Tuesday, 5 February 2013

Oil & Gas Sector - Oil & Gas Sector : Pan-Malaysian umbrella T&I tender on the way


- Upstream reported that Petroliam Nasional (Petronas) is lining up a list of bidders for a multi-year umbrella transport and installation (T&I) contract covering oil and gas field developments throughout Malaysia. Petronas will round up the requirements from production sharing contract holders in the coming weeks and divide the workload into heavylift plus pipelay and pipelay packages.

- As with similar contracts handed out in a 2009 round, the fresh Pan Malaysia tender is expected to be broken down into as many as five packages. The contracts on offer will run from 2014 to the end of 2015 with potential options for extensions. Petronas has already sounded out several vessel operators on their interest before issuing the formal tender documents, now projected to be issued towards late January or early February this year.

- Malaysian home-grown oilfield services providers SapuraKencana Petroleum and Puncak Niaga’s wholly-owned Global Offshore Malaysia are likely contenders, having won the 2009 umbrella contracts that are due to expire in 2014. Petronaslicensed players including Target Energy, Alam Maritim and the Malaysian unit of France’s Technip would also be expected to join the fray. US-based McDermott International and Saipem are also expected to be invited back to the 2013 tender round.

- Petronas has also widened its bid by inviting international contractors who are new to Malaysia’s oil & gas industry, including China’s Offshore Oil Engineering Corporation, National Petroleum Construction Company of Abu Dhabi and Seaway Heavylift. But foreign contractors interested to tender may have to link up with Malaysian partners in order to meet local content requirements, with Petronas imposing a minimum 30% ownership on the vessels proposed for the 2009 umbrella tender.

- The work scope for the umbrella tender is not yet finalised, but there could be as many as 12 central processing platforms and 60 wellhead platforms in the pipeline over the next three years in Malaysia. Petronas had initially tendered out five packages in 2009, but these were subsequently merged into 4, with 3 being awarded to SapuraCrest Petroleum (which later merged into SapuraKencana Petroleum) and the fourth to Global Offshore Malaysia. With the value of the earlier umbrella T&I contract, which had a 3-year term plus two annual extensions, estimated at around RM9bil, we expect the new concession to be valued at over RM11bil.  

- The award of this umbrella T&I contract is likely to materialise in 2H2013. But the first umbrella contract expected this year will be the RM8bil-RM10bil umbrella hook-up & commissioning job, which was originally expected late last year, but will be awarded later by end-1Q2013 and mid-2013. Dayang Enterprise, Petra Energy, SapuraKencana, Coral Alliance and other smaller unlisted players are bidding for this contract. Additionally, a major fabrication contract that could be officially awarded soon is likely to be the over RM1bil Malikai tension leg platform production facility for the JV between Malaysia Marine & Heavy Engineering Holdings and Technip. 

- In 2H2013, the rollout of the second phase of the North Malay basin gas cluster project, which will involve a large central processing platform at the Bergading field and multiple satellite well-head platforms, could further sustain the re-rating momentum. This will be supported by further newsflows at the RM60bil RAPID project in Pengerang and tank terminal projects in Southern Johor together with massive gas cluster upstream projects off Sabah and Sarawak which are tied in to the expansion of the Bintulu LNG complex in 2015. We maintain our OVERWEIGHT call on the sector with BUY calls being SapuraKencana Petroleum, Bumi Armada, Dialog Group and Alam Maritim Resources.

Source: AmeSecurities

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