- Sweden-based Lundin Oil is
expected develop the first offshore oil project in Pahang with production
scheduled for 4Q2014. Prime Minister Datuk Seri Najib Razak said the state’s 5%
oil royalty is expected to amount to RM100mil annually with production expected
of between 17,500 and 20,000 barrels per day (bpd).
- The
Bertam oil field at Block PM 307, at the shallow water depth of 76 metres and
160km off the shore of Kuantan in Peninsular Malaysia, has reserves of 64mil
barrels (See location map in Chart 1).
Lundin Oil has a 75% stake in the production-sharing contract, while Petronas
holds the balance 25%. This finding is significant as there has never been a discovery
of sufficient size for commercial development in the Penyu Basin, at the
southern area of the Malay Basin.
- Lundin’s
exploratory drilling started in 2011 which resulted in 3 discoveries and one
successful appraisal well in Bertam. This Bertam project is clearly a
fast-track development, as production is expected slightly more than a year
after the completion of the commercial and technical feasibility studies by
2Q2013.
- Given
that this will be the first such project in Pahang and that there is likely to
be no direct pipeline network nearby, we expect Lundin to employ a floating
production storage offloading vessel to process and help in the transportation
of the oil. Local companies which are expected to be bidding to provide these
services are MISC, BumiArmada, TH Heavy Engineering and M3Nergy.
- But we
also expect fabrication contracts to build wellhead platforms to be awarded by
mid-2013. The usual players are SapuraKencana Petroleum and Malaysia Marine and
Heavy Engineering Holdings. But other domestic players such as TH Heavy
Engineering and Boustead Heavy Industries Corp may also enter the fray.
- These
developments are positive for the industry in the longer term. But while the
capex upward trend is still intact in the immediate term, fabrication contracts
for new offshore platform projects are temporarily slowing down due to project complexities, re-tendering
exercises, re-engineering and deferrals. We note that large central processing
platform awards for the North Malay Basin Phase 2, as well as the Bokor, Dulang
and Semarang fields could slip into early next year from earlier expectations
of this year. Hence, the momentum of new contract rollouts has shifted from
pure fabrication to offshore installation works in the sector’s value chain
over the next six months.
- But the
hook-up, commissioning and maintenance works, which include the replacement of
expiring long-term contracts, are likely to materialise towards the end of this
year. Petronas and its production-sharing contractors are currently holding an open
Pan-Malaysian tender for hook-up, construction and commissioning (HUCC) works
potentially worth RM8bil-RM10bil, with interested bidders including
SapuraKencana Petroleum, Dayang Enterprise, Petra Energy, and possibly,
Shapadu.
- We
maintain our Neutral stance on the sector with our top BUYs being Dialog Group
and Petronas Gas, which are expected to be re-rated from the multiple tank
terminal and LNG regassification projects in the pipeline.
Source: AmeSecurities
No comments:
Post a Comment