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/

Sarawak govt ‘disappointed’ with decision to postpone hearing

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

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

“The state government would not allow Petroliam Nasional Bhd (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.

On June 4, 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.

Meanwhile, the Sabah government is set to intervene in the Petronas suit seeking a declaration that it is the exclusive owner of the country’s petroleum resources.

Chief Minister Datuk Seri Mohd Shafie Apdal said that he had asked the state AG to monitor the suit against the Sarawak government that would have implications on Sabah.

Source: https://www.thestar.com.my/business/business-news/2018/06/12/sarawak-govt-disappointed-with-decision-to-postpone-hearing/

Development plans put Sarawak on right track

KUCHING: Sarawak has achieved positive economic growth despite global economic uncertainty, Yang di-Pertua Negeri Tun Abdul Taib Mahmud said.

He said the state’s economy grew by 4.7% last year compared to 2.3% in 2016, while the Gross Domestic Product (GDP) per capita increased from RM44,000 in 2016 to RM46,000.

Exports also grew from RM77bil in 2016 to RM96bil last year. The poverty rate meanwhile dropped from 0.9% in 2014 to 0.6% last year and unemployment remained at less than 4%.

“Sarawak’s growth is supported by strong economic fundamentals, good administration and financial management by the state government,” Taib said when opening the Sarawak Legislative Assembly session here yesterday.

He said the state government’s development plans, such as the Socio-Economic Transformation Plan, Sarawak Corridor of Renewable Energy (SCORE) and Digital Economy Plan, would continue to boost growth and attract investment.

“These are people-centric plans that will improve socio-economic standards and create jobs, especially for the talented and highly-skilled younger generation,” he said.

In particular, he said the Digital Economy Plan could increase productivity in sectors like agriculture, manufacturing and services by promoting the use of digital technology and applications.

“The digital economy has the potential to create new opportunities for our younger generation.

“I believe our young people have the creative and innovative skills necessary for the digital era,” he said.

On another matter, Taib expressed confidence that the state government would be able to manage Sarawak’s oil and gas resources for the benefit of the people.

He said efforts towards developing and managing these resources sustainably had been put in place, including the enforcement of the Oil Mining Ordinance 1958 and Gas Distribution Ordinance 2016 and the formation of Petroleum Sarawak Bhd (Petros).

“This is in line with Sarawak’s aspiration to become an oil and gas hub in the region and to collaborate with Petronas for the interest of Malaysia and the state,” he said.

As such, he said Sarawak’s rights to its territorial waters must be preserved so that the oil and gas resources found there could be developed to benefit the state.

Source: https://www.thestar.com.my/metro/metro-news/2018/07/10/development-plans-put-sarawak-on-right-track-state-economy-grew-by-47-last-year-poverty-rate-dropped/

Dr M fishes in Sarawak waters

THERE was quite a lot of hype ahead of Tun Dr Mahathir Mohamad’s visit to Sarawak, but everything went without a hitch.

Chief Minister Datuk Seri Abang Johari Tun Openg knew the game that the opposition was playing – Dr Mahathir has gone from being the villain to the darling of Pakatan Harapan and barring him from entering would only give the Opposition an additional issue to play up.

Besides, he is the former premier even though the average Sarawakian is not wild about him.

Dr Mahathir is no stranger to Kuching but everything seemed familiar, yet not so familiar this time around.

The familiar part was that as he stepped down from his private jet, he was immediately ushered by airport security and officials to the VIP lounge.

The less familiar part was that the receiving delegation comprised top DAP leaders including Chong Chieng Jen, who is the state Pakatan and DAP chairman.

This the era of U-turns – enemies have become friends and things that were not okay are now okay for Dr Mahathir.

Lau: Dr Mahathir suffers from trust deficit among Sarawakians.

 

Chong, who used to be one of Dr Mahathir’s fiercest critics, seemed thrilled to bits to be meeting the elder man. The MP-cum-assemblyman is known for his sweet, boyish grin and he looked as though he had struck the Sports Toto jackpot.

Mahathir too was smiling away, oozing his usual charm. But his voice sounded rather nasal, as though he had a blocked nose, and he also seemed a little breathless because he had trouble completing some of his longer sentences.

But he sportingly fielded questions from the local media, telling them he would like to talk to the PBB leaders in the state government.

“But everybody is very shy nowadays. The last time I came, they visited me. Now (they are) a little bit strained,” he said with his typical wit.

The initial resistance among DAP leaders about Dr Mahathir seems to have evaporated and they are eager to jump on the Mahathir bandwagon.

One of the roles that DAP had envisaged was for Dr Mahathir to be the primary attacker against Prime Minister Datuk Seri Najib Tun Razak.

The racial angle is deflected when you have someone like the former premier showing it is alright for DAP to take on Umno.

It softens the perception that a Chinese party is attacking a Malay leader or as the DAP leaders put it, “Malay screw Malay”.

Chong: He presented Pakatan Harapan’s election manifesto.

 

Dr Mahathir has lived up to the motto and many DAP leaders now realise how useful he is to their agenda.

Hours later on a damp and drizzly evening, Dr Mahathir arrived for the much anticipated ceramah at the commercial heart of an upper-middle class suburb.

There was a good turnout, although it was below the expectations of the organisers. The novelty factor was of course Dr Mahathir – it was the first time that Kuching residents were seeing him on the Pakatan stage and he did not disappoint.

He launched into what has become his standard performing act – he painted Najib as public enemy No.1, accused his government of kleptocracy, poked fun at his wife, explained why DAP is no longer his enemy and declared that Pakatan could form the next government.

And since he was on Sarawak soil, he made soothing sounds about restoring the state rights of Sarawakians.

He is not as sharp as he used to be and everyone noticed that he referred to Sarawak’s terms in the Malaysia Agreement as “16 Points” instead of “18 Points”.

He made the mistake during the press conference at the airport and several more times during the evening ceramah.

And as expected, he blamed his predecessor and successor for Sarawakians’ grievances over territorial sea rights and petroleum royalty. He was, of course, not to be blamed.

Tiang: Ex-premier not qualified to talk about what Sarawak wants.

 

“Mahathir is saying what the Chinese want to hear because in the urban area, they are angry with the Government,” said a retired Chinese professional.

Pakatan in Sarawak seems to have gotten its act together after the very public quarrel over seats during the state election.

Standing alongside Dr Mahathir, Chong also unveiled the party’s “New Deal, New Hope” election manifesto which promises equality, empowerment and full state rights to the state, as well as quality education and infrastructure development.

It was a rather hastily drawn up document and he promised to come up with more details closer to the election date.

DAP leader Lim Kit Siang was quite carried away by the whole thing and asked Sarawak and Sabah to deliver 40 of its 56 parliamentary seats to Pakatan.

But Dr Mahathir could not bring the tsunami mood to Sarawak. He looked old and sounded tired against the giant stage backdrop that was plastered with the “New Deal, New Hope” slogan.

The charisma is still there, but the days when he could walk on water are long over.

He carries too much baggage with Sarawakians and as Deputy Chief Minister Tan Sri Dr James Masing said: “I do not think he is sincere. In his 22 years as prime minister, he never bothered to touch on it (renegotiating the Malaysia Agreement), he refused to talk to us about it.”

One of the reasons why the state government did not bar Dr Mahathir was because they wanted to assess his impact and they now have the answer.

The saying that it is better late than never did not work in this case and the opinion out there is: Why now? Why didn’t Dr Mahathir do it when he had the power to do so?

Michael Tiang, the political secretary to the Chief Minister, let go a stinging open letter which basically told Dr Mahathir that he is not qualified to talk about what Sarawakians want and that since he retired as prime minister, Sarawak has been able to set up is own development bank, Debos, and its own petroleum company, Petros.

Besides that, Tiang expressed disappointment that despite being a statesman, Dr Mahathir’s attacks on the Prime Minister’s wife were no better than what cybertroopers do on the Internet.

“Your political partners like Lim Kit Siang do not deserve any welcome in Sarawak. He has criticised Sarawak for abusing our immigration powers. What do you mean abusing our autonomy? This is our autonomy since 1963!

“If Lim Kit Siang cannot accept the fact that we had this autonomy since 1963, Sarawakians should not believe there will be any ‘New Deal and New Hope’ for Sarawak,” said Tiang.

Sarawak has always had this peculiar thing about rejecting political parties from the peninsula, especially Umno, whom they view with great suspicion.

But there is also something rather hypocritical about it given the way peninsular brands like DAP and PKR have made inroads.

They do not like peninsular figures telling them how to run their state. They want to keep race and religion out of the Sarawak way of life.

They view Dr Mahathir as a primary cause of what the country is today and that is why many of them draw a line about his leading role in politics today.

“Dr Mahathir suffers from a trust deficit among many Sarawakians,” said SUPP assistant treasurer Robert Lau.

The hardcore Opposition supporters will go along with it. They will do anything to topple Barisan, whether it is supporting PAS like in the last general election or backing the “old dictator” this time.

However, local journalists think that riding on Dr Mahathir could backfire for the Sarawak opposition parties.

“I was not overwhelmed. What does it say about the Opposition that they have to bring him in?” said a Kuching-based journalist.

It is still quite difficult to figure out Dr Mahathir as the leader of the Opposition.

He is in danger of becoming a one-trick pony in his campaign against Najib. He started out with the grand strategy of bringing down Najib via the 1MDB issue. It worked beautifully among the urban voters, but failed to resonate with the rural base and he has stopped talking about 1MDB.

He has also stopped claiming that Malaysia is going bankrupt or that it is a failed state. Things could certainly be better, but economic figures show that the economy is growing steadily.

Malaysia recently moved up two places in the global competitiveness index, China is investing in a big way and the new MRT was the talk of the town.

The Asian Development Bank recently named Malaysia and Hong Kong as the “surprise growth nations”. Malaysia was also named one of the best places in the world to retire, prompting Najib to quip that “however, some people refuse to retire”.

Dr Mahathir’s cameo appearance in Sarawak was not a roaring success, but it was an important stop in his role as Pakatan’s “top dog”.

Will it be Sabah next?

Tun Dr Mahathir Mohamad was supposed to be the X-factor in Sarawak Pakatan Harapan’s “New Deal, New Hope” launch last weekend but he has a trust deficit among Sarawakians and he failed to bring on the tsunami mood.

Source: https://www.thestar.com.my/opinion/columnists/analysis/2017/10/01/dr-m-fishes-in-sarawak-waters/

‘Unity the key to success’

KUCHING: Sarawak’s Malay community must preserve unity among themselves and with other communities so that the state can continue to develop.

Making this call, Deputy Chief Minister Datuk Amar Awang Tengah Ali Hasan said unity was the key to the community’s success over the years.

“But we cannot take this for granted. We need to identify our weaknesses and correct them for our unity to remain strong,” he said when opening a Malay cultural seminar here yesterday.

Awang Tengah said unity and development were the goals of the state government’s leadership under Chief Minister Datuk Patinggi Abang Johari Tun Openg.

“We want Sarawak to be a developed, high-income state by 2030.

“Various initiatives have been introduced to take back our oil and gas rights, such as amending the Oil Mining Ordinance and setting up Petroleum Sarawak Bhd (Petros),” he said.

Awang Tengah also reminded the Malay community not to ignore the rights of others communities in protecting their own rights and interests.

For instance, he said the setting up of the Unit For Other Religions (Unifor) should not be misunderstood.

“Unifor was set up to preserve the harmony in Sarawak’s multicultural society, where people from different faiths, cultures and backgrounds live together in unity.

“No single race can rule on its own without working together with the others. This is the reality.

“As Malays, we should be united and continue to respect and work together with the other communities in the state,” he said.

The three-day seminar was organised by the Sarawak Malay Cultural Foundation with the theme “Managing Culture in the Digital Era”.

The topics discussed included politics, education, rural development and leadership.

Source: https://www.thestar.com.my/metro/metro-news/2018/10/31/unity-the-key-to-success/

Greater say over natural resource

KUCHING: The newly-launched Petroleum Sarawak Bhd (Petros) will spearhead Sarawak’s participation in the strategic oil & gas sector and boost the state’s development.

Chief Minister Datuk Patinggi Abang Johari Tun Openg said the state-owned oil and gas company must build on its presence in Sarawak to grow and deliver sustainable economic benefits while safeguarding the state’s interests and resources.

“I believe it is important for Petros to be strong, effective and efficient in performing its mandated roles.

“Accordingly, Petros is required to seek guidance from the Sarawak government for broad policy direction in the execution of its strategic roles and responsibilities,” he said when launching the company.

Abang Johari added the state government would issue guidelines to Petros to ensure greater and more meaningful participation by Sarawakians and Sarawak companies in the oil & gas industry.

He said the state government also wanted to see Petros work together with Petronas in the upstream and downstream sectors of the industry.

“Both companies can contribute significantly towards the advancement of the oil and gas industry in Malaysia and the economic progress and prosperity of our nation,” he said.

During the launch, the Chief Minister named Saau Kakok, a Bidayuh with nearly 40 years’ experience in the oil and gas industry, as Petros’ chief executive officer.

Saau’s last position was vice-president for Asia at a United States-based independent oil company.

“Petros is fortunate to gain Saau’s experience, talent and vision. I am confident that he is the right person to lead Petros into the future, adding value to the careers of young Sarawakians while making Petros the best place to work,” Abang Johari said.

Earlier Petros chairman Tan Sri Hamid Bugo said the company’s vision was to be a major player in exploiting and utilising energy resources.

“We see our role eventually as an active, fully integrated oil and gas operator across the value chain – upstream, midstream as well as downstream.

“We also see Petros as the catalyst for fuelling Sarawak’s growth by developing and utilising the state’s oil and gas resources domestically.”

Hamid also said Petros planned to collaborate with other companies in the industry and several proposals were in the pipeline.

“I hope players in the oil and gas industry will not regard Petros as a disruptive competitor but as a facilitator and collaborator, a government-linked entity that sees value in working together.”

Hamid added that Saau would join Petros in April while all essential staff would be recruited by the end of the year.

Source: https://www.thestar.com.my/metro/metro-news/2018/03/08/greater-say-over-natural-resource-petros-will-be-a-major-player-in-the-development-of-sarawaks-oil-a/

Petros is nothing like scandal-plagued 1MDB, says Abang Jo

KUCHING: Chief Minister Datuk Patinggi Abang Johari Tun Openg has refuted allegations by a website that the state-owned Petroleum Sarawak Bhd (Petros) is like the scandal-plagued 1Malaysia Development Bhd (1MDB).

“There’s been a malicious article written on Petros. We have a transparent organisation.

Source: https://www.thestar.com.my/news/nation/2019/03/05/petros-is-nothing-like-scandalplagued-1mdb-says-abang-jo/

Abang Johari: Oil and gas companies must get relevant permits by July 1

KUCHING: Companies involved in the oil and gas industries in Sarawak must obtain the necessary licences and leases required under the Oil Mining Ordinance 1958 and Gas Distribution Ordinance 2016 starting July 1.

 

Chief Minister Datuk Patinggi Abang Johari Tun Openg said the licenses, including permits, leases and other approvals will cover all persons and companies involved in the oil and gas industries in Sarawak including their contractors, sub-contractors and vendors.

 

He added that licenses will be issued by the Sarawak government under the Oil Mining Ordinance (OMO) and Gas Distribution Ordinance (GDO), in accordance with legislative powers conferred on the state under the Federal Constitution.

 

The state government will carry out engagement with all oil and gas industry players beginning next month on laws and regulations compliance including the Land Code and Natural Resources and Environment Ordinance. The session will also touch on penalties and consequences of non-compliances.

 

“This is normal practice. When you do business in other countries, you have to adhere to their regulations as well. We are asserting our rights within the Federal Constitution to regularise oil and gas operations in the state,” he told reporters after a MoU signing ceremony between Bintulu Port Authority and Bintulu Supply Base Sdn Bhd here Thursday.

 

Abang Johari said the regulating of both upstream and downstream of the oil and gas production, as well as gas distribution in Sarawak is crucial to the state’s planning to expand its economy and enhance level of participation by locals in the oil and gas industry.

 

He added that the forthcoming amendments to OMO 1958, to be tabled in the next Sarawak Legislative Assembly sitting, will require all oil and gas industry players in Sarawak, including Petronas, to comply with the ordinance.

 

“Section 2, Section 6 and Section 8 of the Petroleum Development Act (PDA) 1974 undoubtedly confirm that all industry players must comply with OMO and other state laws including the Land Code of Sarawak in regards to land use and occupation in the state.

 

“Under Section 8 of the PDA, only the Petroleum Mining Act 1966 (except Section 14 thereof) is not applicable to Petronas. Section 14 of the Act, which no longer applies to Sarawak, requires Petronas to seek permission to use and occupy land needed for its activities,” Abang Johari said.

 

He added that Petronas, not being exempted by the PDA from compliance with the Sarawak Land Code, must have licenses or leases to use and occupy land including the continental shelf for the production of oil and gas in accordance to the land code.

 

Touching on the GDO, the chief minister said all persons and companies undertaking the distribution of gas, including the setting up of gas processing, separation or regasification plants and pipelines will be required to obtain a license.

 

The Gas Distribution (License) Regulations 2018 would set out the procedures for applying for license and fees payable by licensees, Abang Johari said.

 

Petroleum Sarawak Bhd (Petros), under direction of the state government, will enter into Mining and Production Sharing Agreements with Petronas and other major industry players. Petros would also be granted license by the state to distribute Gas from Petronas processing separation plant at Tanjung Kidurong in Bintulu.

 

Source: https://www.thestar.com.my/news/nation/2018/04/19/abang-johari-oil-and-gas-companies-must-get-relevant-permits-by-july-1/

Don’t drop austerity mindset

Petronas tells O&G players sustainability of stronger oil price remains to be seen

WHILE the worst of the downturn in the oil and gas (O&G) industry is now over, the outlook is not blue skies. Cost is already showing signs of increasing at a worrying rate, and there is now some premature exuberance among the industry players.

Players should not drop the austerity mindset otherwise all the previous efforts from Petronas’ intensive cost-efficiency efforts over the last three years will be negated.

This was the key message that Petroliam Nasional Bhd (Petronas) president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin wanted to highlight when he presented Petronas’ stellar full year financial results to Dec 31, 2017 to a room full of reporters.

Wan Zulkiflee also emphasised that the current stronger oil price was now supported by production cuts of the Organisation of Petroleum Exporting Countries (Opec) and non-Opec countries, hence the sustainability remains to be seen.

“Therefore, it is imperative to continue to keep costs under control, increase efficiencies and drive up value,” he said.

Certainly, oil prices have recovered remarkably since it started crashing from its high of US$110 in mid-2014. It hit its low of US$27 in January 2016, and has since been on a steady uptrend.

For the most part of 2017, oil prices hovered between the US$50 and US$65 level. Brent traded at US$64 as of press time yesterday.

Overall, Petronas announced strong financial results, both for its fourth quarter as well as its full year to Dec 31, 2017 due to stronger oil prices along with the group’s ongoing transformation efforts which focused on cost optimisation and efficiency improvements.

For the fourth quarter to Dec 31, 2017, Petronas’ profit after tax increased by 61% to RM18.2bil from RM11.3bil in the corresponding quarter last year due to higher revenue and lower net impairment on assets and well costs.

As a result, earnings before interest, taxation, depreciation and amortisation (ebitda) was also higher by 15%, at RM25.3bil compared to RM21.9bil in the corresponding quarter last year.

The group’s revenue rose to RM61.8bil, 14% higher compared with the corresponding quarter last year. This was contributed by higher average realised prices recorded for major products and higher sales volume mainly from LNG and petroleum products, partially offset by the effect of the ringgit strengthening against the US dollar.

Outlook

The positive fourth quarter results were also driven by the upward trend of key benchmark prices and better margins.

“The continued drive for higher productivity and operational excellence have placed Petronas in a stronger position to execute its long-term growth strategy. Subject to sustainability of price recovery, the group expects to deliver a satisfactory performance in the next financial year,” Wan Zulkiflee told a press conference.

Meanwhile, for the full year, Petronas’ profit after tax jumped by 91% in 2017 to RM45.5bil, compared with RM23.8bil recorded in 2016.

The increase was achieved on the back of higher revenue, lower net impairment on assets and well costs and continuous efforts to optimise costs in 2017.

The group’s revenue increased by 15% to RM223.6bil compared with RM195.1bil recorded in 2016. The increase was mainly due to higher average realised prices recorded for major products coupled with the effect of weakening of the ringgit against the US dollar. This was partially offset by lower sales volume for crude oil & condensate and petroleum products.

Cumulative 2017 ebitda rose to RM92bil compared with RM70.7bil recorded in 2016, in line with higher profits.

Ratilal: At current price levels, we have done a lot of adjustments to our asset values, and these have been done over the last three years.

Cash flows from operating activities improved to RM75.7bil, an increase of 41% from RM53.8bil in 2016.

Total assets as at Dec 31, 2017 was slightly lower at RM599.8bil compared with RM603.4bil as at Dec 31, 2016 primarily due to the impact of the ringgit strengthening against the US dollar.

Shareholders’ equity of RM389.8bil as at Dec 31, 2017 increased by RM9.4bil compared to last year mainly due to profit generated during the year.

The group’s gearing ratio remained stable at 16.1% compared to 17.4% recorded last year. Return on capital employed (ROACE) increased to 9.8% compared to 5.4% in 2016, in line with higher profits.

Capital investments for the year ended Dec 31, 2017 totalled RM44.5bil, mainly attributable to the Refinery and Petrochemical Integrated Development (Rapid) project in Johor.

Below are excerpts from the Q&A session Wan Zulkiflee had with reporters. Also present was Petronas executive vice-president and group chief financial officer Datuk George Ratilal.

Dividends:

Petronas paid RM16bil in dividends in 2016. What was Petronas’ dividend payment in 2017 and what is it planning to give out in 2018?

WZ: We gave out RM16bil in 2017. For 2018, we are planning to give out RM19bil in dividends

Capex:

Petronas spent RM44.5bil in capex for 2017. Will this increase in 2018?

WZ: Yes, this year Petronas is planning to spend more, around RM55bil.

Oil price estimation when planning its budget:

When Petronas planned its budget and capital expenditure in 2017, it planned it based on oil prices of US$45. What is Petronas’ estimation of oil prices when it plans its budget for 2018?

WZ: We will be basing our budget similar to the Government’s budget, which is at Brent oil prices of US$52 per barrel.

Outlook for oil price in 2018:

WZ: There are many things that affect oil prices. The Opec voluntary cuts, supply and demand, and also the speculative element. As a company, we are very conservative, and our forecast is somewhat lower than current prices, and this morning Brent was US$64.

In the bigger scheme of things, we are such a small player.

I think the global demand is about 97 billion to 98 billion of barrels a day, and we produce only half a million barrels a day. So in the overall scheme of things, we are small.

Going forward, I think oil prices will be decided by the bigger players. I think we need to look at inventory levels. That is the criteria we know that we have to achieve collectively, for Opec and non-Opec countries. Based on the inventory levels, Opec will decide whether they want to continue with the production cuts.

Petros:

WZ: I have been on record to say that we welcome any such state-owned bodies or business entity in the oil and gas business. We welcome their participation, as long as it is set up within the proper arrangements that have been made.

Who decides on Petros’ investments, and who will be the governing body for Petros?:

WZ: I think since this involves Petros, it is better you ask them. I don’t think I am in a position to respond for Petros.

Level of consolidation among the oil and gas players:

WZ: There have been attempts by a few industry players in Malaysia, but I think it is not as material as we had hoped for. I know its not easy. But I think going forward, we still need competitive big companies to serve the industry in Malaysia and in the region. So we are still encouraging companies to consolidate.

Petronas’ Canada project:

In 2017, one of the significant decisions made by Petronas was not to proceed with the Final Investment Decision on the Pacific North West LNG project and the Prince Rupert Gas Transmission project in Canada. However, Petronas will continue to evaluate options to monetise gas in Canada. So what is the status on Canada?

WZ: Yes, we are producing about 600 million standard cubic feet of gas for the local markets.

And we have world-class gas assets. The proven resources are about 23 trillion standard cubic feet. So, yes we will definitely continue to explore all options that we have to monetise this resource. This is an ongoing process.

Impairments:

GR: At current price levels, we have done a lot of adjustments to our asset values, and these have been done over the last three years. So if prices remain at this level, we don’t see any significant impairments. Impairments happen for two reasons – one is price levels and therefore future cashflows need to be adjusted lower.

The other reason is a breakdown in operational aspects. So that is if something happens somewhere in the business. That, we can’t quite predict. However, besides that, we don’t expect any substantial level of impairments similar to what happened in the last two years.

Retrenchment:

WZ: Today, we dont’ have any big plans for retrenchment. However, as an ongoing exercise and this is nothing new and special, we have got a process where repeated non- performers will have to leave. But this is normal and has been done for many years now.

There is now no specific programme for retrenchment.

FLNG 1 and FLNG2:

Petronas has commissioned the world’s first floating liquefied natural gas (FLNG) liquefaction, storage and offloading vessel – Petronas FLNG Satu – which is now operating offshore in Sarawak. What are the plans to set up a second FLNG?

WZ: FLNG 1 has delivered six cargoes, and we are happy with its performance.

FLNG 2 is now under construction. It will be in operations in 2020. We are confident that we are on track to be operational by then.

Source: https://www.thestar.com.my/business/business-news/2018/03/03/dont-drop-austerity-mindset/

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/

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