Oil and gas sector
Maintain overweight: Petroliam Nasional Bhd’s (Petronas) domestic activities are picking up, from first production systems to rejuvenation jobs. Platforms, chemicals and floating solutions are the essentials for development. Jobs will likely be spread out favouring a large group of local service providers such as Bumi Armada Bhd, M3Nergy Bhd, MISC Bhd, Ramunia Holdings Bhd, Tanjung Offshore Bhd and Deleum Bhd. We remain “overweight” on the sector.
Our recent fact-finding “coffee talk” round with oil and gas service providers revealed that a series of field developments will be rolled out this year. We have identified five projects revolving around the rejuvenation/enhanced oil recovery (EOR), early production system (EPS) and marginal to shallow water field projects. They are: (i) Petronas Carigali’s Angsi (EOR project off Peninsular Malaysia); (ii) Shell’s St Joseph (EOR project offshore Sabah); (iii) Carigali’s Tanjung Baram EPS; (iv) Hess’ Belud (Sabah’s shallow water field project); and (v) Hess’ Kamelia field.
This is a fast-track project. Petronas has set a target to hit first oil production by June 2013. It requires a vessel-based sea-water reverse osmosis (SWRO) plant (chemical floating production, storage and offloading [FPSO]) with the capacity to desalinate 150,000bpd of seawater to increase oil recovery rates up to 20%. US-based Water Standard won the oilfield desalination project and will likely partner an FPSO operator for this job. Conversion is expected to take 16 months to complete.
This project is similar to the Angsi field but on a smaller scale (30,000bpd desalination injection capability), and will use chemical alkaline surfactant polymer (ASP). Shell recently issued an invitation-to-bid (ITB) for the engineering, procurement, construction and commissioning (EPCC) job. Unlike the Angsi field, the main asset (vessel) will be owned by Shell. The winner of the EPCC job will jointly undertake the front-end engineering design (FEED) studies, choose and convert the tanker and earn project management fees, similar to Bumi Armada’s Sepat project.
Hess’ Belud field plan, meanwhile, calls for an FPSO and wellhead platform for the oil and gas complex on Block SB302 with first oil or gas production by 2014. The Kamelia project too requires an FPSO. Separately, the Tanjung Baram EPS project, awarded to a foreign party, is running into complications and will likely miss the first oil production target (1,000 to 3,000bpd) set for July 2012. A re-tender could occur should the issue remain unresolved.
We think Bumi Armada is the likeliest partner for Water Standard for the Angsi project. This would involve a chemical FPSO. For St Joseph, we gather that five bidders were invited (M3Nergy, Bumi Armada, Deleum, BW Offshore Sdn Bhd and Tanjung). Bids will close in February with an announcement in three months. Elsewhere, our ground checks suggest that M3Nergy’s odds of securing an FPSO contract are high; we think it could be for the Belud project. Also, market talk suggests that the MISC-Ramunia partnership is a frontrunner for an FPSO for the Kamelia field. — Maybank IB Research, Jan 27
This article appeared in The Edge Financial Daily, January 30, 2012.
Maintain overweight: Petroliam Nasional Bhd’s (Petronas) domestic activities are picking up, from first production systems to rejuvenation jobs. Platforms, chemicals and floating solutions are the essentials for development. Jobs will likely be spread out favouring a large group of local service providers such as Bumi Armada Bhd, M3Nergy Bhd, MISC Bhd, Ramunia Holdings Bhd, Tanjung Offshore Bhd and Deleum Bhd. We remain “overweight” on the sector.
Our recent fact-finding “coffee talk” round with oil and gas service providers revealed that a series of field developments will be rolled out this year. We have identified five projects revolving around the rejuvenation/enhanced oil recovery (EOR), early production system (EPS) and marginal to shallow water field projects. They are: (i) Petronas Carigali’s Angsi (EOR project off Peninsular Malaysia); (ii) Shell’s St Joseph (EOR project offshore Sabah); (iii) Carigali’s Tanjung Baram EPS; (iv) Hess’ Belud (Sabah’s shallow water field project); and (v) Hess’ Kamelia field.
This is a fast-track project. Petronas has set a target to hit first oil production by June 2013. It requires a vessel-based sea-water reverse osmosis (SWRO) plant (chemical floating production, storage and offloading [FPSO]) with the capacity to desalinate 150,000bpd of seawater to increase oil recovery rates up to 20%. US-based Water Standard won the oilfield desalination project and will likely partner an FPSO operator for this job. Conversion is expected to take 16 months to complete.
This project is similar to the Angsi field but on a smaller scale (30,000bpd desalination injection capability), and will use chemical alkaline surfactant polymer (ASP). Shell recently issued an invitation-to-bid (ITB) for the engineering, procurement, construction and commissioning (EPCC) job. Unlike the Angsi field, the main asset (vessel) will be owned by Shell. The winner of the EPCC job will jointly undertake the front-end engineering design (FEED) studies, choose and convert the tanker and earn project management fees, similar to Bumi Armada’s Sepat project.
Hess’ Belud field plan, meanwhile, calls for an FPSO and wellhead platform for the oil and gas complex on Block SB302 with first oil or gas production by 2014. The Kamelia project too requires an FPSO. Separately, the Tanjung Baram EPS project, awarded to a foreign party, is running into complications and will likely miss the first oil production target (1,000 to 3,000bpd) set for July 2012. A re-tender could occur should the issue remain unresolved.
We think Bumi Armada is the likeliest partner for Water Standard for the Angsi project. This would involve a chemical FPSO. For St Joseph, we gather that five bidders were invited (M3Nergy, Bumi Armada, Deleum, BW Offshore Sdn Bhd and Tanjung). Bids will close in February with an announcement in three months. Elsewhere, our ground checks suggest that M3Nergy’s odds of securing an FPSO contract are high; we think it could be for the Belud project. Also, market talk suggests that the MISC-Ramunia partnership is a frontrunner for an FPSO for the Kamelia field. — Maybank IB Research, Jan 27
This article appeared in The Edge Financial Daily, January 30, 2012.
