Ethiopia to Auction Previous Petronas’ Exploration Blocks

The Ministry of Mines of Ethiopia announced that it has retained all five petroleum exploration contracts from the Malaysian giant, Petronas, and plans to invite international companies to takeover the exploration blocks.

Briefing on the coming five-year plan of the Ministry to employees, Sinkinesh Ejigu, Minister of Mines, noted that the government of Ethiopia has concluded negotiations with Petronas officials with mutual understanding and retained back all the five blocks that the company was exploring.

In October 2010, it was reported that Petronas has decided to transfer its exploration activity in Ethiopia to a US based company, SouthWest. “We have agreed with Petronas officials amicably that there will be no transfer and based on our agreement all the five blocks are now in the hands of Ethiopian government,” the Minister said, responding to newbusinessethiopia.com reporter at the press briefing session following her meeting with the employees last Thursday (February 17, 2011).

“Now we are planning to auction the blocks for other international oil exploration companies,” said, Sinkinesh refused to go into the details on how the deal was concluded with Petronas. According to the minister, government is very much strict and will do all the due diligence on the potentials of the companies before awarding the exploration sites-


Her ministry makes sure that the companies to who it will award the sites, ‘are not brokers who plan to transfer the explorations sites to a third party’, according to the minister who commends Petronas for the infrastructures it has built in Ethiopia over the past years investing hundreds of millions of US dollars.

“We are very much grateful for what Petronas have done in Ethiopia and we respect their decision. We hope to see the company investing in other business streams in Ethiopia in the future,” she said.

Petronas, which decided to quit its oil exploration activity in Ethiopia after spending over 350 million US dollars in the past seven years did not mentioned why it has decided to quit exploration.

Petronas Carigali Overseas Operations (PCOSB) has been in operation in Ethiopia since 2003. Six Petroleum Production Sharing Agreements (PPSA) - five explorations and one development were signed between the Malaysian company and the Government of Ethiopia.

The PPSA covers two distinct regions namely Gambella, which is located in the western part of the country Sudan border and Ogaden Basins. Meanwhile a few years ago, the company has concluded its exploration in Gambella region indicating that there is no oil.

In the eastern part of the country, Ogaden, the company has been working on eight exploration blocks and two development fields until the management finally decided to stop exploration and withdraw from the country.

Now all exploration blocks found in the Ogaden Basin: the Ethiopian government takes 3 & 4, 11 & 15, 12 & 16, 17 & 20 and the Calub & Hilala contract area back. The blocks are proven hydrocarbon bearing sedimentary basin in Ethiopia, with proven gas reserves of 2-4 trillion cubic feet.

Bintulu LNG to generate power supply for Sabah’s east coast

Petronas and Tenaga Nasional Berhad (TNB) will soon be working on bringing liquefied natural gas (LNG) from Bintulu to generate alternative power supply to Sabah’s east coast.

Chief Minister Datuk Seri Musa Aman said this was to address the critical shortage of power supply in the east coast, especially since the proposed coal-fired power plant project was recently scrapped.

“I know that we have a critical problem in terms of providing stable electricity to the people in the east coast, and not many know that TNB was subsidising RM2 million a day for diesel used in the various independent power plants there,” he said at Gerakan’s Chinese New Year and Chap Goh Mei celebrations here today.

Musa said the venture between Petronas and TNB was a directive by Prime Minister Datuk Seri Najib Razak during the recent National Economic Action Council (NEAC) meeting, which came prior to his meeting with the premier, together with Deputy Chief Minister Tan Sri Joseph Pairin Kitingan and state Industrial Development Minister Datuk Raymond Tan on the proposed coal-fired power plant.

During that meeting, Musa told Najib of the Sabah people’s unhappiness over the project.

Meanwhile, Gerakan president Tan Sri Dr Koh Tsu Koon said the party fully supported the decision by the government to scrap the proposed coal-fired power plant project, that was in line with the sustainability concept under the New Economic Model.

“This (decision) reflects the commitment of the chief minister and the BN (Barisan Nasional) to continue to make environment as its main agenda. So, this is most welcome,” he said.

Koh, who is also minister in the Prime Minister’s Department, said the scrapping of the project was one of three reasons for BN to smile in the Chinese New Year of the Rabbit.

The other two, he said, were the victory in the Batu Sapi parliamentary by-election and Gerakan receiving many new members. — Bernama

SPEED UP GAS-FIRED POWER PLANT

By: SAPP MEDIA

Sabah Progressive Party (SAPP) urged the government to speed up construction of the alternative gas-fired power plant without much delay.

Assistance Secretary General, Suaib Mutalib said that already three years had been wasted due to the government’s indecision on the coal-fired power plant that saw its proposed location being changed three times.

“If the government made a firm decision during the first time it received objection from the people, an alternative power plant would have already been decided.

“Perhaps, the project could have started by now,” he said in a statement here Wednesday.

Suaib who is also SAPP Tungku CLC Chairman said people in the East Coast are yearning for a reliable electricity supply, hence urged the government to really speed up the construction of alternative power plant.

Chief Minister Datuk Seri Musa Aman announced on Wednesday that the project had been scrapped as the Prime Minister was concerned about the wellbeing of Sabah’s environment and the people’s sensitivity.

Oil reserves found off Sarawak’s coast to boost Govt coffers

Petronas’s persistency in exploring for the precious commodity within Malaysia has struck gold with major oil and gas reserves discovered off the coast of Sarawak.

Some 100 million barrels of oil and 2.8 trillion standard cubic feet (tscf) of natural gas were discovered from two exploration blocks there.

Spurred by the success, Petronas plans to drill more than 50 exploration wells off Malaysia over the next three years.

“These activities, especially if they result in discoveries, are expected to boost business opportunities in the oil and gas industry and will promote upstream investment in the country,” it said in a press statement yesterday.

A research report said the new oil and gas finds represent 2% of oil reserves and 3% of natural gas reserves.

“These new discoveries underpin our optimism for the industry, as (they) prolong the lifespan of Malaysian reserves – 24 years for crude oil and 38 years for natural gas,” said the report by AmResearch yesterday.

Commenting on the latest find, Petronas said 2.6 tscf of natural gas was struck after drilling almost 4km below sea level at the NC3 well at the SK316 block.

Over at another block called SK306, some 100 million barrels of oil reserves and 0.2 tscf of gas were found after drilling extended beyond 3km.

The well at SK306 block, called Spaoh-1, is currently being prepared for production testing.

Production test results had shown that the deposits were technically recoverable, added the statement.

The decision to concentrate on exploration activities in Malaysia rather than overseas was made recently, with Petronas deciding to engage Malaysian companies to help drill for oil at marginal oilfields offshore.

Petronas had found 106 marginal fields containing 580 million barrels of oil, and believed the high price of crude today makes such drilling activity viable.

Petronas makes ‘major’ petroleum find off state’s coast

Petronas said it made “major” oil and gas discoveries that may help replenish the Southeast Asian nation’s diminishing reserves.

Early estimates showed a total 2.8 trillion cubic feet of natural gas and 100mil barrels of crude at two wells off the coast of Sarawak, it said in a statement yesterday.

“These discoveries are 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,” it added.

The nation’s crude and natural gas production has fallen for two straight years, declining to the equivalent of 1.63mil barrels of oil a day in the year ended March 31 from 1.66mil a day a year earlier, according to Petronas’ 2010 annual report.

The country has responded by offering companies incentives to explore deeper and less-profitable fields in a bid to increase reserves as energy demand rises.

Petronas confident oil business won’t be affected by split in Sudan

Petronas is confident its oil business in Sudan would not be affected after the people of Southern Sudan, where the oil fields are sited, voted for independence last month.

“We are optimistic of a positive outcome with regard to matters relating to the oil industry, which is critical for the socio-economic sustainability in north and south Sudan,” a Petronas official said in response to queries from StarBiz.

“As a responsible business entity, Petronas has in place steps and measures to protect and safeguard its people, assets and resources, wherever it operates,” the official said.

The anxiety over the future of Petronas' operations in Sudan arose after the south voted to split from the north in a referendum conducted in January.


The official results of the vote, released earlier this week and confirmed early reports of overwhelming support for the split, showed nearly 99% of the people in the south wanted independence from the north.


The secession of south Sudan is expected to be formalised in July and a number of issues are yet to be sorted out, chief among them the petroleum revenue rights of the north to the oil fields in the south.

Petronas has been in Sudan since 1997 after being invited by the country to pursue exploration and development works in two concession areas.

The national oil firm said that part of its success as a long-term investor in Sudan could be attributed to its “long-term view and commitment, values and professionalism”.

“We believe the same would carry us through moving forward post-referendum,” the Petronas official said.

Petronas has long-term ties with Sudan President Omar Hassan al-Bashir and now it has to build a similar relationship with authorities in the south ahead of the secession.

“In Sudan, we are closely monitoring the development with regard to the referendum, and we have been taking adequate steps and actions to best serve our rights and interests,'' the Petronas official said.

“At the same time, we have had and are in continuous discussions and high-level engagements with all relevant officials and parties, including with the government of south Sudan, on our intention and way forward in growing our business,” the official said.

Sudan is an important cog in Petronas' international operations. Last year, Sudan's production of crude oil accounted for 26% of the total international output in barrels of oil equivalent.

In 2010, international operations were the largest contributor to Petronas' revenue at RM98.1bil or 45.3% of total revenue. Petronas' total revenue for its 2010 financial year was RM216.4bil.

Ethiopia May Take Over Petronas Assets in Ogaden, Reporter Says

The Ethiopian government may take over Petroliam Nasional Bhd.’s oil and gas holdings in the Ogaden region rather than approving a sale to SouthWest Energy (H.K.) Ltd., The Reporter said, citing an unidentified official at the Mines Ministry.

Hong Kong-based SouthWest announced on Oct. 6 that it purchased the oil and gas fields in the arid region where rebels have been fighting the government for more than three decades. In April 2007, the Ogaden National Liberation Front attacked an exploration site operated by China’s Zhongyuan Petroleum Exploration Bureau, killing nine Chinese workers and 65 Ethiopians.

Dayang order book swells to RM1.8bil with latest Petronas contract

Dayang Enterprise Holdings Bhd, whose subsidiary has secured a RM802mil contract from Petronas Carigali Sdn Bhd, will see its order book swell to RM1.8bil.

Dayang is also likely to emerge as one of the companies with the strongest earnings growth in the oil and gas sector.

“The latest win puts Dayang's order book at RM1.8bil, giving it five years of earnings visibility. The contract would be on a call-up' basis, and we believe the overall contract value is likely to be higher than the original value because there is almost always additional work required,” said Hwang DBS.

“It was a widely anticipated development. We believe that news on contract flow has been pretty much priced into Dayang but other catalysts have now emerged,” said ECM Libra Investment, adding that the group's recent fund-raising exercise of RM245mil indicated that it was out shopping.

“Whether they are buying new assets (in the form of workboats or barges) or buying out competitors remains to be seen,” ECM Libra said.

The group's wholly-owned subsidiary Dayang Enterprise Sdn Bhd received the contract from Petronas Carigali. It involves the provision of topside structural maintenance services in Sarawak, Sabah and Peninsular Malaysia.

It said the contract was from Feb 2, 2011 until Feb 1, 2016.

Besides the latest job, Dayang has a topside maintainence contract from Shell until 2016, while other contracts include hook-up commissioning projects.

The group said the new project would “contribute positively'' to its earnings and net assets for the financial year ending Dec 31, 2011, and the subsequent financial periods within the duration of the contract.

Managing director Tengku Datuk Yusof Tengku Ahmad Shahruddin, when contacted by StarBizWeek yesterday, declined to reveal the amount of contributions expected. However, analysts have estimated that the contract would contribute between 10% and 15% to the group's 2011 earnings.

Tengku Yusof said the new contract would require two workboats, and that Dayang was expected to take delivery of a new workboat at the end of this year.

The 80m x 22m workboat, costing nearly RM70mil with the capacity for up to 200 people, is being built by Shin Yang Shipping Corp Bhd in Miri, Sarawak.

“If Petronas Carigali requires a third workboat, we may have to charter it from a third party,'' Tengku Yusof added.

Dayang currently owns four workboats, which are on long-term charter to clients, including those in Brunei, and a supply vessel.

Tengku Yusof said the group had tendered for several offshore fabrication and maintenance projects, the outcome of which was expected in the second quarter of this year. “Most of these projects are in Peninsula Malaysia.'' he said.

Thai PTTEP in talks with Petronas on JDA field

Thailand's PTT Exploration and Production Pcl said on Monday it was in talks with Malaysia's Petronas about exploring for more gas at the Malaysia-Thai Joint Developping Area (JDA) in the Gulf of Thailand.

The move is aimed at meeting rising natural gas demand in Thailand and reducing dependence on oil imports after a surge in crude oil prices, Chief Executive Anon Sirisaengtaksin told reporters.

"PTTEP is planning to produce petroleum in the Gulf of Thailand as long as we can. Some may expect natural gas to be exhausted in the next 20 years. With new technology, we expect to extend the production period to be longer than that," he said.

PTTEP, a subsidiary of top energy firm PTT Pcl), has joined with Petronas Carigali, the exploration and production arm of the national oil firm, to explore and produce gas at two blocks at JDA, B-17 and C-19, Anon said.

Last year, the JDA field produced about 335 million cubic feet per day, accounting for 10 percent of Thailand's domestic consumption, he said.

PTTEP has set budget of up to 20 billion baht ($649.6 million) to explore gas at its developing oil and gas fields, including JDA, but had not concluded the talks or agreed details on the proposal with Petronas, he said.

Technip-Daewoo group wins Petronas contract

Petronas and its unit, MISC Bhd, have awarded a foreign consortium consisting of French-based Technip SA and South Korean Daewoo Shipbuilding & Marine Engineering Co Ltd a key engineering contract for a floating liquefied natural gas (FLNG) unit in Malaysia.

Technip said in a statement issued via its website that the contract involved front-end engineering and design (FEED) for a FLNG unit with annual capacity of one million tonnes.

The contract is scheduled to be completed by the second half of this year.

“This strategic project combines technologies and know-how from Technip's three business segments onshore process of natural gas liquefaction, offshore floating facilities and subsea infrastructures,” Technip said.

The statement did not provide any contract value.

Both Petronas and MISC officials could not be reached for comment as yesterday was a public holiday in Kuala Lumpur while Technip did not respond to e-mailed questions.

Technip, which provides solutions and technology for project management, engineering and construction in the oil and gas industry, has previously been awarded FEED contracts for FLNG units by other oil majors.

In December 2009, it won a FEED contract for a proposed FLNG by Brazilian federal energy company Petrobras and was also part of a consortium awarded a FEED contract for a FLNG by Shell Gas & Power Developments BV in mid 2009.

Last August, Technip entered into an agreement with MISC and its subsidiary, Malaysia Marine and Heavy Engineering Holdings Bhd (MHB), to form a long-term strategic collaboration.

The collaborative areas include working jointly on onshore and offshore projects, designing and building offshore platforms, exchanging expertise and developing technology.

To cement the collaboration, Technip became a cornerstone investor with a 8% stake in MHB when the latter undertook an initial public offering late last year before its listing on the Main Market of Bursa Malaysia.

Technip has worked with the MISC group previously and is currently co-contractors with a MHB unit for Petronas' onshore and offshore facilities in Asia.

With presence in 48 countries, Technip has operating centres and industrial assets (manufacturing plants, spoolbases and construction yard) on five continents, and operates its own fleet of specialised vessels for pipeline installation and subsea construction.

The company has integrated capabilities and expertise in underwater infrastructures, offshore facilities and large processing units and plants on land.