- Upstream reported that Malaysia Marine & Heavy
Engineering Holdings (MMHE) and SapuraKencana Petroleum are likely to be
involved in Malaysia’s first chemical enhanced oil recovery (CEOR) vessel at
the mature Angsi field off Peninsular Malaysia. This vessel is expected to cost
US$1bil (RM3bil), of which half will be earmarked for the vessel construction.
- The CEOR unit is expected to be converted from a vessel to
meet Petronas’ initial target start-up in late 2013. This will be Malaysia’s
first floating CEOR solution, which will be equipped with 15 days storage to
inject up to 150,000 barrels per day of water. Water Standard and Malaysia’s
MMC Oil & Gas Engineering carried out the basic engineering studies for the
Angsi CEOR.
- MISC and SapuraKencana are understood to be in talks over
a proposed joint venture to own and operate the CEOR vessel. This happened
after Petronas commenced direct negotiations with its vessel-owning arm MISC,
on supply of the vessel. Petronas has stipulated a fixed five-year lease plus a
requirement for the CEOR floater to be able to continue services for another 10
years. Should a deal materialise, MISC stands to clinch a contract for the
engineering, procurement and construction (EPC), plus operations and
maintenance, of the Angsi CEOR vessel.
- MISC has in turn, commenced discussions with SapuraKencana
on a tie-up for the Angsi CEOR project. This involves a joint venture with
SapuraKencana undertaking the fabrication of the topsides. MISC is likely to
seek a role in the operations and maintenance of the vessel while its
fabrication subsidiary, MMHE, has been tipped to undertake the hull work for
the Angsi vessel.
- As mentioned in our earlier reports, we are not surprised
that MMHE and SapuraKencana have emerged as the front-runners for the Angsi
project given that these two are currently the leading major yards in the
country. But this development will be mildly negative for BumiArmada, which was
earlier angling for this project under its oilfield services segment. But the
group is still targeting two floating, production, storage and offloading (FPSO)
contracts annually, with five projects currently up for tender.
- We believe the Angsi CEOR is only the tip of the iceberg
as massive enhanced/improved oil recovery and marginal developments are
underway with the most immediate rollout being the RM15bil fast-tracked North
Malay Basin gas clusters as well as other enhanced oil recovery jobs in East
Malaysia. News flow momentum is also gaining traction for Petronas Carigali’s and
Murphy Oil’s floating liquefied natural gas vessels for the Kanowit and Rotan
fields, respectively. Additionally, France-based Total and Petronas Carigali
are currently drilling landmark
exploration wells into deep high-pressure, high temperature reservoirs such as
the Saujana, Restu and SK 317B-1X fields, off Peninsula Malaysia. These
uncharted developments are likely to require more complex engineering
capabilities
- Against the backdrop of escalating requirements for more
specialised and higher scale engineering capabilities, we maintain MMHE as our
top pick in the sector as it is the only domestic yard which has a proven track
record in complex engineering platforms with deepwater capabilities. We also retain our OVERWEIGHT view on the
sector with our other BUY calls being Petronas Gas, SapuraKencana, Bumi Armada
and Dialog Group.
Source: AmeSecurities
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