By Lawrence Yong
Malaysia’s oil and gas service contracts awarded for January to May were 49% higher than the whole of 2012 at RM16.3 billion — with about RM8 billion awarded in May alone — and there will be more to come, BIMB Securities Research said in a sector outlook report.
BIMB said that this was positive for Bursa Malaysia’s oil and gas stocks, which should perform better than the general market. BIMB recommended that investors buy shares in Dayang Enterprise Bhd, Uzma Bhd and Bumi Armada Bhd. Shares of Dayang and Uzma have already gained 110% and 131% for the year-to-date.
“We believe May which saw the award of the Pan Malaysia TSM-HUC (topside maintenance/hook-up commissioning) contract is the peak month (circa RM8 billion) for 2013 in terms of orderbook replenishment, bringing total contracts awarded YTD (year-to-date) to RM16.3 billion, 49% higher than the RM10.9 billion for the whole of 2012,” BIMB said.
It also noted positively that Malaysian conglomerate UMW Group is set to list its oil drilling equipment division, UMW OG, (due by year end) as drill demand is currently experiencing a bull run on high charter rates.
“With all of its four rigs chartered out on long-term contracts, we see room for UMW OG to further expand its asset base, a view that is supported by robust industry activities,” BIMB said.
In a summary table, BIMB listed the companies which received job contracts in May as follows: Dayang (RM3.8 billion), Alam Maritim (RM38 million), KNM (RM307 million), Petra Energy (RM2.5 billion), Perdana Petroleum (RM705 million) and SapuraKencana Petroleum (RM560 million) and Scomi Energy (RM98.5 million).
Looking ahead, BIMB said they expected more “sizeable fabrication contracts and RSCs.” But this may only crystalize towards the end of the year at the earliest.
Jobs to be awarded may include those from Australia’s AWE Ltd, which has shortlisted Bumi Armada, BW Offshore and Emas Offshore to provide a heavy oil floating, production, storage and offloading (FPSO) unit for the Ande Ande Lumut project.
Malaysia Marine and Heavy Engineering (MMHE) and SapuraKencana Petroleum were seen to be frontrunners for several fabrication jobs along with other international players as follows:
Hess Corp was due to award contracts for the massive North Malay Basin gas project. The pre-qualification bid for about RM1 billion job has been extended to 12 fabrication yards, including seven local Petronas licence holders and is targeted to close in May, with contract awards expected in 1H14.
Also due from Petronas are awards for the platform fabrication works of the Baronia (Baram Delta) and Sepat gas field projects.
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