January 3, 2012 [The Borneo Post] - KUCHING: Despite uncertainties stemming from slower global economic growth, the nation’s oil and gas (O&G) sector is expected to thrive next year following healthy order backlogs seen this year.
According to MIDF Research Sdn Bhd (MIDF Research), the acceleration of Petronas’s RM300-billion capital expenditure (capex) along with the development of the country’s liquefied natural gas sector (LNG) would provide cushion against the global economic slowdown.
“We believe 2012 will be an exciting year for the domestic O&G players in view of the potential announcement for sizeable projects like Malikai Deepwater project, the RM15-billion North Malay Basin, Petronas’s RM60-billion refinery and petrochemical integrated development (Rapid) as well as the floating LNG development,” pointed out MIDF Research.
The overall healthy order backlog would see aggregate earnings for the sector to grow by 11.2 per cent next year.
Additionally, at the price of above US$80 per barrel, exploration and production (E&P) activities were still viable, supporting oil majors and national oil companies’ capex plans.
As such, MIDF Research believed that the country’s O&G sector would continue its drive upwards in spite of the negative prospects surrounding the global market.
Looking back, world oil demand had declined for the consecutive three months, down 0.3 per cent month-on-month to record at 89.3 million barrels per day (bpd) in October this year, according to Energy Intelligence Group. Contagion effects from Europe’s debt crisis were expected to further cap global oil demand.
However, Malaysia’s momentum in the O&G division seemed to be going strong with a total of RM5.77 billion contracts awarded in November against October’s RM1.27-billion, based on companies under MIDF Research’s coverage.
“This development is mainly driven by the RM4.2-billion and RM1.4-billion contracts secured by SapuraCrest Petroleum Bhd and Malaysia Marine and Heavy Engineering Bhd, from Petroleo Brasileiro S A and ExxonMobil Corporation, correspondingly,” said MIDF Research.
On top of this, a contract worth at an estimated RM1 billion from Bechtel International Inc for the fabrication, assembly and testing for Wheatstone LNG Plant Facility, which was announced this month, indicated a spin-off opportunity for the local players.
“The booming LNG sector in Australia might effectively provide good opportunity to the local O&G players. Note that Wah Seong Corporation Bhd is also doing the pipe-coating works for Gorgon and Australia Pacific LNG projects. This along with the Kebabangan Deepwater projects are projected to sustain its financial year 2012 forecast profit,” opined MIDF Research.
Within East Malaysia, local participants of the O&G field had also been actively raking up activities.
Dialog Group Bhd had recently signed a shareholders agreement with China Aviation Oil (Singapore) Corp Ltd to establish a joint venture company known as Langsat Terminal (Three) S/B (LT3SB). Dialog would own 40.7 per cent effective interest in LT3SB. The total development was at an estimated cost of RM371 million and would undertake the design, development, operation, management and maintenance of a 380,000-cubic metre oil storage tank terminal facility for a concession period of 30 years.
Another homegrown group Coastal Contracts Bhd had also secured contracts for the sale of three offshore support vessels, two landing crafts and two barges for RM233 million just last week.
