UMNO Putra Second Generation Continues to Grab

February 1 2011

Petronas awards US$800mil first ever risk service contract

PETALING JAYA: Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd, together with Petrofac Energy Developments Sdn Bhd (PED), have bagged an estimated US$800mil contract from Petroliam Nasional Bhd to jointly develop and operate an oil and gas field in Berantai.

This would mark the first time the national oil company has awarded a risk-service contract (RSC) (as opposed to a production-sharing contract) for the development and production of petroleum resources in the country.

The joint operating agreement (JOA) will be 50% owned and led by PED, part of London-listed Petrofac Ltd Group of Companies, while Kencana's wholly-owned Kencana Energy Sdn Bhd and SapuraCrest's wholly-owned Sapura Energy Ventures Sdn Bhd would each hold a 25% interest, said both companies in an announcement to Bursa Malaysia.

The operating parties will be jointly responsible to provide field development plan, execute and complete the plan including its funding and carry out production of petroleum resources from the Berantai field over the course of the RSC, which is for a nine-year period starting from Jan 31. The project is targeting first gas by end of December 2011 with the first development phase of 18 wells expected to be completed by end-2012.

“This is a very fast-track project to be delivered by year-end (for the first gas production). It's not a normal timeline but with the concerted effort of all the three parties ... (we are quite confident of meeting the timeline).

“We do not own the concession but we are proud Petronas has given Malaysian companies a chance to participate and take on more risks. We estimate the development cost to be a minimum US$800mil. It all depends on the first phase of production ... there may be a second phase, so the expenditure could go up,” Kencana's group chief executive officer Datuk Mokhzani Mahathir told StarBiz.

SapuraCrest executive vice-chairman Datuk Shahril Shamsuddin said: “We need to work very fast as the timeframe is tight. But it's not unachievable. We have allocated resources to ensure this project is completed on time. The whole idea is to bring local companies into the value chain.

“There are no freebies in this. The risks are real and it's a serious project.”

The rights and liabilities of each party will be in proportion to their respective interest in the JOA. Kencana Energy and Sapura Energy's contribution into the development cost would be approximately US$200mil each. Kencana Petroleum said it will fund this via internal funds, borrowings and proceeds from equity/debt fund raising exercise.

As at end-July 2010, Kencana Petroleum Group's borrowings stood at RM225.9mil. Assuming that 50% of Kencana Energy's cost to develop the project is funded through borrowings, the total borrowing of Kencana Petroleum Group will increase by RM310mil to RM535.9mil.

Accordingly, the company said its gearing, after adjusting for the private placement of 166.70 million new shares, would increase from 0.30 times to 0.47 times.
Sapura, for its part, said it would fund the job through a combination of internal funds and external borrowings.

The operating team undertaking the project shall comprise personnel from each of the operating parties.

“Overall supervision and direction of the operations are vested in a management committee consisting of representatives from each of the operating parties. Each of the operating parties shall have the right to deploy works and services to the project,” said the companies.

Kencana said the contract presented the opportunity to expand its service offering within the upstream oil and gas services and move up the value chain as a field developer and operator while extending the group's earning visibility.

For SapuraCrest, it said the contract would mark a “step change in ascending the oil and gas value chain and developing new competencies in new areas of the oil and gas industry.”

The project is expected to improve both companies' net asset, net asset per share and earnings per share over the duration of the contract.

The companies pointed out that the risk factors included execution risks such as availability of technical expertise, skilled manpower, materials, changes in prices of materials, and changes in political, economic and regulatory conditions.

The Berantai field is located about 150 km offshore Terengganu. The development of the Berantai field will involve the provision of one well-head platform with 18 wells together with related pipeline linking it to another existing platform and a provision of a floating production, storage and off-loading vessel. A second well-head platform is expected to be installed in a subsequent phase.
*************************************************************************************
March 25 2010

Petronas denies oil field find

KUALA LUMPUR: Petronas has strongly denied reports that it has made a big discovery of an oil field which is said to be one of the biggest in the world.

“We adopt a well-established reporting process whereby we make progress report to the board and stake holders as well as to the Government.

“There is no way we are hiding any information with regards to the discovery as we have no intention to hide any news,” exploration and production business vice-president Ramlan A Malek told a media briefing yesterday.

He added that an announcement would have already been made if the company had found a big oil field.

Former Petronas chairman Tengku Razaleigh Hamzah had reportedly claimed that Petronas had discovered a huge tract of oil reserve that could significantly reduce oil prices.
Razaleigh said it was the prerogative of the Prime Minister to give Petronas the green light to start extracting oil from newly-discovered fields.

To this, Ramlan said although the company did not rule out the possibility of discovering a huge oil field in the future, it was unlikely to find such an oil field in the country.

“At this moment, there are no announcements of huge oil field discovery in this region. The most recent discovery was in Brazil of a huge oil field that can produce about five to eight billion barrels,” he said.

He added that Malaysia’s current oil production of about 600,000 barrels per day was just a fraction of the total world oil production and this would unlikely affect global crude oil prices.

For future plans, Ramlan said Petronas would venture into deep-water reservoir exploration in the country.

“This will involve a huge amount of investment as we are dealing with quite a challenging environment. An average investment to drill in shallow water is about US$10mil (RM33.2mil) but for deepwater it can go up to as high as US$100mil (RM333.2mil),” he said.

Ramlan said Petronas would continue to drill an average of 30 wells per year in Sabah, Terengganu and Sarawak.

The country’s oil reserves can last until 2017 if there is no new discovery.
*************************************************************************************
March 20 2010

Tengku Razaleigh makes a claim

Gua Musang MP Tengku Razaleigh Hamzah today claimed he was told that the national oil company, Petronas, has made a “very big discovery of an oil field, probably the biggest in the world”.

This discovery, he asserted, meant that Petronas would have a very good future. However, the founding chairman of Petronas declined to go into details.

tengku razaleigh speech 110310 02"I was told... no announcement (was) made (about) a very big discovery of oil. I was told there was a big discovery... which could depress the oil price. I was also told it is the biggest oil field or oil well (not only) in this part of world but also in any part of the world.

"I cannot disclose the (location)... I cannot tell you," he said when asked repeatedly about the discovery, which he mentioned in his talk titled, 'Conversations on the Constitution and Oil Royalty - A Constitutional Right?' organised by the Bar Council today.

He also did not identify who had told him of the developments in Petronas.

Razaleigh had recently spoken against the federal government's stand that the Kelantan government had no right to demand royalty for the oil extracted from the state's offshore area.

Razaleigh, a former finance minister, said a large oil find means Petronas had a good future but added, it must be properly managed.

"I hope Petronas will be managed well... no leakages, so that money will come back to the people," he added.
*************************************************************************************
Tengku Razaleigh announced that an oil field was found in Malaysia and probably the biggest in the world on March 21st 2010. Four days later Petronas denied such rumour.

But Tengku Razaleigh is too dignified to be a rumour monger so bingo 11 months later Petronas now come out with the news of the oil field discovery in Sarawak.

Why 11 months later? Like every business in Malaysia that rings Easy Ringgit, the division of spoils must be agreeable by the UMNO elites on who eats first and how much per bite.

So who are the priviledge ones. They are none other than : Taib, Mahathir, Ananda, Rosmah and Daim. But since they are old farts the second generations have been groomed to continue to grab on their behalf.