Friday 16 November 2012

Oil & Gas Sector - 2nd Phase of North Malay Basin award in 3Q13 NEUTRAL


- Upstream reported that US independent Hess has begun the tender process for the first of three contracts tied to the subsequent phased development of nine gas and condensate fields across three offshore blocks in the North Malay basin off Peninsular Malaysia.The nine fields include the Bergading field in Block PM 325, the Bunga Dahlia and Teratai discoveries in Block PM 302, and six other finds in Block PM 301 - Gajah, Melati, Kamelia, Zetung, Anggerik and Kesumba.

- Hess has pushed ahead with a revised, phased, multi-platform development for Bergading to host a wellhead platform and a central processing platform (CPP) tied in to up to 10 other satellite structures.The first phase  involves fabrication and installation of Bergading’s host facilities and three wellhead platforms at the Zetung, Anggerik and Kesumba fields (ZAK). 

- Hess has lined up three separate engineering, procurement, construction, installation and commissioning contracts tied to the this phase covering Bergarding’s CPP and wellhead platform, in-field and export lines connected to ZAK. Invitations to tender are understood to have been issued to as many as 100 Petronas-licensed engineering outfits, yard operators and transport and installation contractors to register their interest in the ZAK tender by the end of this week. A separate design competition is likely to be called for the Bergading CPP later this year. But unlike the ZAK tender, which has been limited to only Petronaslicensed players, the Bergading tender is expected to be extended to international contractors. We expect local bidders for the first of the three initial EPCIC contracts, scheduled to be awarded in 3Q2013, to be SapuraKencana Petroleum, Malaysia Marine & Heavy Engineering and TH Heavy Engineering.

- Offshore installation is targeted from 4Q2014, suggesting production start-up could be in 1H2015.The multi-field project was originally planned to focus on a CPP at the Kamelia field in Block PM 301.That proposal evolved into the current multi-plaform scheme calling for the CPP to be relocated to Bergading plus a early production system — comprising Ezra’s Lewek Arunothai floating production, storage and offloading vessel (awarded via a 40%-owned associate of Perisai Petroleum) and a SapuraKencana-built wellhead platform — to bring Kamelia on stream around mid-2013. The Kamelia EPS is projected to produce 40 million cubic feet per day of gas.

- Hess, which earmarked US$400mil annually from 2013 through 2015 for the North Malay basin development, had  previously flagged a peak production rate of 125 MMcfd when the full field development is complete in 2015, although the design capacity for the Bergading CPP is understood to be around 450 MMcfd. Another US$250mil has already been set aside for the Kamelia early production system, now expected to come on stream by mid-2013. Hess and Petronas Carigali are equal sharing partners in the North Malay basin project.

- These developments reaffirm our views that 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. 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 SapuraKencana and Dialog Group.

Source: AmeSecurities 

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