Saipem bags $700m double

Italian contractor Saipem has landed jobs worth a total of $700 million, for work in the Gulf of Mexico and off Kazakhstan.

Amberjack Pipeline has contracted Saipem to transport and install the 220-kilometre long Walker Ridge export pipeline, which will connect the Jack and Saint Malo fields in the deep-water Gulf of Mexico to a floating production, storage and offloading unit.

Offshore work will be carried out by the newbuild pipelay vessel Castorone, with the first phase scheduled for the first quarter of 2013. The contract marks the first job for Castorone, which is still under construction.

Meanwhile, Agip has extended an existing piles and flares contract covering work at the Kashagan development, in the Kazakh sector of the Caspian Sea, until December next year.

The workscope includes the fabrication, assembly, transport and installation of the flares and piles for the offshore structures, as well as the installation of 14 module barges.

Procurement, fabrication and installation of associated mooring, protection and interconnection structures is also included.

The Ersai 1 construction barge will be used to fulfil the contract.

The piles, flares and other structures will be fabricated in the Ersai’s Kuryk yard in Kazakhstan, in which Saipem has a 50% stake.

Petronas Carigali to be Bursa's big draw

Analysts have been told by Bursa Malaysia officials of a possible IPO for Petronas Carigali, says a head of research

Petronas Carigali Sdn Bhd, the exploration unit of Petroliam Nasional Bhd, may be listed on Bursa Malaysia next year and it is expected to attract a large number of foreign funds.

"The mother of all initial public offerings (IPO) next year will be Petronas Carigali. We need companies like this to make Bursa attractive," said MIDF Amanah Investment Bank Bhd senior vice president and head of research, Zulkifli Hamzah.

Petronas officials could not be reached for comment. Zulkifli said analysts have been told by Bursa officials of a possible IPO for Petronas Carigali.

OSK Research head Chris Eng said Petronas Carigali should be the largest IPO ever in Malaysia, with a potential market value of close to RM150 billion.

This would eclipse current leader Malayan Banking Bhd, with a market value of RM62 billion as at yesterday.

Zulkifli also expects foreign shareholdings in the local equity market to rise to more than 26 per cent next year from 21.7 per cent now.

This will be spurred by the reclassification of Malaysia as an Advanced Emerging Market effective June 2011 under the FTSE indices. It is estimated that foreign funds with some US$3 trillion (RM9.4 trillion) track these indices.

Zulkifli told reporters at a media briefing in Kuala Lumpur yesterday that MIDF is bullish about the 2011 economic outlook.

"We are bullish, but with a caveat. The caveat is how crude oil price is going to unwind. If it hits US$110 (RM343) per barrel, then fear factor will hit.

"If it goes beyond US$110, then the world could enter another economic crisis. People will move back to US dollars for safety," Zulkifli said.

On the eight short-term factors, Zulkifli said Malaysia can expect more mergers and acquisitions, while corporate earnings growth may hit 15.8 per cent from 14 per cent now on strong growth in banking, plantation and construction sectors.

"We also see bigger IPOs next year, a rally in crude oil and commodity prices and contribution from the Economic Transformation Programme," he said.

The benchmark FTSE Bursa Malaysia KLCI is expected to trade between 1,475 and 1,650 points next year, representing up to 18 times its 2011 earnings.

Halliburton and Saipem pay penalties in Nigerian bribery probe

Saipem Group and Halliburton have agreed to pay criminal fines totalling US$ 67.5 million to resolve an investigation into a consortium of construction firms which bribed Nigerian government officials in order to win construction contracts worth over US$ 6 billion on the Bonny Island LNG facilities.

Saipem Group subsidiary Snamprogetti Netherlands agreed to pay a criminal penalty of US$ 30 million plus US$ 2.5 million legal costs, while Halliburton - former parent of construction firm KBR, which had a 25% stake in the bribery consortium - agreed to pay US$ 32.5 million plus an additional US$2.5 million for legal costs.

The settlements are non-prosecution agreements with the federal government of Nigeria, and come on top of the US$ 1.28 billion that the four-company consortium has so far been fined for using bribery to secure the lucrative liquefied natural gas (LNG) contracts.

The other members of the consortium, known as TSKJ, were Technip, and JGC.

Under its agreement with the Nigerian authorities, Halliburton said it would provide assistance to help recover funds frozen in a Swiss bank account of a former TSKJ agent.

Snamprogetti was sold by its former parent Eni to Saipem in 2006, two years after the consortium's activities are said to have wound down. Eni agreed to indemnify Saipem for losses resulting from the criminal investigations into the Bonny Island contracts, and as a result Saipem said the settlement will not impact its balance sheet.

The news comes just weeks after former commercial vice president of KBR (UK) Wojciech Chodan admitted paying bribes to Nigerian government officials, including top-level executive branch officials, in order to obtain and retain the Bonny Island contracts.

Mr Chodan, who was extradited to the US on 3 December, pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act on 6 December, according to the US Department of Justice.

He faces up to five years in prison when he is sentenced on 22 February 2011.

Malaysia's Petronas doesn't plan exploration arm IPO-report

Malaysia's state oil company Petronas does not plan to list its exploration arm, a company spokesperson was quoted by The Star newspaper on Saturday as saying.

"We have no plans to list Petronas Carigali or any other unit," a Petronas spokesperson told the newspaper in response to comments by an investment bank analyst that the Petronas unit could be listed on the Malaysian stock exchange next year to attract foreign funds.

Analysts had said the IPO could be Malaysia's largest with a potential market value of close to 150 billion Malaysian ringgit, prompting a sharp jump in the ringgit currency on Friday.

Bursa Malaysia , the stock exchange operator, said it had not received any new listing application by Petronas.

Petronas had earlier listed its chemical manufacturing unit Petronas Chemicals. Its shipping arm MISC also listed its ship and rig-building unit Malaysia Marine and Heavy Engineering Holdings Bhd this year.

Fire incident at Petronas aromatics plant

A fire incident occurred at about 11.35 last night at an aromatics plant within the Petronas Integrated Petrochemical Complex in Kerteh.

However, the fire was extinguished shortly after by the Complex's Emergency Response Team, with the assistance of the Fire and Rescue Department.

A statement from Petronas Chemicals Group Berhad released today said there was no human casualty in the incident and as a safety precaution, the operation at the plant had been suspended.

However, the operation at the other facilities within the complex is not affected.

The statement said all the relevant authorities had been informed and an investigation was underway to determine the cause of the fire and to assess the extent of the damage caused by it.

MALAYSIA'S YTL GROUP INVESTS IN OIL SHALE PROJECT IN JORDAN

Malaysian conglomerate YTL Corporation, through its utilities subsidiary, YTL Power International Berhad (YTLPI), is investing in a 5.0 billion USD oil shale power project in Jordan through the acquisition of a 30 per cent equity stake in Eesti Energia's Jordanian project.

Eesti Energia of estonia, a world leader in the oil shale sector, and its Jordanian partner, Near East Investment (NEI), together with YTLPI, will develop an oil plant with an output of approximately 38,000 barrels per day, YTL said in a statement issued here Tuesday.

Construction will commence following further analysis of the resource and environmental studies. The plant will utilise Eesti Energia's leading proprietary oil recovery technology, which has more than 30 years of industrial production in Estonia.

As the new strategic partner, YTLPI will contribute its experience in developing and operating large energy production and trading assets in emerging markets. YTLPI operates electricity generating plants in Malaysia, Singapore and Indonesia as well as a water and sewarage company in Britain.

According to the new shareholding structure, Eesti Energia will own 65 per cent, YTLPI 30 per cent and NEI 5.0 per cent of the oil shale projects in Jordan. Eesti Energia, is the national energy company of Estonia, which is internationally known as Enefit.

"We are delighted to have the opportunity to invest alongside Enefit, with its leading expertise in oil shale-fired power generation and technology for oil recovery," said YTLPI executive director Yeoh Seok Hong, who declined to say how much the company is paying for its stake.

Enefit's chief executive officer, Sandor Liive, said YTL's presence would make a great contribution to the realisation of these projects which would put Jordan for the first time on the way to energy independence.

In May 2010, Jordan Oil Shale Energy Company, a subsidiary of Eesti Energia, signed a concession agreement with Jordanian government for the mining of oil shale from Attarat um Ghudrun oil shale deposit in Jordan.

This was the first surface mining oil shale concession to be awarded by the Jordanian government.

WikiLeaks Reveals BP's 'Other' Offshore Drilling Disaster

A BP offshore oil platform suddenly shows signs of a potentially devastating leak. Bubbles form in the seawater. Alarms sound. Panicked oil workers flee the rig. That may sound like the moments that preceded last April's Deepwater Horizon explosion in the Gulf of Mexico, but it actually describes an event 19 months earlier, in the Caspian Sea waters of tiny Azerbaijan. There are uncanny echoes of the Azerbaijan incident in the Deepwater Horizon tragedy, including the likely cause — a faulty cement job. But there was one marked difference: While the Gulf explosion created an ongoing political firestorm, the Azerbaijan leak remained almost forgotten until last week, when another leak — this time of diplomatic cables, released by WikiLeaks — showed just how close BP had come to a major disaster in the Caspian.

A series of cables by then U.S. Ambassador in Baku, Anne E. Derse, chronicled a growing testiness between BP and the government of Azerbaijan, whose long borders with Russia and Iran and vast Caspian energy reserves give it strategic importance way beyond its small size. BP commands enormous clout in Azerbaijan, having invested $4 billion in gas and oil pipelines from Baku, which travel through Georgia to the Turkish port of Ceyhan, giving energy-hungry Western Europe a supply channel that bypasses Russia.

But the partnership with the Azeri state energy company SOCAR was strained to the limit one morning in Sept. 2008, when a blowout in a gas-injection well on BP's Central Azeri platform prompted the emergency evacuation of 212 workers, and shut down large parts of the offshore production in the Caspian's Azeri-Chirag-Guneshli (ACG) field. That accident deprived the Azerbaijan government of revenues of up to $50 million a day during the weeks when production plummeted, according to the leaked cables. "It is possible that BP Azerbaijan 'would never know' the cause of the gas leak," Ambassador Derse wrote to her bosses in Washington on Oct. 8, 2008, citing confidential talks with the American head of BP Azerbaijan, Bill Schrader. "BP is continuing to methodically investigate possible theories." A later cable says BP concluded that "a bad cement job" caused the leak. BP has not said which company was responsible for that cement work, and its 2008 annual report offered few details. The leak is mentioned on page 28 of the report, where it is stated only that production had resumed "following comprehensive investigation and recovery work."

The cables, first published in London's Guardian, demonstrate the sharp contrast between the saturation coverage of the Gulf blowout, and the Azerbaijan leak that was barely covered in the local press. "Unless you were on the inside you didn't know how serious it was," says Edward Chow, senior fellow at the Center for Strategic and International Studies in Washington. "It hit the trade press, so if you were reading Platts [a specialist oil newsletter] you would have seen it." BP said in a statement published in the Guardian that the company "enjoys the continued support and goodwill of the government and the people of Azerbaijan," and that its discussions with the government are confidential.

The pipeline project has always had a strong geopolitical undertone. A former aide to President Heydar Aliyev told TIME in an interview in Baku in 2006 that President Bill Clinton had urged the Azeri leader in 1994 to construct the pipeline link with Europe as part of "a very strategic plan" to bypass Russia and Iran. But the primary concern following the Caspian platform leak was less on potential diplomatic consequences in a region at the epicenter of energy-driven strategic contest but on the financial losses Azerbaijan suffered after BP's leak. "Schrader said although the story hadn't caught the press's attention, it had the full focus of the GOAJ [Government of Azerbaijan]," Derse wrote, "which was losing '40 to 50 million dollars' each day."

That loss seems trifling by comparison to the $40 billion or more in cleanup costs and legal liabilities that BP faced over the Gulf disaster, even before last week's Obama Administration decision to sue BP and eight other companies involved in Deepwater Horizon. And the revelations about the Caspian incident may have government lawyers picking over the details in search of a pattern of lax safety on BP platforms. In the Caspian leak, the gas did not ignite, and all the workers made it safely off the rig — a far happier outcome than in the Gulf. In what could be seen in retrospect as another portent of things to come, Ambassador Derse described the Azerbaijan government's annoyance over what they said was BP's secretiveness about the incident — a charge which would be repeated by President Barack Obama less than two years later, when he lashed out at BP for obfuscating over the Gulf blowout.

Chow also suggests that the suspicion that both accidents were caused by cement work around the wells could suggest a "systemic" problem with regard to BP's wells. "If you look at the larger picture, BP has had safety problems for more than five years now," Chow says. "It has been well documented, even before the Azerbaijan news."
In one cable from the embassy in Baku in October 2008, a U.S. diplomat says "BP has closed off a 'few suspect wells' from which they think a bad cement job caused the leaking gas." That, the diplomat says, "is actually good news, since had it been a reservoir leak the damage would have been potentially non-reparable, whereas now all BP has to do is fix the cement job." The repair work is "hard and expensive ... but preferable to losing the platform." By April 2010, that assessment would read like a gross understatement.

Total, Petronas join Natuna project

State oil and gas company PT Pertamina named two major international oil and gas companies — Malaysia’s Petronas and France’s Total SA — as its partners in developing the giant East Natuna gas project to go on stream by 2021.

“We expect to sign the PSC [production sharing contract] next year. The project is expected to be on stream 10 years after the PSC is signed,” Pertamina president director Karen Agustiawan said Friday.

On Friday, Pertamina signed a head of agreement (HoA) with Petronas and Total to jointly operate the block located in the South China Sea. Earlier on Dec. 2, Pertamina signed a similar deal with US-based ExxonMobil.

Karen said the HoA with ExxonMobil, Total and Petronas was still an early phase agreement to provide a basis for further cooperation.

“We will follow this with business-to-business talks. Afterward, the consortium will discuss the project’s terms and conditions,” she said.

Petronas’ advisor for the East Natuna project, Non Saputri, said the company was ready to contribute their technology.

“We have experience operating gas field with high degrees of CO2 in Malaysia,” she said. Asked about the size of the stake sought by the company in the project, Saputri said it was up to the Indonesian government to make that decision.

Currently, Pertamina and its partners have not declared the portion each company will get in the project, but Karen has repeatedly said Pertamina wanted majority share and to be the lead project operator.

She also said Pertamina required its partners to allow the state-owned company a share in their upstream assets.

Sealing the deal: Energy and Mineral Resources Minister Darwin Zahedy Saleh (second left), accompanied by oil and gas director general at the ministry Evita Legowo (left) and Upstream Oil and Gas Regulatory Agency chair R. Priyono (third left), witness the signing of oil and gas exploration contracts for South Sokang, Sokang and Wokam II in Jakarta on Friday. Agreements on the appointment of Petronas and Total were also signed. Antara/Yudhi Mahatma

Pertamina is in talks with Total for the acquisition of part of Total’s stakes in the Mahakam gas block in East Kalimantan. The Mahakam block has an estimated gas reserve of 11 trillion cubic feet. Total operates the block with a 50 percent share in partnership with Japan’s Inpex, which controls the remaining 50 percent.

Pertamina also expected a slice of ExxonMobil’s overseas upstream assets, Karen said Dec. 9. On Friday, Karen said a similar asset swap was also expected from Petronas.

The East Natuna gas field, formerly known as the Natuna D. Alpha, has been an important project for Indonesia due to its huge gas reserves. Located in the South China Sea, the Natuna D-Alpha block is estimated to contain 46 trillion cubic feet of gas, making it the biggest gas reserve in Asia.

While waiting for the East Natuna project to go on stream, Indonesia expects to tap another large offshore gas project, the Masela gas field in the Arafura Sea. Inpex owns 90 percent of the project, while local energy company PT Energi Mega Persada owns the remaining 10 percent.

Upstream oil and gas regulator BPMigas approved the project’s plan of development (POD). BPMigas chairman R. Priyono said the upstream development and the construction of the LNG facilities would require an investment of US$5 billion. He said the project was expected to go on stream by 2016.

Velosi accepts GBP87.8m Carlyle offer

Oil and gas services company Velosi Ltd has agreed to recommend a cash offer for its entire share capital from the Carlyle Group valuing the company at about GBP87.8m.

Velosi shareholders will receive 165p cash per share from Azul Holding 2 Sarl, representing a premium of 61.4% to the closing price yesterday (Dec 8).

Azul's sole shareholder is Azul Holding, which is also the sole shareholder of Applus Technologies Holding S.L.

The Applus Group, a leader in testing, inspection, certification and technological services, was formed in 2007 with the acquisition of Applus by Azul Holding on behalf of the Carlyle Group.

Carlyle's MD Alex Wagenberg said, 'As expected at the time of our investment in Applus, the Carlyle Group has been supportive of an accelerated growth and acquisition strategy to transform Applus into a global leader in its areas of competence.

'The acquisition of Velosi, with the additional financial support of the Carlyle Group and its partners, is the most important step to date in achieving that strategy. We are very excited about the combined prospects for the enlarged Applus Group as it works with Velosi and its highly regarded team in very attractive growth markets.'

Velosi shares rose 59.25p to 161.5p.

Oil platform fire to have little impact on Malaysia exports

A fire at an oil platform operated by Petronas Carigali, a unit of Malaysia's state oil firm Petronas , is expected to have little impact on the country's exports of Tapis crude, trade sources said today.

The Bekok C platform, located 200km off the coast of Terengganu, is one of several fields that produces the country's flagship grade Tapis, they said.

Petronas is expected to lose around 100 barrels a month of the light sweet crude for export due to the fire, one of the sources said, but how long this might continue is not clear.

The company could not be immediately reached for comment.

Tapis output is at around 190,000 bpd with most kept for refining by equity producers ExxonMobil and Petronas, leaving little for the spot market.

The fire at Bekok C started just after midnight early yesterday morning and injured six out of the 108 personnel on board.

"It's one of the fields linked to Tapis production, but it's not a major field," the source said.

A second source said there was no disruption in supply as the incident occurred during a planned maintenance.

Petronas was likely to ramp up output from other platforms while Bekok C is under repair, he said.

The company will start marketing February spot cargoes later today after it sold a Tapis crude cargo through tender at around US$$5 a barrel above Tapis APPI.