LSE Gets Assurance Of More Jobs

The federal government is confident of channelling more vessel repair jobs to Labuan now as the outlook of the oil and gas (O&G) sector in the island has improved.

Defence Minister, Datuk Seri Zahid Hamidi, who gave this assurance, said the move was in line with the government's policy of helping the local companies more forward.

He said Labuan Shipyard Engineering Sdn Bhd (LSE), one of Asia's largest shipyard involved in vessel repairs and fabrication, has proven its capability to complete the various projects given.

"I have given my assurance to send more vessels to LSE with the condition that 30 per cent of the jobs be shared among local companies.

"They (local companies) have proven track record and capabilities of handling various jobs under LSE," he told Bernama in an interview here Saturday.

Zahid said the channelling of the jobs to local company like LSE was also part of efforts to reduce over-dependence on foreign expertise where the cost of sending vessels abroad for repairs and refurbishment was high.

"We are confident with the performance and skills rendered to upgrade and repair our vessels thus far," he said.

The minister was here on a two-day visit to LSE to officiate the launch of Hull Block DP2 Diesel - Electric Propulsion Platform Supply Vessel and to Preston Shipyard Sdn Bhd.

Meanwhile, LSE chief executive officer, Mohd Azman Nasir, said the company was grateful to the minister for the assurance of jobs.

"The company's performance has improved for the last three years on positive assessment from Petronas.

"The government jobs will greatly help the company regain its glory of being the regional champion in the ship building, oil and gas as well as fabrication," he said.

Mohd Azman said the company recently fabricated and delivered two units of Single-Point Mooring buoys for the Sabah Oil and Gas Terminal and two units of Mid Water Arches for the Cendor oil field development project.

"This is a testimony to our company's ability to construct and successfully deliver world class and sophisticated truly Made-in-Malaysia products to our many satisfied clients," he said.

He said LSE was also confident of undertaking major refits and modification works besides the normal routine and emergency repairs and to construct new-generation patrol or multi-role support vessels for the Royal Malaysian Navy.

-- BERNAMA

Petron won’t delist

PETALING JAYA: Petron Corp has no intention of de-listing the Malaysian entity it bought into last year and still holds the view that it did not underpay for the asset.

In an exclusive email interview with StarBiz, Petron's suave chairman and CEO Ramon S, Ang said the priority was to grow Petron Malaysia Refining and Marketing Bhd, formerly known as Esso Malaysia Bhd (EMB), without having to de-list the latter. His replies are the first time Ang is speaking to the Malaysian media on this takeover deal which has courted a little controversy.

Petron had acquired 65% in then EMB in March at a price of RM3.50 which had disappointed some shareholders who had chased the stock up to RM5.84 prior to the announcement of the deal. Petron had paid a total of RM1.8bil for both ExxonMobil's listed and unlisted downstream oil and gas assets in Malaysia.

The acquisition triggered a mandatory general offer, which saw most shareholders reluctant to give up their shares, with Petron now holding 73.4% of the company, lower than the 75% mark which would compel it to address its public shareholding spread.

In response to the question of whether Petron had overpaid for the unlisted asset and underpaid for the 65% stake in the listed Esso Malaysia, Ang clarified Petron's position: Only 65% of EMB was acquired for US$200mil, the implied value for 100% is therefore about US$310mil. Petron was just one of the bidders and the price finally agreed upon and paid presented the fair value of the assets acquired.

“Moreover, it has to be considered that the major asset of EMB is the Port Dickson Refinery which has very little value on an as-is basis. Its business value based on a discounted cash flow value of income streams is also low given its refining margins,” Ang said. He is also the vice-chairman and president of San Miguel Corp, the parent of Petron and the Philippine's largest conglomerate.

He also said Petron's priority today and in the next few years was to operate and grow the business as well as execute its plans to upgrade the refinery and improve network development, among others.

“Delisting is not a need but we may consider it if there is an opportunity later,” he said.

As starters, Petron has determined to pump in an initial US$100mil to give the Port Dickson Refinery the capability to produce Euro 4-compliant fuels. However, this is still subject to a professional study commissioned by Petron.

Results of the study undertaken by an independent professional company is expected to be known by year-end and will determine and evaluate the necessary upgrade and improvements.

“This is an excellent opportunity to duplicate the success of Petron in Malaysia, a country with strong economic growth and where fuel per capita consumption is almost three times that of the Philippines. With 80 years in the oil refining and marketing business, Petron is a seasoned player with deep expertise and capability to further drive the development of the downstream oil business in Malaysia,” he said.

On Petron Malaysia's second quarter loss of RM75.09mil, Ang said business operations proved very challenging for the industry locally and internationally.

“This was brought about by the sudden drop in world prices for crude and finished fuel products, causing downstream oil players with higher-cost inventory to liquidate. Our investment is directed by a long-term view of Malaysia's continuing growth which we hope to participate in,” he said.

Below are some questions and answers with Ang:

What are the plans/vision/target for the refinery?

The aim is to operate the Port Dickson Refinery at optimum efficiency and cost effectiveness. This is the same reason why Petron is currently undertaking a US$2bil project to further upgrade and modernise the Bataan refinery in the Philippines into a full conversion plant that will expand production from 120,000 barrels per day to an optimum of 180,000 barrels per day and increase the mix of higher-value fuels and petrochemicals. The project will allow the refinery to make use of a wider range of crude oils and be able to produce cleaner fuels that will comply with stricter environmental standards in the future.

Assuming that Petron continues to be listed, there would be a matter of disclosure requirements and approvals by shareholders, this normally is the stumbling block for plans and investments and consumes a lot of time. What are your comments?

As a listed company in the Philippines with over 150,000 shareholders, Petron is used to the regulatory requirements that serve to ensure transparency and accountability. Our objective is to continue engaging our shareholders here in Malaysia so they can see the value of our programmes and make them share in our vision.

Petron now owns a major part of the downstream business in Malaysia. Would it involve opportunities in the upstream business?

We are only in the downstream business at the moment and we remain focused on growing this business.

A recent statement mentioned the rebranding of 120 service stations, but Petron now owns 560 service stations, with 10 fuel distribution terminals. What are the timeline and funds to be invested?

ExxonMobil allows us to use their brand under a three-year rebranding agreement. During this period, or earlier, we will convert 560 stations at an estimated cost of US$100mil. We opened our first Petron rebranded service station on June 15 and have nine Petron rebranded service stations to date.

You will notice that Petron's service stations are completely differentiated visually with our distinctive red and blue logos and design. But more than these, our customers will also have first-hand experience on what the Petron brand stands for innovative products and personalised services, successful partnerships built on trust, and caring for our customers.

Gas Malaysia: 80% of gas taken up, additional volume to be delivered via extended pipeline

PETALING JAYA: Gas Malaysia Bhd has officially secured contracts for more than 80% of the additional natural gas volume that is coming on stream next year.

Gas Malaysia managing director Datuk Muhammad Noor Hamid said most of the 40 million standard cu ft per day (mmscfd) increased allocation by Petronas next year had been allocated for new customers and existing ones that were undertaking expansion of their facilities.

“The volume of gas is just waiting to be delivered via our extended pipeline. Some of the pipelines are in the midst of construction while some are in the design process. The target is to make sure we complete these pipelines as quickly as possible so that when the gas become available by Jan 1, we can deliver it to our customers,” he told StarBiz.

Previously, Gas Malaysia's management had indicated it would spend about RM140mil to add another 90km to its 1,800km Peninsular Gas Utilisation (PGU) pipeline network operated by the company.

Initially, he said there were concerns on the take-up rate of the additional capacity as customers no longer enjoyed heavily subsidised natural gas price.

“But, so far, we have received warm response from our customers. We actually have an almost complete take-up of the volume, the remaining 20% is not official yet as we are still waiting for the formality of signing the agreements. Suffice to say as far as commitment is concerned our customers have committed to take up all the additional volume,” he said.

Even though the industrial users were not enjoying prices at heavily-subsidised levels, natural gas was still a very efficient fuel, and the economies of gas was still cheaper as users would not need to have an inventory for it, Muhammad Noor added.

Gas Malaysia had recently signed an agreement with Petronas Gas Bhd to increase the natural gas supply by 110 mmscfd to 492 mmscfd from its current 382 mmscfd capacity on a step-up basis, with 40 mmscfd for 2013, 30 mmscfd for 2014 and 40 mmscfd for 2015.

“The additional volume we have currently is only for a staggered three years, and we are sourcing for additional volume from Petronas. We are in discussion and is optimistic of getting more additional volume,” he said.

The company needed to look for what was beyond 2013 to 2015, as it needed to continue on with its growth momentum, he said, adding: “We need to secure the volume for 2016 to 2018, and we think we can secure similar numbers in what we have secured so far.”

Muhammad Noor also said the upcoming third-quarter results to be released in November would also be the quarterly results to look out for.

“The third quarter is the key quarter, as it is the first quarter that you could compare apple with apple with the previous year's quarterly result,” he said.

The first two quarters of its last financial year were exposed to the old margin which had seen quarterly comparison showing a high decline in profit due to the revised margin which is significantly lower.

PTP attempts to block sale of APH by CIMB

KUALA LUMPUR: Businessman Tan Sri Syed Mokhtar Al-Bukhary is blocking a plan by CIMB Group Holdings Bhd to sell the financially troubled Asia Petroleum Hub Sdn Bhd (APH) in Johor.

Port of Tanjung Pelepas (PTP), which is 70% owned by Syed Mokhtar’s MMC Corp Bhd, is opposed to CIMB’s proposal to sell APH, and has made its objections known to the bank-appointed receivers of the failed petroleum venture, PricewaterhouseCoopers (PwC).

The contents of PTP’s letter to PwC remain unclear, but industry executives say Syed Mokhtar could be exercising his rights over the waterway that surrounds APH, which is just 700 metres from PTP.

CIMB advertised on July 4 that it was looking to sell the conditional rights to develop the petroleum storage, blending and distribution terminal located in Tanjung Bin, Johor, and had given PwC the mandate to seek proposals for APH.

It is understood that about 10 proposals have been received.

PTP, executives familiar with the matter say, sent the letter objecting to the sale about a week after the advertisement came out in the newspaper. However, it is uncertain if PwC is deterred by PTP’s objection. PwC declined to comment when contacted.

CIMB’s interest stems from APH having a RM1.4 billion bridging loan, of which RM840 million has been drawn down for the project cost.

APH was also supposed to be part of the second phase of development at PTP, as proposed to the National Economic Action Council back in 2001, according to executives familiar with PTP.

“The land is actually owned by the government, so how can CIMB sell the project? Of course PTP has a claim, it is in its waterway as per the port concession agreement.

The objective of APH back then was to supply fuel to vessels docking at PTP to ensure competitive bunker rates,” an executive familiar with the matter said.

The government however is keeping mum.

A check with the Companies Commission of Malaysia reveals that APH is wholly owned by AQ Properties Sdn Bhd, which in turn is 90% owned by KIC Oil & Gas Sdn Bhd and 10% by politically connected Trek Perintis Sdn Bhd. KIC Oil & Gas is controlled equally by Abdul Rashid Mohd Isa and Faizan Hassan.

This plan for PwC to sell the conditional rights came about after CIMB withdrew its backing for an earlier restructuring plan by PwC, which entailed a debt-to-equity swap.

The plan was to transfer the conditional rights to develop and operate the petroleum
storage, blending and distribution terminal to a special purpose vehicle (SPV), and later draw investors into the SPV and complete the project, which would give the project some value and enable all creditors to recover at least a portion of their money.

Swiss group Mercuria Energy Group Ltd and Petrofac Ltd were said to be among the groups interested in APH.

The petroleum hub project has been wrought with problems. APH was given the mandate to build an oil terminal dubbed Bunker Island off Johor in 2005. PTP then contested it, saying that it had an interest in the project, but its protests fell on deaf ears.

Initially, the government had sought to have KIC hold a 40% stake, with 20% equity interest each for Trek Perintis and Syed Mokhtar.

However, the businessman is said to have opposed the structure. With the deadlock, the project was delayed for more than two years, with cost overruns exceeding RM400 million.

According to industry players, the delays were largely attributed to the need for redesigning, after the soil on the island, which was largely silt, was found to be inappropriate.

Later, it was rumoured that APH had to incur additional costs to stabilise the island using a method that incorporated the use of a perforated vertical drain (PVD), which stalled the entire project.

It is understood that consultants had signed off on the project, saying that it was feasible.

Now, APH requires an additional RM2.6 billion to refinance CIMB’s bridging loan and to restart the unsuccessful project. Other than CIMB, Muhibbah Engineering (M) Bhd is owed RM400 million and other creditors about RM100 million.

A RM2.6 billion injection means the price for the 100-acre island would work out to about RM600 per sq ft.

Seaport Terminal (Johore) Sdn Bhd, a vehicle of Syed Mokhtar’s has already set up another bunkering facility in Tanjung Bin, partnering Vitol, which will compete with APH if and when it is ready.

In another development, Muhibbah Engineering announced that it is being sued by ZAQ Construction Sdn Bhd, the managing contractor for APH.

ZAQ also filed suits against CIMB, APH and Lim San Peen, the receiver and manager appointed by CIMB, seeking damages for the restructuring scheme that was proposed in January 2012 but called off after CIMB withdrew its support. ZAQ is seeking, among others, damages against all the defendants for their involvement and indicated support.

This article appeared in The Edge Financial Daily on September 4, 2012

Labuan-based ASB Eyes O&G Sector In Sabah

Asian Supply Base Sdn Bhd, a Sabah Government subsidiary, is eyeing opportunities in Sabah's oil and gas industry particularly in Sipitang.

Chief Executive Officer Datuk Harris Tan said the business expansion to the Sabah mainland is in line with ASB's diversification plan to become a major player in a highly competitive industry.

He said ASB is moving in the right direction to cater to the region's increasingly active oil and gas industry.

"The company also has the capability and competency to support vessels such as fast crew boats, anchor handling tugs and multipurpose vessels.

"Not only that, ASB has all the requirements to contribute to Malaysia's aspiration to be a deepwater hub in this region.

"The prospects for the oil and gas companies in Malaysia are excellent as Petronas as well the oil majors tend to give priority to Malaysian companies who have the technical capability to undertake jobs," he said after hosting a Hari Raya open house for some 5,000 oil and gas players at its base.

ASB's fully integrated logistics hub hosts major international and local oil and gas players, including world renowned services providers Schlumberger and Halliburton.

Harris said the company is embarking on major development projects with more warehouses to be constructed on a 12 ha. piece of land in its base.

"This is also due to the increase in the number of oil and gas players operating in our base," he said.

To attract more players to relocate their operations to Labuan, ASB is also emphasising safety awareness and policy to its clients and employees, he said.

-- BERNAMA

Asia Petroleum Hub managing contractor ZAQ files suit

ZAQ Construction Sdn Bhd, the managing contractor in the Asia Petroleum Hub (APH) project in Johor, has filed a suit against several parties including CIMB and Muhibbah Engineering (M) Bhd over a restructuring scheme.

Muhibbah said on Monday ZAQ had filed the suit against CIMB, APH, Lim San Peen (the receiver & manager appointed by CIMB over APH) and Muhibbah.

"ZAQ is alleging Muhibbah's involvement in the restructuring scheme proposed by the receiver & manager in January 2012 vis-vis the APH project, and thereby indicating its support for such proposed scheme," it said.

Muhibbah said the proposed restructuring scheme was subsequently called off by the receiver after CIMB withdrew its support in end June 2012.

ZAQ is seeking, amongst others, damages against all the defendants, including Muhibbah for such involvement and indicated support.

"Muhibbah is of the view that the claim brought by ZAQ is frivolous and the Company will defend the case," it said.

APH is the developer of a petroleum storage/blending/distribution terminal under construction. The project is located on a 100-acre reclaimed island at Tanjung Bin, about 15 minutes from Iskandar, Johor.

The project was planned for multiple product tanks of a total capacity of 924,000 cu m with inter-tank connectivity for blending options and space for dedicated multiple users.

CIMB Bank Bhd pulled out from a debt restructuring for APH, delaying the latter's payment for construction works done by Muhibbah.

To recap, Muhibbah was awarded an RM820mil contract for marine piling and jetty works of APH's oil storage and bunkering facility on a reclaimed island off Tanjung Bin, Johor. StarBiz has earlier reported that Muhibbah had completed RM630mil worth of works and had yet to receive payment for RM371mil.

In February, CIMB came into the picture for a restructuring exercise. It was rumoured that Muhibbah and CIMB could end up as shareholders in APH through a debt-equity swap.

CIMB owned 75% of the unsecured and secured debt of APH each. However, it was reported that not all the APH creditors agreed to convert their debt to equity, which may stall the restructuring of APH because the scheme would need 75% creditors' support to be carried out. - The Star

Today's jobs update [04-Sept-12]

CSWIP Client reps - KPG

Client’s requirements are with CSWIP qualified Inspector and MUST have Pipeline experiences in Oil & Gas Industry.

Therefore, I am seeking your interest for this position and the job should be start as soon as they find the right candidate by our Client.

Kindly submit your CV for approval if you are interest in it.

Thanks & Regards

Darric P'ng

KPG SYNERGY SDN BHD (307828-P)  

No 1, Jalan Apollo CG U5/CG, Bandar Pinggiran Subang 2, Section U5, 40150 Shah Alam, Selangor, Malaysia.

T: +603-7845 3115 l F: +603-7845 3557 l W: www.kpgsynergy.com l E: info@kpgsynergy.com

Services Offered : NDT Services, Pipeline Inspection, AUT, Phase Array, TOFD, Eddy Current,

Rope Access, QA/QC & Skilled Manpower Supply, Training & Certification and etc.

PTTEP fined AUD526,000 for Montara spill

The Thai giant announced on Friday that the fine had been issued to its subsidiary, PTTEP Australasia, by the Darwin Magistrates Court in the Northern Territory.

The company got off lightly, given it had faced maximum fines of A$1.7 million (US$1.75 million).

Considered to be Australia’s worst oil disaster, a well blowout on the Montara platform in August 2009 had resulted in oil and gas condensate leaking into the Timor Sea for a total of 74 days.

During an attempt to stop the leak in November of that year, a fire broke out on the Seadrill-owned jack-up West Altas and burned for two days.

PTTEP Australasia pleaded guilty to four charges relating to the oil spill.

According to the Australian Associated Press (AAP), three of the charges had carried a maximum penalty of A$550,000.

AAP reported that Magistrate John Lowndes had offered PTTEP a 25% discount for the guilty pleas, fining it A$495,000 for the first three charges, which related to the Offshore Petroleum and greenhouse Gas Storage Act.

The company was fined A$15,000 for the fourth charge, well below the maximum penalty of $50,000, AAP stated.

PTTEP has accepted responsibility and shown remorse for the incident.

“From the outset we have admitted responsibility for the incident and deeply regret it occurring,” PTTEP Australasia chief executive Ken Fitzpatrick said in a statement.

“Mistakes were made that should never be repeated.”

PTTEP president Tevin Vongvanich added that the company had since significantly transformed its operations and culture.

“We aim to be a trusted, open and respected operator in the Australian oil and gas industry now and in the future,” he said in a separate statement.

Having completed development drilling at the Montara project, PTTEP expects first oil production by the end of this year. - Upstream

Perolehan Petronas Chemical meningkat 16%

Petronas Chemical Group Bhd. (PCG) mencatatkan peningkatan perolehan sebanyak 16 peratus kepada RM3.9 bilion bagi suku kedua tahun ini yang berakhir Jun lalu berbanding tempoh yang sama tahun lalu.

Menurut satu kenyataan, rekod tersebut disumbang oleh peningkatan prestasi operasi di sebalik harga purata yang sedikit merosot.

Secara keseluruhan, keuntungan kumpulan bagi suku tersebut berkembang lapan peratus kepada RM0.9 bilion berbanding tempoh sama tahun lalu.

Perolehan kumpulan bagi tempoh enam bulan pula, turut meningkat kepada RM8.3 bilion berbanding sebelumnya berikutan prestasi operasi yang semakin baik, selain jumlah jualan yang semakin meningkat.

Bagaimanapun, keuntungan bagi tempoh tersebut sedikit menyusut sebanyak satu peratus kepada RM2.1 bilion disebabkan sumbangan salah satu syarikat bersekutu yang merosot berikutan persekitaran pasaran yang mencabar selain perbelanjaan cukai yang tinggi kepada kumpulan.

"Portfolio produk yang pelbagai membantu kami mengurangkan kesukaran dalam menghadapi persekitaran perniagaan yang mencabar ketika ini, kami akan terus menawarkan produk-produk yang berkualiti selain memberi fokus kepada pasaran memberi nilai terbaik," kata Presiden dan Ketua Pegawai Eksekutif PCG, Dr. Abd. Hafiz Abdullah.

Dengan itu, ahli lembaga pengarah PCG turut mengumumkan dividen interim peringkat tunggal sebanyak lapan sen sesaham atau RM640 juta dan akan dibayar pada 16 Oktober ini kepada pemegang saham.

BP Migas and Pertamina Operate First FSO Ship

State upstream oil and gas regulator BP Migas and state oil and gas firm Pertamina officially began operations of the company’s first Floating Storage and Off-loading (FSO) ship.

“This Abherka ship is historic because it’s the first project of Pertamina shipping that converted a tanker into a FSO,” Karen Agustiawan, Pertamina president director said at the ship’s launch off the western coast of Madura in East Java.

Pertamina’s new FSO ship has a capacity of 600,000 barrels of oil per day, and will transport oil from the West Madura Offshore Block. An FSO is essentially a platform for processing hydrocarbons received from nearby sources, where they are processed and stored until they can be off-loaded onto a tanker.

The Western Madura Offshore block has 77 wells and is operated by Pertamina Hulu Energi West Madura Offshore (PHE WMO).

“This ship was previously a tanker that was later converted into an FSO at the COSCO shipyard in Guandong, China for 10 months,” Karen told Antara.

BP Migas chief R. Priyono said at the launch that the completion of the FSO has helped the country move closer to become an autonomous energy producer, or what Priyono called “Indonesia Incorporated,” according to reporting from Antara. 

Priyono said that the ship had facilities to accommodate 150 workers, and the vessel will operate for 10 years at the offshore block without docking.

“[With] the operation of this FSO, we hope to minimize unscheduled down time in the operation area,” Priyono said.

The block is currently targeting a production of 20,000 barrels of oil per day and 166.4 million cubic feet per day of gas.

The gas produced is channeled to state utility firm PLN, PGN, Gresik Migas and fuel tank producer and fuel distributor Media Karya Sentosa, therefore indirectly providing a guarantee of gas supply for power generation and industrial needs in East Java.