Petronas RM300 Billion Commitment To Give O&G Industry A Fillip

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KUALA LUMPUR,   –   Petronas Nasional Bhd’s (Petronas) commitment to spend RM300 billion on capital expenditure until 2015 is expected to give Malaysia’s oil and gas (O&G) industry a fillip next year.

An O&G analyst from MIDF Amanah Investment Bank said the national petroleum company would spend an additional RM35 billion on matured field rejuvenation in an attempt to “mop-up” and maximise output.

“There would be plenty of opportunities for engineering, procurement and commissioning segments of the O&G value chain as exploration and production activities intensify,” he told Bernama.

He said the awarding of contracts would pick up as there was a need for the North Malay Basin, a new integrated gas development in Peninsular Malaysia, and Pan Malaysia Umbrella Hook-up and Commissioning offshore facilities rejuvenation works, to expedite project executions to meet tight production deadlines.

“Thus, we can expect demand for offshore support vessels to increase in tandem,” he said.

The North Malay Basin, a collaboration between Petronas Carigali and Hess Exploration and Production Malaysia B.V., is expected to produce up to 300 mmscfd from nine gas and condensate field across three offshore blocks by 2015.

The Pan Malaysia Umbrella Hook-up and Commissioning project is estimated to offer ten job packages worth a collective RM8 billion to RM10 billion.

The analyst said 2013 could possibly see more mergers and acquisitions in the industry as companies vied to form larger and stronger entities to better compete and also to increase their revenue streams.

He said the West Texas Intermediate crude oil was expected to trade at an average of US$96.50 (RM295) per barrel.

Continuous discovery of new hydrocarbons such as in Sarawak (Kuang North and Tukau Timur) as well as Tembakau-1 and Bertam field offshore Peninsula Malaysia would further support the industry, he said.

He said the discovery of new oil wells would add to Malaysia’s existing proven oil and gas reserves.

For example, he said, the gas find in Tukau and Kuang would add approximately five per cent to Malaysia’s gas reserve and the oil find in Bertam about one per cent to the oil reserve.

On overseas development, he said, the recent acquisition of gas producer Progress Energy Canada Ltd by Petronas meant a new stream of sources to meet the growing demand for gas-powered energy in the country.

This month, Petronas acquired Progress Energy Canada for US$5.3 billion (approximately RM16.9 billion) including promises to increase production by 60 per cent after its initial bid was rejected by the Canadian Government.

He said acquisition would be an additional stimulus to the country gas industry was expected to be boosted by the commencement of Melaka Regassification Terminal in the second quarter of next year.

On major developments for 2012, he said, apart from the Petronas’ acquisition, the industry saw the merger between Kencana Petroleum and Sapura Crest to form one of the largest integrated oil and gas service providers in the world, SapuraKencana, with a market capitalisation of over RM10 billion.

In the downstream activities, Dialog Group Bhd, Johor Government and Netherland-based Royal Vopak NV agreed to invest RM4.1 billion in the Pengerang Liquefied Natural Gas Terminal in Johor.

The analyst said the local oil and gas industry has been satisfactory throughout the year with major oil and gas finds around Malaysia and major corporate news flow involving award of contracts for the North Malay Basin and Pan Malaysia Hook-up and Commissioning jobs.

However, he said, corporate earnings remained lacklustre due to a variety of occurrences which include project execution delays, unexpected provisions, delays in overseas projects etc.

Going forward, he said, there were more room for improvement in 2013 with a mix of local, regional and international jobs to be awarded to Malaysian O&G players.

The analyst expected Petronas to keep the momentum going as it pushed for more deepwater, high pressure, high temperature and high carbon dioxide oil fields.

“There is urgency for Malaysia to increase its proven oil reserves to match the increasing oil consumption, which will sustain the vibrancy of the sector,” he said.  – Bernama