Analysts expect more jobs to flow in after Petronas Carigali Sdn Bhd awarded the SOGT job worth US$766 million (RM2.41 billion) to the Naim Holdings Bhd and Samsung Engineering Co Ltd consortium earlier this month.
It is understood that Naim and Samsung have beaten other bidders that included Kencana Petroleum Bhd and Dialog Group Bhd.
The job, which entails the engineering, procurement, construction and commissioning (EPCC) works at SOGT, was secured via a competitive bidding put jointly by Naim and Samsung. Excluding the SOGT job, Naim’s current order book stands at RM1.85 billion.
In a recent note, RHB Research said contract awards from the SOGT were expected to gain momentum going into the tail end of 2010.
It is learnt that the SOGT project was initially expected to cost about RM1.5 billion, but changes in the engineering design and equipment specifications delayed the awards until now and possibly doubling the cost of the project.
RHB said the next awards would likely be for brown field maintenance. It cited Kencana, Dayang Enterprise Holdings Bhd, SapuraCrest Petroleum Bhd and Petra Energy Bhd as possible contenders and beneficiaries of the SOGT’s future jobs.
RHB said while the securing of contracts boded well for the sector, it expected the new wins to only impact companies’ earnings in FY2011.
However, in the near term, it maintains its view that the direction of crude oil prices remains unconvincing, while trading sentiment may drive stocks.
Therefore, the research firm maintained its neutral call on the oil and gas sector for now, with its top pick being Dialog.
The SOGT comprises two components — an onshore gas terminal and a gas compression station. The terminal will be designed to receive dehydrated crude production from Gumusut, Kakap and Malikai. It will also receive gas from the Kinabalu and Kebabangan fields.
The crude gas will be processed and further dehydrated at the terminal before it is stored for export. It will then be delivered to a liquefied natural gas plant via the Sabah-Sarawak Gas Pipeline (SSGP).
It is worth noting that in 2008, Dialog clinched the RM1.6 billion EPCC job for the SSGP project while Wah Seong Corp Bhd won the pipe-coating portion of the project worth about RM390 million.
According to recent OSK Research notes, although the SOGT was initially proposed in 2007, it was pulled back due to “technical reasons”.
Located in Kimanis, the SOGT will serve as a hub for crude oil and natural gas from the offshore fields of Sabah and is tentatively scheduled for completion by 2013.
The 250-acre SOGT will have capacity for 300,000 barrels of crude oil per day and one billion standard cubic feet of gas per day.
Given the scale of the project, it is not surprising that analysts consider SOGT as one of the main catalysts for the oil and gas sector moving forward.
According to a report by CIMB Research in July, apart from the SOGT, other major contracts up for grabs were the RM11 billion worth of jobs in the development of deepwater fields, US$2.1 billion (RM6.7 billion) in the rejuvenation of seven fields including Tapis, and RM1.5 billion in offshore maintenance works.
This article appeared in The Edge Financial Daily, September 8 2010.
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