Wednesday, 13 June 2012

Oil & Gas Sector - No impact from Tukau gas platform fire OVERWEIGHT


- Newspapers reported yesterday that five Petronas workers have reportedly suffered burns after a fire broke out on board the Tukau B drilling platform, off the coast of Sarawak in the South China Sea. 

- Sixteen maintenance workers on board the platform were evacuated amid the blaze, which razed the part of the platform that housed the compressor skid. The workers were doing maintenance work on the platform when the fire broke out at about 9.20am local time on Monday morning. After the evacuation, the fire was extinguished within an hour. Petronas said the cause of the blaze was under investigation.

- The drilling platform is situated 31 kilometres from the shore, near the Tukau oilfield in water depths of 60 metres. The five injured workers, all locals, were rushed by helicopter to Miri Hospital, where they were treated for various degrees of burns. The most seriously injured worker was treated for second degree burns at the hospital’s red zone unit.

- Currently, we are uncertain about the production of oil and gas from the platform. But since the oil field is located off Sarawak, it will not have any impact on gas production in Peninsular Malaysia, which continues to suffer from intermittent upstream supply disruptions due to reservoir depletion and unscheduled maintenance requirements.

- Hence, while Tenaga Nasional will still continue to face gas supply shortfalls until the 530mmscfd Lekas regassification terminal in Malacca is commissioned by September this year, the Tukau B platform incident is unlikely to exacerbate the problem.

- For Petronas Gas (PGas), which supplies gas to Miri and Bintulu, the potential supply disruption is expected to be minimal. Hence, we maintain PGas’ FY12F-14F net profits. For Petronas Chemicals, its supply of gas currently stems from Kerteh and Gebeng in Peninsular Malaysia as well as in Labuan. Hence, there will not be any impact on the group.

- For the sector, we remain OVERWEIGHT given Petronas’ plans to restore its declining oil and gas production rates via a massive capex spending, amounting to RM300bil from 2011 to 2015. Besides further marginal field projects, the group has achieved final investment decision for the country’s first floating LNG project for the Kanowit field and has signed two heads of agreement for the Refinery and Petrochemical Integrated Development complex in Pengerang with Itochu Corp and PTT Global Chemicals. 

- Malaysia Marine & Heavy Engineering remains our top pick, given its proven track record in providing fabrication solutions for deepwater and more complex engineering projects. We also like Dialog, SapuraKencana Petroleum, Bumi Armada and Petronas Gas.

Source: AmeSecurities 

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