Serba Dinamik secures RM330mil Petronas job

KUCHING: Serba Dinamik Holdings Bhd has been awarded a contract to provide maintenance, construction and modification services to Petroliam Nasional Bhd’s (Petronas) onshore facilities in Bintulu and Miri, Sarawak.

The contract involves Package D (Bintulu-Sarawak Gas) and Package E (Miri-Sarawak Oil) onshore facilities in Miri Crude Oil Terminal and Asam Paya onshore facility as well as Bintulu integrated facilities.

Source: https://www.thestar.com.my/business/business-news/2019/03/22/serba-dinamik-secures-rm330mil-petronas-job/

CM: Bold new moves a must

MIRI: Sarawak must take bold moves if it wants to achieve its development agenda, even if they are radically new in nature.

The state government’s decision to set up its own petroleum company – Petros – is among the bold moves that had to be taken, said Chief Minister Datuk Amar Abang Johari Openg.

Speaking at an oil and gas seminar in Miri organised by the Sarawak Bumiputra Chamber of Commerce, he said Petros was formed two years ago to manage the oil and gas resources of Sarawak.

“Sarawak has the right to administer our oil and gas resources.

“Petros was set up to utilise oil and gas resources to propel the social and economic growth of Sarawak.

“Petros is working closely with Petronas and Shell in this area.

“Petronas and Shell are the experienced players with the technology and knowledge in the oil and gas sectors.

“Even though the global demand for fossil fuel has declined due to the surge in green energy concept, fossil fuel still has its uses,” he said.

Johari said Sarawak still has plenty of oil and gas reserves.

There is thus a need to manage these natural resources well so that they are sustainable in the long run, he added.

Johari said the state government has set ambitious goals in the energy sector.

“We also want to develop green energy through hydro resources and from biomass.

“To achieve these ambitious goals, we are going big in the information technology sector, energy generation, transportation and services.

“These new initiatives require us to be bold in our investment strategies,” he said.

He urged locals to be equipped with the required technology in the energy sectors to benefit from the global demands.

Some 20 oil and gas companies took part in the two-day event held in a hotel in Miri.

Source: https://www.thestar.com.my/metro/metro-news/2019/04/17/cm-bold-new-moves-a-must/

Three-in-one fuel stations in Sarawak to offer fossil fuels, electricity and hydrogen

KUCHING: Sarawak plans to set up three-in-one fuel stations catering for vehicles powered by fossil fuel, electricity and hydrogen fuel cells.

Chief Minister Datuk Patinggi Abang Johari Tun Openg said five stations will be built initially, starting at the end of this year.

“I have directed Petros (Petroleum Sarawak Bhd) and the Sarawak Economic Development Corporation (SEDC) to set up three-in-one refuelling stations throughout the state.

“That is our next move,” he told reporters after launching Sarawak Energy Bhd’s (SEB) integrated hydrogen production plant and refuelling station here on Monday (May 27).

Abang Johari said the hydrogen plant and refuelling station – touted as the first in South-East Asia – were in line with the state government’s green energy agenda.

He said Sarawak, with five hydropower dams, had the potential to produce hydrogen from water as an alternative source of energy.

“The Sarawak government is going in the direction of green energy. We have hydropower, now we are producing hydrogen.

“This is still under research but we believe over time, there will be new technology that will make the process cheaper,” he said.
Abang Johari also said Sarawak could potentially export hydrogen in the future.

“There is already interest shown by one country to invest and set up a plant to produce hydrogen and they buy it back. This country wants to replace nuclear fuel with hydrogen,” he said, adding that he could not reveal the country as the matter was still being negotiated.

Earlier, SEB chairman Datuk Amar Abdul Hamed Sepawi said the hydrogen plant can produce 130kg of hydrogen daily and is capable of fully refuelling up to five fuel cell buses and 10 fuel cell cars per day.

At present, three buses operated by SEDC and two cars in SEB’s corporate fleet will be served by the facility.

“We are working together with SEDC, who leads the hydrogen-fuelled bus pilot project to improve and green our public transportation system.

“In addition, we have added two Hyundai Nexo hydrogen fuel cell vehicles into our corporate fleet,” Abdul Hamed said.

SEDC chairman Tan Sri Abdul Aziz Husain said the buses would be used as a pilot project to demonstrate the capabilities of hydrogen fuel cell technology for public transport in Sarawak.

He said the buses will commence operations as soon as SEDC receives the necessary permits from the relevant authorities

Source: https://www.thestar.com.my/news/nation/2019/05/27/three-in-one-fuel-stations-in-sarawak-to-offer-fossil-fuels-electricity-and-hydrogen/

Barakah to the rescue of beleaguered Malaysian owned Otto Marine?

PETALING JAYA: The fate of financially-distressed Singapore shipping company Otto Marine Ltd, which is owned by Malaysian tycoon Datuk Seri Yaw Chee Siew, is in the hands of Barakah Offshore Petroleum Bhd .

Sources said Otto Marine was banking on getting contracts from Barakah to resuscitate its business which is on the verge of collapse.

“Barakah may even take up a stake in Otto Marine if the collaboration pans out,” said a source.

There have been reports that Otto Marine would face collapse without the intervention of Singapore courts. Based on its current cash reserves, it could probably only subsist for two more months. Otto Marine was delisted in 2016 and has been recording losses since 2011.

It appeared that Otto Marine might have secured a letter of intent from an “unidentified party” willing to invest in the firm if certain conditions were met, said Chee Siew the executive chairman, in court papers, reported by Bloomberg.

Sources said that Barakah could be the white knight.

This would make sense as the founder of Sarawak’s timber giant Samling group Tan Sri Yaw Teck Seng is the second largest shareholder of Barakah with an 11.91% stake via United Power Group Holdings Ltd. He is Chee Siew’s father.

United Power has been increasing its stake in Barakah in 2017.

Teck Seng is deemed interested by virtue of his shareholding in Yaw Holding Sdn Bhd, which owns United Power’s holding company Samling Energy Sdn Bhd.

The Samling group is one of the conglomerates in Sarawak with its main business in the plantation, forestry and property development sectors, and via Samling Energy, it has a presence in the oil and gas (O&G) sector.

Meanwhile, Chee Siew is best known in local circles as the executive chairman of Perdana Parkcity Sdn Bhd – the developer of the successful Desa ParkCity township in Kepong.

When the Samling Group started upping its stake in Barakah last year, many saw it as an entry into the O&G industry in Sarawak.

In September, Sarawak set up its own version of Petroliam Nasional Bhd – Petroleum Sarawak Bhd (Petros). Petros is looking for a chief executive and other key officials to drive the organisation.

All O&G-related jobs in Sarawak will likely be channelled through Petros.

Barakah, which is mainly involved in the offshore pipeline service provider segment, could be a good vehicle for the Samling group.

Founder and chief executive officer Nik Hamdan Daud is the single largest shareholder with a 39% stake.

Barakah closed last Friday at 28 sen, down 61.54% on a one-year basis. At this level, it has a market cap of RM227.26mil.

For now, Barakah remains loss-making. For the nine months to Sept 30, 2017, it recorded losses of RM142.87mil from a net profit of RM10.45mil in the same period previously.

Revenue decreased to RM232.26mil from RM407.46mil duting the same period previously.

Last November, Barakah’s unit, PBJV Group Sdn Bhd, entered into a consortium agreement with Brooke Dockyard and Engineering Works Corp and Samling Energy to jointly bid for O&G-related projects in Sarawak.

Upon the successful award of the contracts, the parties would enter into a specific project consortium agreement and determine the scope of work of each party, Barakah said in a filing with Bursa Malaysia.

Brooke Dockyard is a leading marine engineering and fabrication company involved in the engineering, procurement, construction and commissioning of offshore O&G platforms, shipbuilding and ship repair, bridges, infrastructure, and onshore manufacturing.

Meanwhile, Samling Energy has significant investments in the O&G sector, including offshore support vessels and shipyard, and has expertise that includes transport and installation, decommissioning and drilling.

Otto Marine is among companies in the O&G services industry struggling to meet financial obligations after a plunge in crude prices.

Among its peers that have fallen are Swiber Holdings Ltd, Ezion Holdings Ltd and Ezra Holding Ltd.

Otto Marine, which is saddled with liabilities of US$877mil, is asking the Singapore High Court for protection.

The shipbuilder wants to turn around under the court’s supervision and fend off creditors while it restructures its debt, according to its Feb 20 application for judicial management, which was obtained by Bloomberg.

In the application, Chee Siew was quoted as saying: “I cannot be expected to continue shouldering the financial burden and injecting fresh capital into the company.”

Chee Siew took full control of the ailing firm in October 2016 and is the single biggest creditor with S$208mil due to him and affiliates, the papers showed.

The financial collapse of the group is imminent unless the High Court provides breathing room, he said.

According to Chee Siew, there is a reasonable probability of rehabilitating the company.

Source: https://www.thestar.com.my/business/business-news/2018/02/26/barakah-to-the-rescue/

Supply base to be built in Bintulu for O&G industry

KUCHING: Sarawak will have its own multi-million ringgit integrated supply base in Bintulu next year to serve the needs of oil and gas (O&G) industry.

Phase one of the supply base project, which is undertaken by Bintulu Supply Base Sdn Bhd (BSB), is expected to cost RM300mil. It will provide a 370m long wharf able to accommodate four offshore supply vessels at any one time.

The supply base is scheduled to be operational in the fourth quarter of 2019.

Bintulu Supply Base signed an agreement to lease land at the Second Inner Harbour, Bintulu Port for the project from Bintulu Port Holdings Bhd (BPHB) yesterday.

The signatories were Bintulu Supply Base chairman Ahmadi Yusoff and BPHB chairman Hadzari Abang. Chief Minister Datuk Patinggi Abang Johari Tun Openg witnessed the ceremony.

Bintulu Supply Base is a smart partnership between Yayasan Sarawak and state-owned private companies OBYU Holdings Sdn Bhd and Kris Sakti Petroleum Sdn Bhd. It is a strategic asset and infrastructure for the growth of the Sarawak O&G industry.

“The integrated supply base will provide a one-stop solution for the O&G industry, from exploration to development to production needs, including provision of facilities and services to support drilling operations.

“The integrated asset and facilities hold the key to ensure a cost effective and efficient solution to the O&G players,” according to Bintulu Supply Base.

The company said the development of the supply base would be carried out in phases, taking into consideration the specific requirement of the O&G industry.

“The phased development approach is based on market demand and the fit for purpose of the O&G players.

“The supply base will operate in compliance with the industry health, safety, security and environment standard,” it added.

Bintulu Supply Base said as the project is strategically located in relation to the offshore fields in the Sarawak Basin in close proximity to fields offshore Sarawak, this would enable cost efficiencies to be attained by the O&G players from cost savings due to the shorter travel time from offshore to onshore.

Ahmadi said the set-up of the supply base was in line with Petroliam Nasional Bhd’s (Petronas) initiatives to achieve cost efficiency and operational effectiveness especially for players in Sarawak.

Johari described the integrated supply base project as a significant development of Sarawak’s O&G inclusion strategy.

“It will provide a strong platform for a most effective and efficient logistical service to the upstream activities undertaken by O&G companies on the continental shell, off the coast of Sarawak where valuable petroleum and natural gas resources are located,” he said.

The chief minister said the Sarawak government had decided to issue mining leases to the newly set-up Petroleum Sarawak Bhd (Petros), thereby vesting the mining rights unto Petros.

He said Petros would work out fair and equitable arrangement with Petronas and other companies relating to the mining of O&G from the areas covered by the mining leases.

“In regulating the upstream O&G production, Petronas must only deal with Petros to produce and extract oil and gas from beneath land within the state’s boundaries.

“Petros, under direction from the state government, will then enter into mining and production sharing agreements with Petronas and other major industry players,” he added.

Johari said the state government would also regulate gas distribution in Sarawak by July 1, this year with the enforcement of the Gas Distribution Ordinance, 2016.

“In regulating the distribution of gas ,the state expects to secure more gas necessary to expand its electricity generation capacity and accelerate industrial growth in Sarawak.

“The government wants to put an end to the present scenario whereby Sarawak has abundant gas for export to countries like Japan and South Korea but not enough gas for its own domestic use or to propel its industrialisation agenda.”

The chief minister said that under the Gas Distribution (Licence) Regulations 2018, the distribution of gas to any customers (intermediate and end-users) from any gas processing plant in Sarawak (both onshore and offshore) by way of pipeline would require a licence.

He said Petros would be granted a licence by the state to distribute gas from Petronas processing separation plant at Tanjung Kidurong, Bintulu.

By July 1, Sarawak would assume full regulatory authority over the upstream and downstream aspects of the O&G industry, he said.

The O&G unit of the Chief Minister’s Office will organise an engagement with Petronas and other industry players by the middle of next month to ensure an orderly implementation of the new policies related to the O&G industry.

Source: https://www.thestar.com.my/business/business-news/2018/04/20/supply-base-to-be-built-in-bintulu-for-og-industry/

The Petronas-Sarawak oil intrigue

Change in political landscape paves way for a decision on who has control over oil and gas resources once and for all

SIX DAYS after former prime minister Datuk Seri Najib Tun Razak announced the dissolution of Parliament, Petroliam Nasional Bhd (Petronas) received a letter from the Attorney General (AG) of Sarawak, which it knew it had to act on.

The letter effectively aimed to relieve Petronas as the undisputed guardian of oil and gas (O&G) resources in Malaysia and its powers to be shared with the state government-owned Petroleum Sarawak Bhd (Petros).

Officials familiar with the matter say the biggest fear for Petronas was that its role as the authority for any O&G exploration works would be compromised not because of inadequate laws, but the weak political strength of the federal government.

“But the change in the political landscape after May 9, where the shift in power moved to Pakatan Harapan, gave fresh hope that Petronas has an even chance to allow the courts to determine who is the guardian of all O&G resources in the country.

“The state based its case around the Sarawak Oil Mining Ordinance (OMO), while Petronas is anchoring its case on the Petroleum Development Act 1974 (PDA). Under Pakatan, the mantra is to follow the rule of law, which is good for all parties,” says the official.

On April 13, the letter from the Sarawak AG stated that Petronas would deal with Petros on all matters pertaining to the extraction of O&G resources effective July 1.

It officially positioned Petros as the sole authority to issue licences and permits on all upstream O&G activities carried out in the state.

Hence, Petronas, its sub-contractors and partners in the production-sharing contract ventures are to work with Petros in the extraction of O&G resources in the state with the most amount of reserves in Malaysia.

“When the letter came, Petronas was expecting the worst because over the past five years, it had lost many battles to the Sarawak state government. This was largely because the federal government was weak and did not provide Petronas with ‘air cover’ when it came to matters dealing with Sarawak,” says an official close to the matter.

To the international O&G world, the letter from Sarawak effectively was a blow to the standing of Petronas as the sole authority of O&G resources in the country.

The national oil company faces the daunting prospects of explaining to oil majors such as Shell, Murphy Oil, Mubadala Oil & Gas, Total and Nippon Oil that they have to go through one more layer – Petros – for any type of work they are going to undertake in O&G ventures in Sarawak.

In the past few years, Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin never hid the fact that the company was getting uncomfortable with the situation in Sarawak. He had the view that the practice in most countries was for a single body to be the sole authority for O&G resources.

In this respect, Petronas has always anchored on the PDA that came into effect in 1974, vesting it as the sole authority for all upstream O&G activities in the country. This involves exploration works and entering into contracts with international partners to mine O&G fields, whether onshore or offshore Malaysia.

In return, the states of Sarawak, Sabah and Terengganu, which have O&G resources, receive royalties amounting to 5% from Petronas.

The absolute amount received by these states depends on the quantum of O&G resources extracted from the state. For instance, between 1978 and March 2000, Terengganu received RM7.13bil in royalties. Global oil prices averaged US$20 per barrel then.

In a legal suit between Terengganu and the federal government, it was disclosed that the latter had offered to pay the state RM1.67bil for the period from March 2000 to 2009, while the state wanted RM2.79bil. The matter was settled out of court.

GE14 a turning point?

Petronas vice-president and group general counsel Maliki Kamal Mohd Yasin wrote back to the Sarawak AG stating that it disagreed with the assertion of the state requiring it to get licences and permission from Petros to embark on any work starting from July 1.

It is learnt that Maliki’s argument was anchored on the PDA that vested all rights to upstream O&G resource activities to Petronas.

Maliki’s letter was sent on May 22, just two weeks after Malaysia saw a turning point in its political landscape.

Sarawak, which was the king maker in the previous administration under the Barisan Nasional with 25 seats in Parliament led by Najib, no longer held that precious position. Sarawak’s Barisan won only 19 seats in the 14th general election (GE14) and is facing a different federal government in the form of Pakatan.

The new federal government does not need to depend on Sabah and Sarawak to control Parliament.

The Pakatan coalition, led by Prime Minister Tun Dr Mahathir Mohamad, has more than 112 Parliamentary seats in Peninsular Malaysia and does not have to depend on allies from Sabah and Sarawak to form the government.

The political shift is viewed as something that works in favour of Petronas.

Whether by sheer coincidence or design, in the first week of June, Petronas filed a suit seeking a declaration that it is the sole governing authority for upstream O&G activities in Malaysia for onshore and offshore fields.

Petronas also wants the courts to declare that the PDA supercedes the Sarawak OMO, the law that the state has used as its basis for setting up Petros as the sole authority for O&G activities in Sarawak.

It is not hard to fathom why Petronas wants a decision in determining who controls the O&G resources in Sarawak as soon as possible.

Starting from July 1, the function of Petros as the sole issuing authority for all licences and approvals for O&G activities in the state is to kick off. Petronas would be deemed illegal if it operates in Sarawak without getting the approval from Petros.

The suit, which is to be heard on July 12, will consequentially determine if the Sarawak state assembly has any standing to preside on matters regarding the upstream activities of the O&G industry.

However, when it comes to matters pertaining to Petros, the state Pakatan and Barisan parties seem to have a similar stance.

Towards this end, Sarawak Parti Keadilan Rakyat vice-chairman See Chee How has already stated that the state cannot afford to lose the case against Petronas.

However, the federal government has already stated that it would manage the country based on the rule of law. On this score, Dr Mahathir has already said that the Petronas case is something that the company has taken up and that it would abide by the decision of the court.

Landmark case

The case between Petronas and Sarawak will be an interesting landmark because it sets the stage for other states such as Sabah and Terengganu to set up their own version of “Petros”. In fact, Sabah already has a similar set-up but it is not active.

As for Terengganu, the state government will directly get oil royalties from Petronas after 18 years. And ironically, it is coming from the same Prime Minister who had stopped payments to the state after it fell into the hands of PAS in 1999.

After Barisan lost Terengganu to PAS in the November 1999 GE, Dr Mahathir channelled the payments to a federal government-owned entity. The payments stopped in March 2000.

Payments were made through a federal government entity and was known as Wang Ehsan. It continued until 2009 when Barisan regained the state.

The utilisation of funds between 2004 and 2008 was said to be one of the reasons that led to the ouster of Datuk Seri Idris Jusoh as Mentri Besar of Terengganu. He was replaced with Datuk Seri Ahmad Said after the 2008 GE.

During Ahmad Said’s tenure, one of the proposals for the utilisation of the funds in a supposedly transparent manner led to the birth of 1Malaysia Development Bhd or 1MDB – the fund that is subject to a massive investigation at domestic and international levels.

Since 1974, when the PDA came into effect, Petronas has been managing the resources. It has a monopoly and is the sole authority to go to for any investor wanting to get a piece of the action. Unlike some other state-owned petroleum companies such as Pertamina of Indonesia, Petronas has been handling the contracts well.

However, after 44 years, the states, especially Sarawak and Terengganu, have established many companies and employed people with vast experience in managing O&G resources. It is only natural that they would want a bigger role to play.

However, under the Pakatan government, Sabah and Sarawak are to get 20% of the royalties instead of 5%. That itself is a lot of money to handle – running into billions. As we have seen in Terengganu, the handling of the royalty money from Petronas itself is a full-time job.

Although the current case only involves Petronas and Sarawak, the implications are wide-ranging.

The courts will decide once and for all who controls the O&G resources. This decision will come in an environment where nobody has any room to cast doubts if there were hidden hands behind any court judgements.

A decision either way will have a major impact on the O&G industry in the country.

 

 

 

Related story:

Petronas warned of July 1 being the cut-off date

Source: https://www.thestar.com.my/business/business-news/2018/06/09/the-petronassarawak-oil-intrigue/

Higher inflation

THE already high cost of living is about to get higher in the coming months and Malaysians should brace themselves for it.

Why? Crude oil prices are rising. From June 21, when prices were at the lowest for the year, to Sept 14, Brent, the global benchmark, has jumped 21.56% while the US benchmark WTI has risen 16.13%.

When crude oil prices broke the US$50 a barrel level late last year and into this year, consumers felt the pinch. Headline inflation was at its highest led by transportation and fuel costs in March before tapering off as oil prices dropped into a trading range in the low to mid-US$40s.

Brent has gone back to above US$50 and should WTI break above the US$50 level, there is a possibility it will go back to the mid-US$50 trading levels. Transportation and fuel costs will rise in tandem and this will have a spillover effect on other prices.

Because of the high-base effect (inflation was rising late last year into this year), it looks like inflation is moderating when comparisons are made. But when volatile fuel and food prices are stripped off from the consumer price index, core inflation, which reflects the prevalence of inflation, is actually rising.

The grouses of consumers, despite the best efforts of policymakers to explain, are real where prices are concerned. The high cost of living, coupled with low wages, will mean that households that spend the better portion of their income on necessities such as food, housing and transportation, will feel the impact even more.

The economy looks like growing at a healthy pace this year versus the doom-and-gloom at the beginning of the year. But the growth rate is not reflected in consumer sentiment.

Will the unexpectedly good performance of the economy this year reflect in the wages of ordinary wage earners in the coming year? Because it is of no use to say that the economy is growing when the benefits do not trickle down to wage earners.

Samling, a trail blazer?

THE oil and gas (O&G) industry may not be exciting in Peninsular Malaysia, but it sure is sizzling in Sarawak.

The Samling group this week increased further its interest in Barakah Offshore Petroleum Bhd to 13.19%, underling its interest in the O&G company. It does not take much to guess the interest of Samling group in Barakah – it obviously has to do with the greater development of the O&G industry in the state.

Last month, the state set up its very own version of Petronas – Petros Sarawak. Petros is now actively looking for a chief executive and other key officials to drive the organisation.

All O&G-related jobs in Sarawak will likely be channelled through Petros.

As this is unfolding, obviously Sarawak-controlled O&G companies would stand a better chance to bag jobs from Petros.

At the moment, there are not many large O&G companies from Sarawak. And it would be futile to build one from scratch when there are many O&G companies that are going for a song.

Two years ago, nobody would have been able to buy into an O&G company such as Barakah at such low valuations. Today, it is very possible because the peninsula-based O&G companies are fighting for a small pool of jobs.

Margins are low and many have assets that are left idle with a bank loan to service.

The time is ripe for more merger and acquisition activities in the O&G sector.

For companies such as Samling that made its fortune in timber, switching focus to the O&G sector with the help of Petros is apt.

Timber is a tough industry, as the easy logging concessions have all been taken up. The O&G sector is not easy. But valuations are low and good companies with strong manpower are up for sale at a bargain.

So, is the Samling group’s move into Barakah just the start of a new acquisition trail?

A Geely CEO for Proton

TO those following the developments of Proton Holdings Bhd, they should not be surprised at the latest development.

The new chief executive of the company that produces the national model will be from Zhejiang Geely Holding Group Co Ltd. The person will replace Datuk Ahmad Fuaad Kenali from Sept 30 onwards.

This will mark the first time that a foreigner would be holding the CEO’s post in Proton, a post that would effectively make him (or her) the head of production operations.

The other key positions such as chairman and the head of Proton Edar – the marketing and distribution arm of Proton – are still held by Malaysians.

As a 49% shareholder in Proton, Geely certainly is entitled to nominate its representative to Proton.

The automotive group from China has put in its money for its stake. It has the right to see that its interest is taken care of.

Not to be forgotten is that Proton was bleeding DRB-Hicom to the extent that the local automotive group had to seek financial assistance from the government. The losses were close to RM1bil per annum at a critical stage.

It was at this juncture that Geely came into the picture.

Going forward, if a change in guard at the helm can help Proton turn around, then it is something that should be welcomed.

After all, we have tried local talent and it has not worked.

So, let’s give the new strategic shareholder a chance, even if it means putting its representative as the CEO.

For long, Proton cars’ quality has been viewed unfavourably. That is one of the reasons why it has not been able to capture a bigger share of the local market.

Hopefully, with a new strategic shareholder and a new man at the helm – even though the person is a foreigner – the view on Proton cars will change, and the fortunes of the company with it.

Source: https://www.thestar.com.my/business/business-news/2017/09/16/higher-inflation-samling-a-trail-blazer-a-geely-ceo-for-proton/

Petronas gets tested by Sarawak’s Petros

As higher oil prices lifted the profit of Petronas Nasional Bhd by more than 100% at the end of its second quarter, it does appear that the vagaries of the oil and gas sector have found some stability.

Oil prices have found stability of late after a period of volatility that saw a number of oil and gas companies endure pain none had seen for years prior to the crash in oil prices in 2014.

With profits on the mend, thanks in part to better cost management, Petronas declared a higher dividend of RM16bil to the Government after its second quarter financial results were announced last month.

With more money to dish out, it then appears the time has come for not only the service providers to ask for greater clarity in the jobs they can expect ahead, but also for states where oil is being produced from.

Sarawak, which has long asked for a greater share of oil revenues from production activities in the state, has decided to set up its own oil and gas company called Petroleum Sarawak (Petros).

Indications are that the state is looking for Petros, which was in the works for some time and before Petronas’ profits had bounced, to be an equal partner with Petronas for oil activities in the state, which will dramatically change the dynamics of the oil industry in the state and also the country.

But the move by Petros is not the first by a state in demanding a greater share of oil revenues from Petronas.

Terengganu, which has a big oil and gas industry, used to receive nearly RM6bil a year in royalties from Petronas but that was ended in the year 2000.

Reports are that the state and Petronas are back discussing the return of royalties to the state.

Apart from states asking for a greater share of oil revenue, the Government too has in the past made moves to expand to role of companies engaged in the oil and gas business in the country.

Jawala Corp, Crest Petroleum and Ranhill Bhd once formed a consortium to get involved in the country’s oil and gas space through the drilling in marginal oilfields.

The creation of the consortium came after the tabling of Budget 2004 where an approval was given to a private consortium to drill for oil in marginal fields.

The stance taken by Petronas then with regard to the consortium entering the oil and gas space was the same taken by the company when it deals with requests from states for more money.

It was reported that Petronas president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin recently said that he welcomes any involvement by state government entities in the oil and gas (O&G) business, but it has to be within the Petroleum Development Act (PDA).

“We have a strong relationship with the Sarawak government, as such, we welcome its participation in the O&G industry.

“But we also have regulations in place, of which under the PDA, Petronas is the custodian and manager of the O&G resources in Malaysia,” he told reporters at a briefing on Petronas’ mid-year results recently.

Wan Zulkiflee adds in the report that the partnership with Petros could be similar to other Petronas partnerships, either as service providers or as a partner under the production sharing contract (PSC).

“Discussions are ongoing with the Sarawak state government,” he said when asked about the potential partnership between Petronas and Petros.

Chief Minister Datuk Amar Abang Johari Tun Openg officially announced last month the formation of Petros, with a target for the company to be operational in the first quarter of next year.

“The formation of Petros is an unprecedented step taken by the state government to enable Sarawak to actively participate in the extraction of oil and gas in Sarawak while still pursuing its request for a 20% royalty from Petronas,” he says.

The pressure Sarawak can put on Petronas has been evident in the past. As employees in Sarawak need work permits, even for those from Peninsular Malaysia, the state had in the past wielded that right as it pursued that in the past.

In August last year, Petronas issued a press release citing its concerns over a moratorium imposed by the Sarawak state government on all new applications for work permits for Petronas’ employees from outside Sarawak to work in the state.

“Petronas believes the decision, announced over the weekend, may have been made based on the misperception that Petronas’ recent group-wide business restructuring had unfairly impacted its employees from Sarawak.

“Sarawak remains a key investment state for Petronas, where its workforce requirement will continue to grow. Petronas expects the majority of the workforce required to meet the new manpower demand will constitute Sarawakians, as per existing recruitment practices. A number of positions is expected to be filled by experienced employees, which may include non-Sarawakians,” it said then in a statement.

Related story:

Search for Petros CEO intensifies

Source: https://www.thestar.com.my/business/business-news/2017/09/09/petronas-gets-tested-by-sarawaks-petros/

Orang Ulu want greater say in petroleum company

MIRI: The Orang Ulu want to be given a major role in projects undertaken by the newly-formed Sarawak oil company, Petroleum Sarawak Bhd (Petros).

They are seeking contracts in upstream exploration operations and downstream spin-off sectors.

These were among the views expressed during the closed-door biennial conference of the Federation of Orang Ulu Association of Sarawak, Malaysia (Forum) held here yesterday.

Forum president Antonio Kahti Galis, who chaired the conference, said all the resolutions adopted by the delegates would be forwarded to the state government.

“We in Forum will liaise closely with the Chief Minister to link the Orang Ulu in urban and rural Sarawak with the state government on issues concerning our people.

“Forum wants to be the platform for that,” he said.

Orang Ulu from the Kiput minority ethnic group seen here in Kampung Kuala Tutoh in Ulu Baram. – filepic

The Orang Ulu, made up of Kayan, Kenyah, Kelabit, Lun Bawang, Kiput, Saban, Lahanan and others, also want to be represented at the management level of Petros so that they will have a direct say in polices and decison-making.

A delegate pointed out that at present, the management of Petros did not have any significant representation from the Orang Ulu.

“Orang Ulu have people with capabilities in the petroleum upstream and downstream sectors but until today, we only get small sub-contracts.

“This situation must be looked into so that Orang Ulu can play a significant role in our own petroleum sector.

“This would hasten the socioeconomic development of Orang Ulu people who are way behind other races,” he said.

Forum secretary-general Dick Bala said they will compile a report on the matters raised to be forwarded to Chief Minister Datuk Patinggi Abang Johari Tun Openg.

“The Chief Minister will be briefed on the matters raised by delegates including Petros.

“Other current issues affecting the Orang Ulu in terms of land and rural development will also be included in the report,” he said.

Forum was set up 10 years ago to function as the umbrella body for the Orang Ulu in the state and country.

Source: https://www.thestar.com.my/metro/metro-news/2018/04/04/orang-ulu-want-greater-say-in-petroleum-company-delegates-at-closeddoor-meeting-say-involvement-shou/

Bursa Malaysia well supported by fundamentals

KUALA LUMPUR: Maybank Investment Bank said Bursa Malaysia is well supported by sound domestic fundamentals despite the recent sell down stoked by the Dow Jones’s correction.

The investment bank said in a 1H 2018 Market Outlook session that it expects fiscal stimulus pre-GE14 and Bank Negara’s overnight policy rate (OPR) hike to be the two main thematics driving investment 

For the longer term play, it said the focus is on multi-year orderbook replenishment in infrastructure construction, tourism and Look East Malaysia.

It added that sectors that over “overweight” for 2018 are automotive, and oil and gas.

Fiscal stimulus in the lead up to the general election will be those in the consumer sector as boosts to disposal income is expected to continue and will be front laded in 1H2018. 

The OPR will benefit banks, while Maybank IB believes proven contractors will have the highest potential of winning jobs for the upcoming megaworks.

Among those the bank highlighted were Gamuda, IJM Corp, Sunway Construction and Cahya Mata Sarawak.

Meanwhile, the tourism theme is driven by an increase in higher quality/spend tourists and Visit Malaysia 2020. It noted the increase in tourist arrivals in two previous Visit Malaysia years.

“In 2007 and 2014, tourist arrivals surged +19% YOY and +7% YOY respectively, while tourism receipts grew +27% YoY, and +10% YOY respectively.”

Major construction activities are expected to lift economic activities for the Look East Malaysia theme. 

“For Sarawak, the Development Bank of Sarawak and PETROS (Petroleum Sarawak Bhd) and for Sabah, the Sabah International Petroleum Sdn Bhd are also catalysts. 

“Long term potential beneficiaries of this thematic are Cahya Mata Sarawak, Hock Seng Lee and KKB Engineering, Bintulu Port, Suria Capital and IJM Corporation,” said Maybank IB.

It added that its top picks for the year are IOI Corp, Hong Leong Financial Group, Gamuda, Yinson , Genting Berhad, Cahya Mata Sarawak, Bermaz Auto , YTL Hospitality REIT .

Geopoliticals risks, and financial imbalances and instability were highlighted by the bank as two key market risks that could detail sentiment. 

While volaitiy in the market will continue leading up to the GE14, the market will return to being driven by fundamentals, which are well supported by GDP and corporate growth expectations. 

Source: https://www.thestar.com.my/business/business-news/2018/02/13/bursa-malaysia-well-supported-by-fundamentals/

Latest Articles