC tender comprises the multi-year umbrella transport and installation contract covering oil and gas development throughout Malaysia.
Dayang’s existing RM1.2 billion strong order book was stretching up to 2017 and this reinforces the investment bank’s conviction for the stock.
“We believe that the company could potentially secure at least RM2 billion worth of jobs which will translate into an annual orderbook replenishment of RM400 million, moving forward,” it said.
The report said that a higher than expected order win could prompt a further re-rating, given the long-term tenure of the contract.
“This will boost Dayang Enterprise’s earnings visibility and we estimate that every additional RM100 million in contract value won per annum would lift our financial year 2014 earnings estimate by 14.3 per cent,” the report said.
Given that Dayang had the option to charter vessels from its associate company, Perdana Petroleum, the report said the group would have the capacity to accept the anticipated contract should it secure the tender.
Dayang was sitting on a solid balance sheet with net cash totalling RM86.1 million.
Since 2010, the company has been consistently paying out more that 50 per cent in terms of dividends from its total earnings.
Assuming a dividend payout of 50 per cent, investors could look forward to dividend yields of 3.2 per cent for the current financial year and 4.2 per cent for next year, the report said. — Bernama
PARIS – Persada Engineering has contracted Nexans to supply an electro/hydraulic umbilical for Sarawak Shell Berhad’s F29 field development.
The 22-km (13.7-mi) long umbilical will go into water depths of approximately 100 m (328 ft). Nexans is responsible for the supply and transportation of the umbilical on a fasttrack turnaround of 72 weeks.
The umbilical will be manufactured at Nexans’ Halden, Norway, facility.
China National Petroleum Corp and Malaysia's Petronas are considering bids for Marathon Oil Corp's stakes in two Angolan offshore oil and gas fields, people familiar with the matter told Reuters.
The sale comes as U.S. oil and gas producers scale back their global ambitions to focus on their home market, opening the field for Asia's state-backed giants. An estimated $6 billion worth of oil and gas blocks are being sold by companies worldwide, according to ThomsonReuters data.
Houston-based Marathon first laid out plans in late 2011 to divest up to $3 billion worth of assets to plough money back into other operations.
Marathon has put its entire 10 percent stake each in Blocks 31 and 32 offshore Angola up for sale, the people said. The two Asian energy companies are working with advisors to place bids, though no deal was imminent, they added.
BP, Total SA and Angolan state energy company Sonangol are among Marathon's partners.
Marathon, CNPC and Petronas declined to comment. Sources declined to be identified as the sale process is confidential.
Africa is emerging as the new frontier for oil and gas exploration, with early investors often cashing out.
With Asian acquirers turning aggressive, their share in global oil and gas deals has more than doubled from a decade back, according to Thomson Reuters data. Asia's share in global oil and gas M&A climbed to 19.6 percent in 2012, from 7.6 percent in 2003, the data shows. This comes as global oil and gas M&A jumped to a record $345.9 billion last year. - Reuters
Petroliam Nasional Bhd clarified on Wednesday it had not entered into any agreement over the oil blocks in Brazil.
It issued the statement following news reports about its possible acquisition of OGX Petroleo & Gas Participacoes SA (OGX)'s interest in the Tubarao Martelo oil block in Brazil's Campos Basin.
"Petronas has not entered into any agreement with OGX or any other party with regards to any oil blocks in Brazil," it said.
Bloomberg reported Brazilian billionaire Eike Batista was seeking to sell 40% of the Tubarao Martelo oil block in Brazil's Campos Basin for US$1bil (RM3.04bil) as soon as next month, a person with direct knowledge of the matter said.
OGX Petroleo & Gas Participacoes SA, the oil producer controlled by Batista, is in advanced talks with Petroliam Nasional Bhd (Petronas), said the person, who requested anonymity because the negotiations were private.
Batista, 56, is selling assets and reshuffling management teams at his interlinked commodities and logistics units amid investor concerns that the billionaire's businesses were losing access to financing.
Shares at his public companies have declined as much as 90% in the past year after OGX cut oil output targets, erasing more than US$27bil of Batista's personal fortune since March 2012.
Oil and gas operators in Sabah want Petronas president Tan Sri Shamsul Azhar to resign, accusing him of failing to effectively manage the national oil conglomerate and failing to give Sabah a fair return from the natural resources extracted from its waters.
Sabah Oil and Gas Contractors Association (SOGCA), together with its Peninsular Malaysia partner, the Malay Economic Action Council (MTEM), yesterday expressed their disappointment over Petronas leadership and demanded for several specific changes to be introduced to safeguard the interest of the local companies.
SOGCA president Datuk Iskandar Malik said apart from appointing a new president to helm Petronas, SOGCA-MTEM also called on the government to consider having three or more individuals from Sabah to sit on the company’s board of directors.
He said they also wanted at least one Sabahan to be appointed as executive vice president, in addition to a Sarawakian currently holding the post.
“In addition, we also hope that both Petronas and the government will ensure that for every RM1 profit derived from operations in Sabah, RM0.30 should be given directly to state-based companies,” he said, reading from a written statement later issued to the press.
Realising the need to highlight issues faced by SOGCA members in the state, as well as other oil and gas industry players in Sabah, he said the association had decided to work alongside MTEM to set up a 1Malaysia Oil and Gas Development Programme (1MOGDP).
The proposed programme, he said, was aimed to enhance the oil and gas industry in Sabah and more importantly empower local companies to more actively participate in the sector.
According to him, Petronas currently does not have an active policy for Sabahans in terms of contracting and business opportunities, which resulted in locals getting crumbs and Sabah contractors only given low margin sub-contact projects.
He said it was disappointing that the bulk of profits from the Malaysian oil and gas projects continued to go to foreign companies such as Samsung, which awarded projects to Korean companies and employed workers from Thailand, Indonesia and the Philippines.
Iskandar also described the implementation of the Alliance Integrated Team (AIT) Concept by Petronas in Sabah as “suffocating the local contractors”, claiming it had given more power to Samsung and allowed it to manipulate the award of contracts and sub-contracts.
“The Korean sub-contractors would then sub-contract the tasks to local contractors, but of course it is based on ‘take it or leave it’ basis. We do not understand how Petronas can allow the foreign company to sub-contract the tasks to local companies, when they can award us the project directly,” he questioned.
In this regard, he said SOGCA suggested that Petronas’ seconded staff at AIT be rotated in order to neutralise ‘powerful’ roles in any of its projects in Sabah.
According to him, Sabahans were beginning to get more skeptical about Petronas’ claim of giving contract jobs to them, which has yet to happen until now.
He said the decision to pipe gas from Sabah Oil and Gas Terminal (SOGT) in Kimanis to the Liquefied Natural Gas (LNG) complex in Bintulu, Sarawak had not gone well as Sabahans felt they had been deprived of a highly lucrative project and its spin-offs.
Chairman of MTEM’s Oil and Gas Cluster, Tengku Putra Ahmad meanwhile urged the government to decentralize the licensing for oil and gas projects in Sabah, taking into consideration that the state contributed about 36 per cent of the country’s overall oil revenues.
He said MTEM-SOGCA wanted Petronas to implement the proposed 1MOGDP, which MTEM had presented to the company during a closed door meeting in February.
“In view of the coming 13th general election, we call on all Sabahans in particular, and Malaysians in general, to come together and urged contesting candidates to make a pledge on the management of the oil and gas sector and to change the leadership of Petronas.
“The people must make sure that the halatuju of Petronas is geared towards ensuring economic development for the locals above the interest of foreign companies,” he said.
MTEM is a Peninsular-based coalition of Malay non-governmental organisations, who has been equally vocal of their disappointment towards Petronas and alleged that all the company’s major contracts were being awarded to foreign companies.
Claiming that equally qualified local companies were being sidelined, MTEM has been calling on the nation’s premier leader to intervene and ensure that the contracts are awarded fairly.
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Puncak Niaga Holdings announced that its indirect wholly owned unit, GOM Resources Sdn Bhd, has bagged a service contract worth RM187.3 million from American oil company HESS.
Puncak Niaga told Bursa that the contract includes the provision of the integrated transportation and installation of offshore facilities for early production scheme, integrated gas development project and North Malay basin field.
It added the contract period will be 17.5 months and it has the option to extend for another two years by giving a written notice to GOM.
Puncak Niaga anticipates that the project would contribute positively to the future earnings and net assets of Puncak group.
