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/

One month bonus for Sarawak civil servants

KUCHING: Civil servants in Sarawak will receive a “special incentive payment” of one month’s salary or a minimum of RM2,000 from the state government next month.

Chief Minister Datuk Patinggi Abang Johari Tun Openg (pix) said this was in recognition and appreciation of civil servants who had contributed to Sarawak’s development and growth.

“This special incentive payment is also in view of the commendable financial performance and healthy financial position of the state, which is attributed to the committed service, prudent spending and discipline financial management of the civil service,” he said in his winding-up speech at the state assembly on Friday (Nov 17).

Abang Johari said the payment would involve an estimated sum of RM45mil for 22,549 people in the state civil service, including local authorities and statutory bodies.

“I trust that this special incentive payment will further motivate our civil service to continue with their excellent service delivery,” he added.

On another matter, Abang Johari said Sarawak would exert its mining rights by requiring Petronas to obtain the necessary licences and leases before it can operate in the state’s territory.

He said while the Petroleum Development Act 1974 (PDA) gave Petronas the right to explore and mine petroleum in Sarawak, the right to issue mining leases remained in the state list of the Federal Constitution.

“We are saying that even if the PDA has vested the rights to exploration and export of petroleum in Petronas by the Federal Government, it does not mean that Petronas has the right to simply enter into Sarawak territory, be it land or sea,” he said.

However, Abang Johari said this did not mean Sarawak was not friendly to the petroleum business in the state.

“We welcome the development of the petroleum industry in Sarawak. We have even set up Petroleum Sarawak Berhad or Petros to develop the petroleum industry in Sarawak.

“We have no intention of disrupting the normal business of the petroleum industry in Sarawak when we exert our mining rights under the Federal Constitution,” he said.

He added that the high-level special task force to be set up by the state government would look at ways and means to exert Sarawak’s rights over its natural resources as enshrined in the Federal Constitution and Malaysia Agreement.

“Having a line of communication with the Federal Government on our rights is only one of the ways. Doing whatever we can in Sarawak to exert our rights is another way.

“We shall have to put our heads together. In the words of my late predecessor Tan Sri Adenan Satem, all that we are doing here is to reclaim our rights as enshrined in the Malaysia Agreement 1963 and which have been encroached by the Federal authorities,” he said.

Source: https://www.thestar.com.my/news/nation/2017/11/17/one-month-bonus-sarawak-civil-servants/

CM wants Chinese to rally behind state government

KUCHING: Datuk Patinggi Abang Johari Tun Openg says he needs strong support from the people to implement the plans he has for Sarawak.

A united front from all Sarawakians will send a strong signal to Putrajaya that the state is serious in reclaiming its rights, said the Chief Minister.

Abang Johari added he needed the people, in particular the Chinese community, to rally behind the state government to ensure the ruling coalition could put up a strong representation in Parliament.

“Sarawak people must unite and work together. This is the time to show that the Chinese in Sarawak are united and part of the ruling government,” he said at the Sejiwa Senada programme at Batu Kawah here.

Abang Johari added that his administration had lined up numerous initiatives to transform the state economy. The ongoing Pan Borneo Highway would have a multiplier effect to spur economic growth across Sarawak.

“Our new development approach is to embrace technology in all sectors including agriculture. Modern farming, research and technology in production including efficient logistics will help us penetrate the global market.”

Abang Johari (left) greeting Barisan Nasional candidate for Bandar Kuching Kho Teck Wan (right) while Stampin candidate Dr Sim Kui Hian looks on.

He said the setting up of Petroleum Sarawak Bhd (Petros) will ensure the state has strong participation in the oil and gas sector, working alongside Petronas.

The recent acquisition of 25% equity in LNG3 will give the state an extra income of about RM2bil next year, Abang Johari added.

Stronger participation and investment in the oil and gas sector will help the state support the RM11bil LRT project in the Kuching-Samarahan-Serian divisions, as well as the water grid project throughout Sarawak.

“I promise to source more funds for Sarawak and we will assert our rights under MA63 (Malaysia Agreement 1963).

“Petros will ensure Sarawak fully exploits its oil and gas resources,” Abang Johari said.

Abang Johari presenting a mock cheque for RM10,000 to Jimmy Chiang from the Kuching Spinal Injuries Association

The Chief Minister added Sarawak plans to have its very own television station in the near future.

At the event, Abang Johari presented a RM500,000 grant to SJKC Sam Hap Hin, an agreement letter for the relocation of SJKC Chung Hua Bako to Samarahan, as well as land ownership deed for expansion of SJK Chung Hua Mile 4 at Jalan Penrissen.

The Chief Minister also presented native customary rights communal reserve land titles to Kampung Giit in Padawan, Kampung Semadang, Siburan, and Kampung Gita Baru in Sungai Maong.

Petronas, under its corporate social responsibility initiative, presented a total of RM120,000 to 10 non-governmental organisations in Kuching.

Source: https://www.thestar.com.my/metro/metro-news/2018/05/07/seeking-communitys-support-cm-wants-chinese-to-rally-behind-state-government/

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/

Petronas warned of July 1 being the cut-off date

EVERYBODY knows that national oil company Petroliam Nasional Bhd (Petronas) has been losing its clout in Sarawak in the last few years. It came to light in 2016 when Sarawak issued a moratorium on all new applications for work permits for staff outside the state, including Petronas.

It was reported that the state government’s decision was prompted by complaints from Petronas officers from Sarawak whose services were terminated or retrenched because of the downturn in the oil price.

In April last year, Sarawak announced the setting up of Petroleum Sarawak Bhd (Petros), a company that would enable Sarawak to actively participate in oil and gas (O&G) extraction activities in the state.

Petronas since then has said that it has had a series of discussions with the state, but there is not much progress.

In the last one year, Sarawak has embarked on several initiatives that would see Petros come into force from July this year.

The grim reminder came in an official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on June 13.

The letter stated that starting from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws, including the Oil Mining Ordinance 1958 (OMO), the Land Code of Sarawak and the Gas Distribution Ordinance 2016.

The letter stated that Petronas has to comply with the state laws for the exploration, prospecting and mining of petroleum including natural gas, and the distribution of gas within the state.

“Any such activities and the use or occupation of state land, both onshore and offshore, carried out without the required licences or leases issued under the state laws after July 1 would be deemed illegal and appropriate action would be taken,” the letter stated.

Petronas was told to liaise “immediately” with the Sarawak state-owned oil exploration company Petros to discuss arrangements on the exploration and prospect of mining petroleum and natural gas in the state.

The letter also stated that the state government would be holding a dialogue session with all persons or companies involved in upstream and downstream O&G activities in Sarawak.

Petronas responded on May 22, more than a month after the issuance of the letter from the Sarawak AG and two weeks into the formation of a new government at the federal level under Pakatan Harapan.

Petronas issued a lengthy letter stating that the company disagreed with the state on its authority over the exploration and mining activities of O&G resources.

“Petronas is not required to apply for any such licences or leases from the state under the OMO … there is no requirement for Petronas to liase with Petros. In all instances, Petronas fully reserves its rights in respect of the foregoing,” the three-page letter ended.

Petronas, in essence, disagreed with Sarawak’s contention that the state was not covered by the Petroleum Development Act 1974 (PDA).

In outlining details, Petronas said that the PDA had vested in it exclusive powers to regulate upstream O&G activities throughout Malaysia and that no other body had such powers.

“The OMO was superceded by the PDA, which by necessary implication repealed the OMO,” the letter said.

It also said that the Sarawak government had entered into an arrangement, in March 1975, vesting in Petronas the ownership of petroleum resources both offshore and onshore in return for agreed cash to the state government.

Petronas also wrote that the OMO was a pre-Malaysia Day law and that under the Malaysia Act 1963, the OMO is to be treated as a federal law since the ordinance pre-dates the formation of Malaysia.

This means that from then on, the Sarawak government could no longer consider itself the authority under the ordinance, Petronas stated.

Since the letter was issued, there were no major developments until June 4, when Petronas filed a case seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

It is worth noting that Sarawak has also issued a handbook on “The Regulatory and Basic Procedures of the Oil & Gas Industry in Sarawak”.

The handbook says that the O&G industry in Sarawak will be experiencing regulatory adjustment in consequence of the state reclaiming its constitutional authority to regulate the mining and production of petrochemicals, as well as the distribution of gas in Sarawak.

It says that the aim of the handbook is to give industry players clear and comprehensive guidance to help them understand and apply all relevant state legislations when operating in Sarawak.

“The state government will exercise its regulatory powers in a manner that would not jeopardise the interest and investment of those who have already been operating in Sarawak,” the handbook states.

The role of Petros is also laid out in the handbook, including to assist the state government to issue exploration, prospecting and mining licences.

It points out that Petros is to be a major revenue contributor to the Sarawak state through active participation as a major player in the exploitation and utilisation of petrochemicals in Sarawak.

There has been growing dissatisfaction in the Sabah and Sarawak governments over the years on oil royalties, despite the fact that the bulk of Petronas’ hydrocarbons are derived from the two states.

Things between Sarawak and Petronas started to heat up last year when Sarawak chief minister Datuk Patinggi Abang Johari Tun Openg announced the formation of Petros.

Wan Zulkiflee then responded that he welcomed any involvement by state government entities in the O&G business, but it has to be within the PDA.

He said that under the PDA, Petronas is the custodian and manager of the O&G resources in Malaysia.

Related story:

The Petronas-Sarawak oil intrigue

Source: https://www.thestar.com.my/business/business-news/2018/06/09/petronas-warned-of-july-1-being-the-cutoff-date/

Sarawak govt ‘disappointed’ with decision by Federal Court to postpone hearing on Petronas case

KUCHING: The Sarawak government has expressed its “deep disappointment” with the decision by Federal Court to postpone to June 21 a hearing over the state rights on its oil and gas resources.

In a statement yesterday, the state government said it will consider all other options to protect and enforce its constitutional rights in this matter, 

On June 4, Petroliam Nasional Bhd (Petronas) filed a suit seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

The case was supposed to be heard on Monday, June 11.

“It is surprising that Petronas who made the application and sought an urgent hearing has no objection to the postponement of hearing of the case,” it said.

The postponement, according to the statement, was granted without according the Sarawak Attorney General legal team the courtesy of being heard on the state government’s objection.   

“The state government would not allow Petronas to disrespect and disregard our rights to regulate the upstream activities under our laws such as the Oil Mining Ordinance and the Land Code,” it said.

Over the past year, Sarawak has embarked on several initiatives that would see Petroleum Sarawak Bhd (Petros) come into force from July.

An official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on April 13 stated that from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws.

Source: https://www.thestar.com.my/business/business-news/2018/06/11/sarawak-govt-disappointed-with-decision/

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/

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/

Petroleum Sarawak is not 1MDB, says Chief Minister

KUCHING: The state-owned Petroleum Sarawak Bhd (Petros) is nothing like 1Malaysia Development Bhd (1MDB) as alleged by a website, says Chief Minister Datuk Patinggi Abang Johari Tun Openg.

“There’s been a malicious (article) written on Petros. We have a transparent organisation. That website and has malicious intentions,” he said when opening the Brooke Dockyard and Engineering Works Corporation’s new Demak Yard here on Monday (March 4).

Source: https://www.thestar.com.my/news/nation/2019/03/04/petroleum-sarawak-is-not-1mdb-says-chief-minister/

Affin Hwang upgrades Petra Energy to buy as risk-reward looks favourable

KUALA LUMPUR: Affin Hwang Capital Research says the risk-reward is looking favourable for Petra Energy and upgraded its rating to buy with a higher 12-month target price of 59 sen.

Accoding to the research house, Petronas has been issuing more contract awards and work orders while Petra Energy has also seen higher work orders for hook-up, construction and commissioning (HuCC) contract to the value of RM150mil.

Meanwhile, the maintanence, construction and modifgication contract with Petronas is also picking up momentum in terms of mor work programmes amounting to RM50mil by our estimates. 

“PENB has recently completed the production enhancement programme and is in the midst of
doing some commissioning work. Based on a back-of-envelope calculation, this will increase targeted production to approximately 5,500–5,800 barrels per day (from 4,500 barrels). 

“We are also positive that the KBM risk service contract (RSC), which is due to expire by mid-2020, stands a good chance of being extended, on the current high oil price and good production track record.”

Affin Hwang also believes that Petra Energy stands a good chance of wiinning a rebid for the HuCC contract for another five years, with a total outstanding orderbook current at RM1.6bil.

With regrds to operating in Sarawak, the research house said it understands that service providers like Petra Energy are still waiting for Petros to award licences although it should not have a problem in getting the licence.

Source: https://www.thestar.com.my/business/business-news/2018/07/05/affin-hwang-upgrades-petra-energy-to-buy-as-risk-reward-looks-favourable/

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