Shell scraps sale of $900m Thai gas field stake to KUFPEC

EBR Staff Writer

Published 04 October 2017

Royal Dutch Shell has scrapped its $900m deal to divest its stake in the Bongkot gas and condense field in Thailand to a subsidiary of Kuwait Foreign Petroleum Exploration Company (KUFPEC).

The parties associated with the sale and purchase agreement made in January had reached a mutual understanding to terminate it.

Shell and KUFPEC failed to resolve the different interpretations they had on the share sale transactions within the committed timeframe. This, eventually led to the cancellation of the agreement, reports Reuters citing an emailed statement from a Shell representative.

As part of the deal, Kufpec Thailand was to acquire a stake of 22.2% from Shell Integrated Gas Thailand (SIGT) and Thai Energy (TEC), both subsidiaries of Shell. The stake was related to the Bongkot field and adjoining acreage in Thai waters comprising Blocks 15, 16 and 17 and block G12/48.

Currently, Shell’s partners in the Bongkot field are PTT Exploration & Production (PTTEP) which is the operator with a stake of 44.4% and Total with 33.3% stake.

According to Shell, its subsidiaries SIGT and TEC will continue to support the state-owned oil and gas firm PTTEP in the safe and efficient operation and additional development of the gas field.

The oil giant also revealed that SIGT plans to take part in the upcoming licensing round for the extension of the Bongkot field.

Shell stated: “Shell Group’s divestment programme continues to make good progress at both raising cash and re-shaping the company.

“To date, the company has more than $25 billion in completed, announced or in progress divestments, on track to meet its target of $30 billion of divestments between 2016 and 2018.”

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PETRONAS to award maintenance jobs soon

Jose Barrock / The Edge Malaysia

September 25, 2017 15:00 PM MYT

This article first appeared in The Edge Malaysia Weekly, on September 18, 2017 – September 24, 2017

PETROLIAM Nasional Bhd (Petronas) is understood to have conducted a pre-award meeting for its maintenance, construction and modification (MCM) jobs, which translate into contracts collectively worth RM6 billion, sources say.

This means the long wait for the award of these contracts — valued at close to RM1 billion each — will soon be over.

“We had the pre-award meeting about a week ago, so the actual awarding should be soon,” says a source.

Another industry source says Petronas has divided the contracts for oil and gas platform maintenance. The earlier notion was that the national oil company would split the MCM jobs into six packages for a five-year duration but this is not certain yet.

It is understood that several bidders have been dropped and that it is the “usual suspects” that have won the lion’s share of the jobs.

The “usual suspects” include Dayang Enterprise Holdings Bhd, Petra Energy Bhd, Sapura Energy Bhd’s wholly owned SapuraKencana Pinewell Sdn Bhd, Carimin Petroleum Bhd, Deleum Bhd, Icon Offshore Bhd and privately held Borneo Sea Offshore Engineering Sdn Bhd.

Deleum and Icon are understood to have some form of tie-up on the operating level but not any formal joint venture.

While details are scarce, Dayang is understood to have bagged the contract to maintain oil platforms in Sarawak while Sapura is understood to have won the gas portion in the state. Deleum is said to have bagged a substantial contract in Peninsular Malaysia.

The integrated logistics contracts are slated to be awarded soon as well, although no details were available at press time.

News of the award of MCM contracts by Petronas augurs well for the domestic oil and gas industry, whose many players are still struggling to survive in the current low oil price environment.

Many felt the heat when the national oil company initiated the renegotiation of contract terms when crude oil prices collapsed in October 2014, and followed it with job cuts.

The MCM contracts will be timely for oil and gas players who can now replenish their order books, which has been a challenging task across the board.

Crude oil prices seem to have stabilised at between US$45 and US$55 per barrel. Concerns about a glut surfaced in June when crude oil dipped below US$45, thanks to some countries ramping up production after prices rose. Nonetheless, prices have rebounded from a low of US$44.82, the lowest level since November last year.

Analysts feel price stability is what counts whether crude oil is low at US$40 or high at US$100 per barrel. In the past, oil majors were cautious about capital expenditure partly due to the volatility.

Some oil majors are expected to increase their capital expenditure after they had slashed it for more than two years. Analysts see activity picking up in the sector with the demand for services expected to be high, although it would not be as robust when oil was trading at more than US$100 per barrel.

In June, UMW Oil & Gas Bhd was awarded two contracts with a combined estimated worth of US$34.81 million (about RM151.08 million) by Petronas Carigali Sdn Bhd. UMWOG will provide two jack-up drilling rigs to support Petronas Carigali’s offshore upstream projects.

In April, Malaysia Marine and Heavy Engineering Holdings Bhd won a RM1 billion contract for the central processing platform (CPP) in Petronas’ Bokor Phase 3 redevelopment project. The contract was awarded by Petronas Carigali.

Nonetheless, some industry players say the bigger concern could be obtaining financing as banks have become very cautious about giving loans to oil and gas-related companies after the oil price slump.


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Six companies said to be shortlisted for Petronas’ MCM jobs

May 24, 2017 16:00 pm MYT
Jose Barrock / The Edge Malaysia

This article first appeared in The Edge Malaysia Weekly, on May 15, 2017 – May 21, 2017.


A handful of oil and gas companies — Dayang Enterprise Holdings Bhd, Petra Energy Bhd, Sapura Energy Bhd’s wholly owned SapuraKencana Pinewell Sdn Bhd, Carimin Petroleum Bhd and a joint venture between Deleum Bhd and Icon Offshore Bhd — could be shortlisted for portions of the RM6 billion maintenance, construction and modification (MCM) contracts expected to be dished out by Petroliam Nasional Bhd (Petronas) in July or August, industry sources say.

Another company still in the running from the initial 20 or so bidders is privately held Pioneer Engineering Sdn Bhd, according to some of the sources.

Petronas is expected to split the MCM contracts into six packages with a five-year duration.

News reports say the largest contract is worth RM1.5 billion for the Sarawak portion, but details have been scarce.

“From what we know, the value of the contracts should be about RM1 billion a company … it should be good for all of us as times are tough,” says an executive from one of the shortlisted companies.

It has been speculated that Dayang is the incumbent for the Sarawak portion and stands a good chance of bagging the job.

The shortlisted companies

Dayang has an order book of about RM3 billion, which should keep it busy until next year, and a strong tender book of about RM4 billion.

For its financial year ended December 2016, Dayang posted a net profit of RM54.93 million from RM694.65 million in revenue. Dayang’s earnings are stabilising, with its 4Q net profits at RM47.09 million.

It had cash and cash equivalents of RM292.42 million and deposits and prepayments of RM39.40 million. Its long and short-term debt commitments stood at RM1.34 billion and RM296. 93 million respectively.

Last Thursday, Dayang closed at RM1.23, giving it a market capitalisation of RM1.19 billion.

Sapura Energy, which has an order book of nearly RM17 billion, is among the largest oil and gas service providers in the world. At its closing price of RM1.92 last Thursday, it had a market capitalisation of RM11.50 billion.

For its financial year ended Jan 31, 2017, Sapura Energy posted a net profit of RM208.32 million from RM7.65 billion in revenue. It had cash and cash equivalents of RM3.52 billion while its long-term debt commitment was pegged at RM15.13 billion and short-term borrowings at RM3.51 billion.

Petra’s 30% stake in the Kapal Banang Meranti Small Field Risk Service Contract has transformed the company into an oil production outfit. Nevertheless, it still has oil and gas assets that are ideal for MCM-type jobs.

For its financial year ended December 2016, the company suffered a net loss of RM117.28 million from RM333.24 million in revenue. However, Petra made huge impairments — to the tune of RM77.38 million — during the financial year.

The company had cash and bank balances of RM238.64 million while its short-term borrowings were at RM150.16 million and long-term debt commitments at RM87.43 million. It is also worth noting that Petra had retained earnings of RM124.93 million.

Carimin was listed at the end of 2014 at RM1.10 a share but closed at 30.5 sen last Thursday, giving it a market capitalisation of RM71.33 million.

Much of this decline is a result of the tumbling oil and gas prices. Last Thursday, West Texas Intermediate was trading at about US$48 per barrel, in contrast to US$110 in September 2013 and US$145 in early July 2008, when oil and gas counters were in vogue.

For its financial year ended December 2016, Carimin suffered a net loss of RM942,000 from RM64.17 million in revenue.

However, it had RM52.36 million in fixed deposits with licensed banks, short-term investments of RM21.22 million and cash and bank balances of RM16.11 million.

Its long-term debt commitments were RM72.72 million while short-term borrowings stood at RM16.26 million.

Many in the industry were surprised by the joint venture between Deleum and Icon Offshore. Deleum has its mainstay in the provision of specialised products and services to the oil and gas industry, particularly in the exploration and production segments, while Icon has a huge marine spread asset base.

For its financial year ended December 2016, Deleum registered a net profit of RM26.51 million from RM608.65 million in revenue.

Icon, meanwhile, suffered a net loss of RM152.75 million on the back of RM226.91 million in revenue.

Pioneer Engineering is a private company controlled by Mohd Rahimi Abdul Rahman (51%) and Fazli Hazami Abdul Rahman (49%). The directors are Fazli and Salmiah Abdul Rahman.

According to Companies Commission of Malaysia, for its financial year ended December 2015, it posted an after tax profit of RM1.14 million from RM101.21 million in revenue.

It had RM68.24 million in current assets, RM25.39 million in non-current assets, current liabilities of RM54.36 million and non-current liabilities of RM8.07 million. It had RM21.2 million in reserves.

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SapuraKenacana seals $97m in Petronas contracts

03 March 2017

SapuraKencana Petroleum (SapKencana) has picked up a raft of smallish jobs worth a total of $97.4m, the Malaysian oil and gas services provider said in a press release.

SapKencana said that the deals were done through its various units with various operating units of Malaysian national oil company, Petronas or its units. These include SapuraKencana TL Offshore (SKTLO) being awarded a one-year umbrella contract by Petronas for the provision of Pan Malaysia Transportation and Installation of Offshore Facilities.

The work consists of transportation and installation of platform, structures and pipelines and its associated works.

SKTLO has also been awarded a five-month contract for the provision of Engineering, Decommissioning, Procurement, Construction, Installation and Commissioning for the Sepat Mobile Offshore Production Unit Stabilisation and Repair Works by Petronas E&P unit by Petronas Carigali.

Meanwhile SapuraKencana HL was awarded a 33-month contract by by Petronas Carigali for the provision of procurement, construction and commissioning (PCC) of Full Well Stream Air Cooler Module on its Central Processing Platform NC3CP-A.

SapuraKencana HL was also awarded a nine-month contract by PCPP Operating Company for the provision of engineering, preparation, removal and disposal for the Dana and D30 facilities decommissioning project.


SapKencana did not disclose the value of each individual contract.

Posted 03 March 2017


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Aramco investment seen positive for Rapid, Petronas

Thursday, 2 March 2017

PETALING JAYA: The investment of Saudi Arabia’s Aramco in the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor, is positive for Petroliam Nasional Bhd (Petronas) and the project itself.

According to analysts, the US$7bil (RM31.1bil) investment by the Saudi national oil company for a 50% stake in the refinery and cracker assets within the Pengerang Integrated Complex could help relief the financial pressure on Petronas and help the progress of the project.

“Saudi Aramco’s decision to invest up to US$7bil in the Rapid refining complex in Malaysia is positive for the project’s outlook, and significantly reduces the financial burden placed on operator Petronas. The deal would help to lock-in future demand for Saudi crudes from Malaysia, which is set to swing to a net importer by 2020,” BMI Research said.

The research company pointed out that Malaysia’s crude balance will swing into a deficit in 2020 despite being a net exporter currently, as Rapid expands and the need for crude feedstock rises that declining domestic production will not be able to meet.

Petronas on Tuesday signed a share purchase agreement with Aramco to facilitate the latter’s proposed acquisition of a 50% equity in the refinery and cracker assets at Rapid.

Petronas president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin said the partnership brought together the strategic fit of both companies.

Meanwhile, Hong Leong Investment Bank (HLIB) said while Aramco’s investment could ease Petronas’ capital expenditure (capex) burden, it would not expect the national oil and gas company to increase its capex commitment.

“We do not expect a significant jump in capex spending by Petronas post-partial relief of its Rapid capex commitments (due to the investment by Aramco), as we expect the cash surplus to be mainly directed to its dividend payments to the Government,” the brokerage said in a report.

“The farm-in by Saudi Aramco will relieve Petronas group partially from its heavy capex commitment to Rapid, providing Petronas with more cash buffer to maintain its dividend payment to the Government,” it added.

As of the nine months ended September 2016, Petronas’ operating cash flow of RM36.1bil was only sufficient to cover for RM35.9bil in capex spending. The dividend of RM12bil in the period had to be financed by its cash reserves.

“With this deal, Petronas will be able to self-sustain payments to the Government without a further cash drain,” HLIB said of the participation of Aramco.

It noted the other primary beneficiaries of the Petronas-Aramco partnership included Dialog Group Bhd and Petronas Chemicals Group Bhd (PetChem). Dialog would benefit from higher prospects for expansions in tank terminal capacity and EPCC (exploration and production concession contract) jobs for refineries, while PetChem would benefit for its involvement in the petrochemical business in Johor and lesser burden in capex spending.


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Indonesia changes production-sharing terms

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PTTEP divests 50% participating interest in Myanmar MD-7 project

March 09, 2017 01:00

PTT EXPLORATION and Production has entered a partnership agreement with Total E&P Myanmar to divest its 50-per-cent participating interest in the Myanmar MD-7 Project, while PTTEP remains the operator of the project.

The company will collaborate with Total in the exploration and development activities in the block, which is located in the Gulf of Mottama, part of the Andaman Sea off Myanmar. The transaction has been approved by the Myanmar government.

PTTEP says seeking a strategic partner in the Myanmar MD-7 Project corresponds with the company’s risk-management policy. By bringing in a partner that has extensive experience in deepwater operations is expected to enhance the overall capacity of the consortium.

Somporn Vongvuthipornchai, president and chief executive officer of PTTEP, said the Myanmar MD-7 Project was located in a deepwater area.

“Therefore, having a partner with expertise and experience in exploration and development of many deepwater projects will help us to carry out the activity of the Myanmar MD-7 Project more effectively. This would be in the best and mutual benefits of both parties, and also of Myanmar.

“Additionally, Total is our long-term strategic partner, which has been co-investing in various projects with PTTEP for the past 30 years.”

Block MD-7 covers an area of 7,798 square kilometres. PTTEP South Asia, a subsidiary of PTTEP, was awarded the exploration rights in 2013. The project is currently under the 3D seismic-evaluation process to assess the block’s resource potentials.

PTTEP holds eight exploration and production projects in Myanmar. The company is the operator in the Zawtika Project, the Myanmar MD-7 Project, the Myanmar PSC G & EP 2 Project, the Myanmar M11 Project, the Myanmar M3 Project and the Myanmar MOGE 3 Project.

Meanwhile, it is a joint-venture partner in the Yadana Project and the Yetagun Project.


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