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OIL and gas (O&G) service
providers are expected to enjoy robust growth
based on the continued up-cycle of the industry.
At Aseambankers' recent O&G Equity Investors
Conference 2007 themed Treasures from the Deep,
speakers were upbeat that deepwater activities
would play a prominent role in Malaysia's O&G
sector.
This is in view of Petroliam Nasional Bhd's (Petronas)
efforts to address the declining trend in the
country's production and reserves.
Aseambankers senior analyst (equity markets)
Liaw Thong Jung said Malaysia's first deepwater
venture, the Kikeh field commissioned on Aug 17,
has an initial production rate of 20,000 barrels
per day (bpd).
The Kikeh field output will grow to more than
100,000 bpd when it reaches maximum capacity.
“This will be followed by production at Gumusut
and Kakap in 2010. Thereafter, Malikai,
Kebabangan and Jangas fields by 2011, followed
by Ubah Crest and Piasangan in 2012 and Kamunsu
in 2013.
“These deepwater blocks with larger oil
reservoir and higher flow rates will account for
a third of Malaysia's oil production by 2011,”
Liaw told StarBiz.
Additionally, the country's shallow water fields
still offer untapped resources; and about 90
hotspots have already been identified for
development.
Concurrently, Liaw said, the O&G onshore
development projects planned in the five
economic regions under the Ninth Malaysia Plan
were expected to further spur the growth of the
O&G supporting industry.
The projects include the Tanjung Langsat and
Asia Petroleum Hub in the Iskandar Development
Region, the Tanjung Dawai fabrication yard and
Petrochemical Industrial Zone in the Northern
Corridor Economic Region, and the Petronas-led
Eastern Corridor Development Region.
The O&G onshore development projects in East
Malaysia include the Sabah-Sarawak gas pipeline,
Sabah Oil and Gas Terminal, Tanjung Manis
offshore fabrication yard and shipyard in
Sarawak, and methanol plant in Labuan.
There is also the 300km Trans-Peninsular Oil
Pipeline from Kedah to Kelantan and the related
storage facilities project valued at US$7bil.
Liaw said the development was underpinned by an
uptrend in oil prices and the need to sustain
energy resources.
The operating cost of oil per barrel is at
US$35; and with current market price of above
US$70 per barrel, oil majors will continue to
explore and produce oil from new fields,
escalating the demand for service support
providers.
Against this backdrop, O&G service providers,
including offshore fabricators, rig and ship
builders/operators, pipe layers/coat-ers as well
as drilling fluid/waste management operators,
are expected to enjoy sustained growth in years
to come.
One of Aseambankers' top picks among O&G support
service providers is KNM Group Bhd, which plans
to increase the production capacities at its
Canada, Brazil, Batam (Indonesia) and Dubai
plants next year. The group has allocated
RM140mil for capital expenditure (capex) next
year.
KNM is a process equipment manufacturer for the
oil, gas, petrochemicals, minerals processing
and energy industries.
Its head of corporate affairs and company
secretary Terence Yeoh said KNM had just
expanded its annual production capacity by
21,000 tonnes to 90,000 tonnes.
“The increased capacity this year is a result of
the expansion of our plant in Kuantan Port,
China and Dubai,” he told StarBiz, adding that
capex for this year was RM130mil.
With the current order book amounting to RM2bil
that will last until 2009, the group is believed
to be actively bidding for other contracts worth
RM10bil, mostly in China, the Middle East and
Canada.
Offshore support vessels (OSVs) service provider
Alam Maritim Resources Bhd is also increasing
its market share by acquiring more vessels. It
is also expanding its scope as an O&G service
provider to include offshore construction,
subsea and underwater engineering services.
Group financial controller Md Nasir Noh said
Alam Maritim would receive three more OSVs in
the last quarter of this year and two in the
first quarter of 2008.
“The five OSVs cost about RM147mil,” he said.
He said the group planned to increase the size
of its fleet due to strong demand and the
shortage of Malaysian OSVs.
Alam Maritim has 18 OSVs whose average age is
5.5 years, with a total tonnage of 20,559 tonnes.
The group is also strengthening its business arm
that is involved in offshore construction,
subsea and underwater engineering services.
The scope of services in this division includes
underwater welding and construction, hull
cleaning and inspection, pipe laying, and
remotely-operated vehicle (ROV) services.
Alam Maritim acquired a 60% stake in Eastar
Offshore Pte Ltd, a Singapore-based ROV
manufacturer, earlier this year. |
