Cover Story: Oil & Gas Conundrum

February 4, 2018

Dateline 2017-12-21, The Edge:

MALAYSIA-based oil and gas outfit De Raj Group AG has just received the requisite approvals for a listing on the Frankfurt Stock Exchange in Germany.

When asked why the company opted for a listing so far from home, CEO Vaidyanthan Nateshan says things are difficult in Malaysia, referring particularly to the debt market.

“It’s not the equity market that is tough, it’s the debt market. We are well capitalised and need financing for executing projects. The Malaysian debt market is dead … asset cover here is 2.5 to 3 times while in Europe, it is 0.8 times,” he tells The Edge in a short phone conversation last Friday.

“We have bankers telling us they won’t touch oil and gas companies with a barge pole, so I’m taking the company to Europe.”

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Banks continue to provide financing to viable businesses

February 1, 2018

Dateline 2017-12-12, FMT:

Banks will continue to provide access to financing for viable businesses, including the oil & gas (O&G) sector.

The Association of Banks in Malaysia (ABM), in a statement today, said this in response to a report on Sunday in Edge Malaysia titled “Oil and Gas Conundrum”.

ABM, which comprises 27 banks, said all O&G cases have been given due consideration.

“Credit evaluation is conducted on O&G companies similar to loan applications by any other industries.

“Feasibility studies, such as stress test analyses, due diligence and credit evaluation, are conducted as part of the standard assessment procedure to determine eligibility and viability.

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Malaysia’s O&G players are getting more jobs, but not the financing they need

January 30, 2018

Are banks still giving O&G workers personal loans? Hello, BSN? And how is an AG company, a Malaysian company?

Dateline 2017-12-09, The Edge:

Malaysia-based oil and gas (O&G) outfit De Raj Group AG just got the requisite approvals for a listing on the Frankfurt Stock Exchange in Germany — far from home but pushed to do so because banks are just not touching oil and gas companies, according to its CEO Vaidyanthan Nateshan.

“We have bankers telling us they won’t touch oil and gas companies with a barge pole, so I’m taking the company to Europe,” he was quoted as saying in The Edge Malaysia‘s cover story for the week of Dec 11-Dec 17, ‘Oil & gas conundrum’, by senior news editor Jose Barrock.

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Malaysia’s Hibiscus To Buy Shell’s 50% Stake In North Sabah Production Contract

January 29, 2018

Dateline 2017-12-05, Nikkei Asian Review:

Hibiscus Petroleum, a Malaysian petroleum exploration and production firm, said Tuesday it plans to buy Shell’s 50% stake in the 2011 North Sabah enhanced oil recovery production-sharing contract.

The company has secured unconditional consent from the national oil-and-gas company Petronas for the proposed acquisition of the North Sabah contract from the Dutch oil major, Hibiscus said in an exchange filing. The contract provides production rights until 2040, the company said.

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‘Recovery in O&G industry hindered by low capex’

January 20, 2018

Dateline 2017-11-29, The Edge:

UMW Oil & Gas Corp Bhd (UMW-OG), a stock that has fallen out of favour after the meltdown of crude prices in late 2014, beat estimates with its first-ever profitable quarter in two years in the third quarter ended Sept 30, 2017.

The performance brought fresh optimism about earnings recovery for other upstream players. But is the long wait finally over? Analysts are still sceptical, with no consistent work order flow in the local upstream segment with national oil firm Petroliam Nasional Bhd (Petronas) sticking to upstream capital expenditure (capex) cuts.

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Kuantan Port to house RM5.1 billion oil refinery complex

January 7, 2018

Dateline 2017-11-13, The Edge:

Kuantan Port Consortium Sdn Bhd and NewOcean Energy (Malaysia) Sdn Bhd, a unit of energy supplier Hong Kong-listed NewOcean Energy Holdings Ltd, have signed land sublease and terminalling agreements for the development of NewOcean’s oil refinery complex in Kuantan Port.

The project, estimated to cost approximately RM5.1 billion, comprises an oil refinery with an annual production capacity of 3.5 million tonnes, a tank farm serving as a storage depot for entreport trade purposes and a blending plant for various grade of petroleum products.

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RM4.5b Trans Sabah Gas Pipeline to be funded with loan from China, guaranteed by Malaysia

December 23, 2017

Why not just say, paid by Malaysia?

Dateline 2017-11-08, The Edge:

The Trans Sabah Gas Pipeline (TSGP) will be funded by a soft loan of RM4.53 billion from the Export and Import (EXIM) Bank of China and guaranteed by the Malaysian government, said Minister in the Prime Minister’s Department, Datuk Seri Abdul Rahman Dahlan.

The RM4.53 billion constitutes the total cost of the project, Rahman Dahlan said in a statement today, refuting an allegation on social media that Prime Minister Datuk Seri Najib Razak had collateralised oil and gas blocks off Sabah to China for a loan of RM100 billion.

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Analysts: No major changes from Petronas’ cautious approach

December 2, 2017

Dateline 2017-10-24, Borneo Post Online:

Analysts expect no significant changes from Petroliam Nasional Bhd’s (Petronas) cautious approach to upstream exploration and development expenditures .

According to AmInvestment Bank Bhd (AmInvestment Bank), persistently low asset utilisation levels are anticipated for the medium term in the oil and gas sector as the research firm did not expect any significant change in Petronas’ cautious approach to upstream exploration and development expenditures.

AmInvestment Bank noted that for the second quarter of 2017 (2Q17) to date, contract awards have risen by 15 per cent quarter on quarter (q-o-q) RM2.2 billion largely due to the lumpy award of the RM1 billion Bokor central processing platform project to Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE).

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RM6b Petronas deals unlikely to be catalysts for oil & gas sector: AmBank Research

November 9, 2017

Pop quiz: what catalysts do you know?

Dateline 2017-09-18, The Sun:

AmBank Research is of view that a reported RM6 billion maintenance, construction and modification (MCM) contracts rollout by Petroliam Nasional Bhd (Petronas) is unlikely to work as a catalyst for the oil and gas sector, maintaining the sector’s neutral call.

It was previously reported that, Petronas has conducted a pre-award meeting for the delayed contracts which were expected out in the second quarter of the year.

“Petronas’ recent focus on reshuffling its upstream portfolio amid a review of its capital and operating expenditure against the backdrop of a lower crude oil price environment has negatively impacted the local services sector. It is uncertain whether Petronas would split the MCM jobs into six packages for a 5-year duration as earlier envisaged,” AmBank said.

Essentially, these new contracts, which are a relief for the sector, are to replace the existing service jobs currently held by the incumbents. These could offer a respite for vessel utilisation rates. However, in terms of value accretion, we do not expect any significant increase in day rates, given the currently depressed offshore market,” it added.

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Malaysia on target to become regional oil and gas hub: MPRC

October 22, 2017

Dateline 2017-09-11, NST:

Malaysia is set to become the oil and gas hub by year 2020 and is well on target towards becoming a regional hub within three years.

Malaysian Petroleum Resources Corporation (MPRC) said the country, deemed as one of the fastest growing economies in the Asia Pacific region and home to market-oriented economy and pro-business government policies, is also aims to ensure its local players to become regional players in the sector.

MPRC chief executive officer Datuk Shahrol Halmi said it is important to have Malaysia’s reputation at play to become a hub, and not just beating the drum claiming to be one.

“We also have strategies to ensure that we get there, and working hard to make sure it happens.

“It is crucial to attract the multinational companies (MNCs) to come to Malaysia and ensure that they make Malaysia as a regional base for the region.

“A hub is not just a hub. It brings other benefits to the Malaysian economy such as technology transfers, job opportunities and high-paying jobs as well,” Shahrol said in an exclusive interview with NST Business recently.

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