Boost for O&G sector

ETP projects will further lift the industry this year and next

KUALA LUMPUR: More newsflow is expected from the oil and gas (O&G) industry which is likely to continue its outperformance in the calendar years 2012 and 2013 on sustained high oil prices.

CIMB's O&G sector analyst Norziana Mohd Inon said in a report that the trickle-on effects of the Economic Transformation Programme (ETP), which was announced in 2010, was kicking in now and would benefit the O&G sector the most.

“The unveiling of the ETP has provided a substantial boost to the oil & gas sector, which has been identified as one of the 12 national key economic areas. Commanding 52% of RM170bil committed investments so far, the O&G sector is the single largest beneficiary of the ETP,” Norziana wrote in her report.

The O&G sector is also expected to see an increase in activities this year after the implementation of a new tax scheme by the Government with a reduction of tax rate to 25% from 38% and a waiver of export duty on oil produced and exported from the marginal field development, the CIMB report said.

“Petronas has since increased its exploration activities with local and overseas partners. Billions of dollars are being committed to new projects as the national oil company aims to exploit new reserves and strives to get the most from mature and marginal field assets,” CIMB said.

Meanwhile, Maybank Investment Bank's O&G analyst Wong Chew Hann expects some field developments will be rolled out this year and that these projects are likely from the rejuvenation and enhanced oil recovery (EOR), early production system (EPS) and marginal-to-shallow water field projects.

These projects were Petronas Carigali's Angsi EOR project, Shell's St Joseph EOR project, Petronas Carigali's Tanjung Baram EPS project, Hess' Belud - Sabah's shallow water field project and the Hess' Kamelia field.

Another factor to watch for was sustained high oil prices which encourages investments into the sector by Petronas and the major oil giants.

CIMB opines that US$60 per barrel of oil is the required level of prices for investments into the sector to be sustainable.

CIMB also expects more marginal field contracts to be awarded this year and more deepwater fields to come onstream.

According to Norziana, seven companies were expected to report all-time high net profits - Bumi Armada Bhd, Dialog Group Bhd, Kencana Petroleum Bhd, Petronas Dagangan Bhd, Sapuracrest Petroleum Bhd and Wah Seong Corporation Bhd.

Wong said potential jobs awarded by Petroliam Nasional Bhd (Petronas) and Shell were likely to benefit Bumi Armada, M3Nergy Bhd, MISC Bhd, Ramunia Holdings Bhd, Tanjung Offshore Bhd and Deleum Bhd.

Norziana pointed out that Dialog was presently the biggest beneficiary of the ETP announced so far, after clinching the Pengerang and Balai projects in June and August 2011 respectively.


Boost for O&G sector, thestar.com.my