PETALING JAYA: Sarawak oil and gas players are set to benefit as the state transitions into the new administration of its oil resources under Petroleum Sarawak Bhd (Petros), with plans to increase local participation in the industry.
UOB Kay Hian Research singled out Serba Dinamik Holdings Bhd as among the major beneficiaries, aside from other Sarawak-listed companies like Dayang Enterprise Holdings Bhd , Petra Energy Bhd , KKB Engineering Bhd (via OceanMight) and Brooke Dockyard.
The research house recently attended the Sarawak oil & gas seminar and exhibition, said the issues covered during the conference included Petros’ plans, and matters relating to vendor development and reserves data.
By end-2019, it said, Petros would take firm action to implement the state’s mandate, particularly in relation to revenue sharing and local participation.
“We believe this is necessary to kick start delayed greenfield projects,” it said in a note.
The research house, which maintained its “market weight” stance on the sector, said Petros CEO Sauu Kakok clarified during the seminar that their key targets included driving more share of revenue from Sarawak O&G resources and boosting participation of Sarawakians.
Petros, it said, was actively working towards meeting the “hard target timeline” of Dec 31 for measures including setting up governance policies.
“This implies that the one-year grace period for Petronas, Putrajaya (and its key advisors), and Sarawak state will conclude.
“We understand further delays are unlikely as all stakeholders are working hard to reach firm agreements,” the research house said.
Petros, which was set up in August 2017, is in charge of regulating upstream production, governed under the oil mining ordinance 1958. It is also regulating the gas distribution governed under the distribution of gas ordinance.A technical session during the seminar revealed that the Sarawak basin has 23% of Malaysia’s oil and 51% of natural gas.
For the overall sector, UOB Kay Hian said many O&G stocks remained “too locally dependent”. It noted that Petroliam Nasional Bhd (Petronas) would focus on overseas upstream capex, while domestic upstream capex is set to improve from RM12bil in 2018 to RM15bil in 2019.
“We understand local activity levels have generally increased, especially for maintenance/brownfield works, with maintenance, construction and modification contractors like Dayang Enterprise and Petra Energy guiding high activity levels in 2019 although rates remain low,” it said.
The research house said it favoured internationally competitive companies, like engineering, procurement, construction and commissioning and storage operator Dialog Group Bhd and Yinson Holdings Bhd .