Mosva: Good times await offshore support vessel segment

MARCH 4, 2019 BUSINESS



KUALA LUMPUR: As the activities in the oil and gas (O&G) industry pick up pace on the back of rising benchmark Brent Crude oil price which has hit US$66 per barrel, the offshore support vessel (OSV) segment is upbeat of more tender offers, especially from Petronas.

In the dark days of oil price in 2016, when the price slumped to US$28 per barrel, barely 100 vessels were chartered.

With the stabilisation of the oil price at the current US$66 per barrel, the Malaysian OSV Owners’ Association (Mosva) foresees full utilisation of the industry’s capacity of 300 vessels, said its president, Mohamed Safwan Othman.

“Stability in oil price creates stable demand, be it from the national oil company or other oil majors in Malaysia such as ExxonMobil, Shell and Repsol,” he told Bernama.

Petronas, for instance, has kicked off maintenance work, hook-up commissioning drilling and exploration, disclosing that there would be about 20 greenfield and 30 brownfield projects between 2018 to 2020 that would have the potential for future oil projects.

Mohamed Safwan said for the past three years, since end-2014, Petronas had stopped all of its activities except for production, which resulted in a sharp decline in OSVs needed, culminating in only 170 vessels being occupied from 300 previously.

“Since July 2018, when the oil price reached US$70 per barrel, we saw the activities picking up. And imagine for 20 greenfield projects, they would require up to three OSVs, it is a simple calculation on how much vessels are needed, especially for three years until 2020,” he added.

According to Mosva, under the OSVs requirement for 2019 to 2021, Petronas has contracted out 107 vessels under the Integrated Logistic Control Tower packages.

“The most widely required OSVs for development projects are

• anchor handling tug supply vessel, 
• platform supply vessel, 
• straight supply vessel and 
• fast crew boat,” he said.

Mosva has 24 members in the country, with accumulated tonnage of 540,000 dead weight tonnage (DWT), representing 90 per cent of Malaysian-flagged OSVs.

Asked about the challenges ahead, Mohamed Safwan said the OSVs owners were facing issues with low charter rate, which could go as low as 50 per cent of its operating expenses.

“Whereas for Petronas, its profit margin is US$35 per barrel and for them to embark on the exploration activities, they require oil price to be at US$55 per barrel. But we are actively engaging with Petronas on this matter,” he said.

Meanwhile, the total Malaysian fleet as at 2018 stood at 10.23 million DWT, with oil tankers made up 31 per cent (3.2 million DWT), bulk carrier (eight per cent), general cargo (three per cent), container ships (two per cent) and other types of vessels (the remaining percentage). — Bernama

Petronas awards MCM contracts to five contractors

JANUARY 16, 2018

File photo of a Petronas offshore platform. Petronas’ subsidiary, Petronas Carigali Sdn Bhd (PCSB), has awarded its contract for the provision of maintenance, construction and modification services (MCM) at its offshore facilities in Peninsular Malaysia, Sabah and Sarawak to five local contractors.

KUALA LUMPUR: Petronas’ subsidiary, Petronas Carigali Sdn Bhd (PCSB), has awarded its contract for the provision of maintenance, construction and modification services (MCM) at its offshore facilities in Peninsular Malaysia, Sabah and Sarawak to five local contractors.

In a statement here, it said the contractors were

• Carimin Engineering Services Sdn Bhd, 
• Dayang Enterprise Sdn Bhd, 
• Deleum Primera Sdn Bhd, 
• Petra Resources Sdn Bhd, 
• Sapura Fabrication Sdn Bhd, and its joint-venture partner, Borneo Seaoffshore Engineering Sdn Bhd.

These five local contractors were selected for the five-year contract which took effect in September last year, with an option to extend an additional year, said PCSB.

Under the terms of the contract, the engineering and maintenance services will include Topside Major Maintenance (TMM) and Facilities Improvement Projects (FIP).

Vice-President of Malaysia Assets of Petronas and Chief Executive Officer of PCSB Mohd Jukris Abdul Wahab said new requirements were introduced to encourage collaboration across the industry supply chain.

“These contracts encompass requirements such as the utilisation of marine vessels from Malaysian-owned companies only and the mandatory participation of 20 per cent local state service providers to spur value-added services that ensures growth in Malaysia’s oil and gas upstream services industry,” said Jukris.

With 200 offshore platforms in operation under PCSB in Malaysia, Petronas continues to encourage merit-based participation from local contractors to achieve value-driven production growth for the long-term progress and sustainability of the oil and gas industry. – Bernama

Petronas contracts

Petronas contracts have gone to a handful of S’wakians, not to Petros


MAY 7, 2018 SARAWAK


See Chee How

KUCHING: Datuk Patinggi Abang Johari Tun Openg should be truthful to all Sarawakians and admit that Petronas work contracts awarded after his appointment as the Chief Minister of Sarawak, in as far as they involved the operations in Sarawak, have gone to a handful of Sarawakians and not to Petros, the state-owned company incorporated to partake the upstream and downstream petroleum-related development activities in Sarawak, said Batu Lintang assemblyman See Chee How.

See, who is state PKR vice chairman, was responding to Abang Johari’s denial on Saturday that most Petronas contracts worth RM2.1 billion being awarded to close relatives and Parti Pesaka Bumiputera Bersatu (PBB) members.

According to See, in Nov 2017, it was revealed that Sapura Energy Bhd has bagged five contracts worth a combined RM1.47 billion.

“The contracts included work in relation to the Pan Malaysia Transportation and Installation of Offshore Facilities for Petronas Carigali Sdn Bhd and Sarawak Shell Bhd, and a contract to undertake the provision of maintenance, construction and modification services under the Package A (Offshore) — Sarawak Gas for Petronas Carigali,” he said today.

On Jan 15, this year, he said a Memorandum of Understanding (MoU) for a logistics collaboration between Petronas Chemicals Marketing Labuan (PCML) Ltd and Hubline Berhad was signed, enabling Hubline Berhad to join PCML’s panel of transporters for petrochemical products.

“On Jan 16, 2018, Petronas Carigali Sdn Bhd (PCSB) had issued a statement announcing that it has awarded contracts for the provision of maintenance, construction and modification services (MCM) at its offshore facilities in Peninsular Malaysia, Sabah and Sarawak to five local contractors, namely, 
-  Carimin Engineering Services Sdn Bhd, 
-  Dayang Enterprise Sdn Bhd, 
-  Deleum Primera Sdn Bhd, 
-  Petra Resources Sdn Bhd, 
-  Sapura Fabrication Sdn Bhd, and its joint-venture partner, Borneo Seaoffshore Engineering Sdn Bhd.

“Tan Sri Datuk Amar Hamid Bugo, the former State Secretary of Sarawak was appointed the Chairman of Petros by the present Sarawak Chief Minister. He has remained a director in Sapura Energy Berhad, a corporation which is almost wholly West Malaysian.”

See said Abang Johari should have full knowledge that the joint venture partner for Sapura Fabrication Sdn Bhd in the contract to undertake the provision of maintenance, construction and modification services under the Package A (Offshore) — Sarawak Gas for Petronas Carigali, is Borneo Seaoffshore Engineering Sdn Bhd, a company registered in Kota Kinabalu, but one which the Sarawak Chief Minister’s one very close family member was made a director not long before the contract was awarded.

“Dayang Enterprise Sdn Bhd and Petra Resources Sdn Bhd are established corporations of which Sarawakian individuals have substantial interests, though a brother of the present Prime Minister Datuk Seri Najib Tun Razak was also made a director in Petra Resources very recently.”

Hence, See said he maintained his statement that the general Sarawakians have not benefited from the contracts that were awarded by Patronas, valued to be above RM2 billion, since the present Chief Minister has taken his office.

“And I urge the Chief Minister to be forthright and truthful in revealing who are the Sarawakians who are behind the companies and corporations who had secured the contracts with Petronas thus far.

“And I maintain my contention that, because of the personal interests and that of the parties within the Barisan Nasional (BN), the Sarawak Chief Minister has put himself in a weak position to safeguard and fight for Sarawak’s rights in the exploration, exploitation and development of our valuable petroleum resources in Sarawak.”


https://www.theborneopost.com/2018/05/07/petronas-contracts-have-gone-to-a-handful-of-swakians-not-to-petros-rep/

Petronas net profit soars 22 pct to RM55.3 bln in FY2018

MARCH 9, 2019 BUSINESS



KUALA LUMPUR: Petroliam Nasional Bhd’s (Petronas) net profit rose 22 per cent to RM55.3 billion in the financial year ended Dec 31, 2018 (FY18) from RM45.5 billion in 2017, on the back of higher revenue and supported by a net write-back of impairment on assets.

Revenue also increased by 12 per cent to RM251 billion from RM223.6 billion in FY17, mainly due to higher average realised prices for all key products.

President and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said the company recorded a strong financial performance in 2018, supported by its ongoing drive to increase operational efficiency and commercial excellence.

“We have made progress in the pursuit of our long-term strategies and will continue to invest in the future,” he said during the company’s fourth quarter and 2018 financial performance briefing yesterday.

Commenting on oil prices, he said it was expected to remain volatile this year with uncertainties expected to have a significant impact.

Wan Zulkiflee said Petronas’ plans for this year would be based on the oil price of US$66 per barrel.

“We use US$66 per barrel (as a benchmark) for our planning as anticipate a volatile year. As you can see in the past month, the oil production was also quite erratic,” he added.

He said Petronas planned to set aside slightly more than RM50 billion for its capital expenditure (capex) allocation for this year, slightly higher than the RM46.8 billion allotted in 2018..

Upstream activities would see an injection of RM30 billion, while RM15 billion has been allocated for the domestic market.

“Last year, we saw most of the capex spent on the Pengerang Integrated Complex. Some of the capex would be used to venture into renewable energy.

“This is because oil is a depleting source and I think we have to allocate capex for whenever the opportunity is available, and India is one of them, and Malaysia as well,” Wan Zulkiflee said.

It was reported that Petronas had shown interest in one of India’s largest rooftop solar power producers, Amplus Energy Solutions Pvt Ltd, in a deal that could be worth RM1.56 billion.

— Bernama

Investor's Checklist: Energy

The profitability of the energy sector is highly dependent on commodity prices.  Commodity prices are cyclical, as are the sector's profits.  It's better to buy when prices are at a cyclical low than when they're high and hitting the headlines.

Even though the sector is largely cyclical, many energy companies keep their bottom lines black during the troughs.  Look for this characteristic in your energy investments.

OPEC is a highly beneficial force in the energy sector because it keeps commodity prices above its costs.  It is worth keeping tabs on the cartel's strength.

Because of OPEC, we view exploration and production as a much more attractive area than refining and marketing.

Working in a commodity market, economies of scale are just about the only way to achieve a competitive advantage.  As such, bigger is generally better because firms with greater heft tend to be more profitable.

Keep an eye on reserves and reserve growth because these are the hard assets the company will mine for future revenue.

Companies with strong balance sheets will weather cyclical lows better than those burdened with debt.  Look for companies that don't need to take on additional debt to invest in new projects while also paying dividends or repurchasing shares.


Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey



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