Potential beneficiaries

THE plan to develop the country's marginal oil fields to ramp up production, further motivated by rising oil prices, has gained momentum. While foreign players will continue to play a significant role in the development of these fields, one key aspect is that at least 30% equity participation in the consortium involve local players.

There are 106 marginal oilfields that collectively contain 580 million barrels of oil equivalent (BOE) in the country. Petronas has plans to develop 25%, or 27, of the marginal fields which would be grouped together in clusters of 4-5 fields each for development.

Industry watchers say there are about 15 local players involved in various aspects of the oil and gas industry. But not all of them will get a chance to play the major role in this new drill; those with sound financial muscle or capabilities to raise adequate funding naturally stand a better chance. But for those who do not get a slice of the equity action, an industry watcher says there still may be plenty of jobs to go around in terms of support services for the development of the marginal fields.

These are some of the potential beneficiaries who are likely to be approached by interested foreign players to develop the marginal oil fields:

Dialog Group Bhd

It is an integrated specialist technical services provider in the O&G and petrochemical industry with market capitalisation of about RM4.4bil. It is widely speculated that Dialog stands a good chance to be involved in one of the subsequent marginal fields development.

“Dialog has a high probability to bag the contract due to its experience and financial strength. But, at this point we can only guess whether it has already been approached by a foreign D&P company,” says an analyst.

As of Dec 31, 2010, Dialog's cash and cash equivalents stood at RM280.6mil.

UMW Oil & Gas Bhd

UMW Oil & Gas Bhd is a company under the UMW Group that makes oil tubular goods and line pipes, O&G exploration operations, fabrication of O&G structures, provision of oilfield services and supply of oilfield products.

According to a news report earlier this month quoting its parent company UMW Holdings Bhd managing director Datuk Syed Hisham Syed Wazir, the oil and gas division may be restructured while the listing plan of the subsidiary is still on the card.

Sime Engineering Sdn Bhd

Sime Engineering Sdn Bhd, a wholly owned subsidiary of Sime Darby Bhd, already has experience in works related to marginal fields. It handles marginal field development in the Malong, Sotong and Anding field development project in offshore Terengganu.

In the area of sub-sea development, it has the capability to develop and complete subsystems for the development of satellite fields.

Malaysia Marine and Heavy Engineering Holdings Bhd

Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) is an indirect subsidiary of Petronas.

MMHE is a 66.5%-owned unit of MISC Bhd, which in turn is 62.4% controlled by Petronas.

MMHE offers a wide spectrum of engineering and construction, marine conversion and marine repair services particularly for the O&G sector.

It was reported that the company may team up with its strategic shareholder Technip, Europe's second-largest oilfield services company, to bid for the marginal field job.

As at Sept 30, 2010 MMHE cash and cash equivalents stood at RM1.1bil.

KNM Group Bhd

KNM's business currently revolves around process equipment manufacturing and turnkey systems provider for the oil, gas, petrochemicals, minerals, power, environmental, renewable energy and biotechnology.

KNM's RM2.2bil recent windfall power contract brought total jobs secured in 2010 to RM4.4b.

Perisai Petroleum Teknologi Bhd

Perisai Petroleum is a technology provider that has more than 100 patents, granted or pending, owned directly or via licensing in a number of countries worldwide, of which 30 are co-owned with Petronas.

Perisai provides proprietary solutions for topsides to subsea, from greenfields to abandonment.

TA Securities research head Kaladher Govindan says Perisai and its other local counterparts like Petra Perdana, Alam Maritim and Tanjung Offshore are likely to get involved in the marginal fields.

“To what extent, we still have to wait and see but the development of the marginal fields will surely need supply vessels service which is rendered by Perisai,” he says.

Alam Maritim Resources Bhd & Tanjung Offshore Bhd

Although these two companies may not be strong contenders as development partners for the marginal fields, their strengths in oil and gas support services put them as the frontrunners to bag some related contracts.

Alam Maritim says it will focus on expanding its offshore installation construction (OIC) division this year as it has just taken delivery of a pipe-lay barge and this, it adds, will be the main asset to support any OIC contracts secured by the group.

Tanjung Offshore said recently that it is eyeing several small field developments. - By SHARIDAN M.ALI, sharidan@thestar.com.my