Sarawak Government gets rating upgrade

Moody’s lifts the state’s issuer rating to A3 from Baa1

PETALING JAYA: Sarawak has received an upgrade for its issuer rating from Baa1 to A3 by Moody's Investors Service.

The upgrade is due to Sarawak's strong record of positive financial performance, including the generation of operating and financing surpluses over many consecutive years, which has contributed to the state's growing reserve levels.

In a press statement, Moody's concluded that the state had a “coherent strategy consistent with the A3 rating”.

“Principally, the setting aside of sufficient assets to retire its large amount of foreign currency debt at maturity, as well as the strategy of continuing to build reserves and utilizing caution with respect to additional borrowings all support the rating upgrade,” it said.

The Moody's review focused on Sarawak's strategy for debt management, sinking-fund arrangements and future borrowing plans.

It said that “such results reflect robust growth in commodities-related revenues and the state's prudent approach to fiscal management, which includes conservative budget projections and tight control over stable and predictable operating expenditures”.

The state's financing surpluses averaged nearly 30% of operating revenues from 2004 through 2011, with an excess of 20% in most of those years.

The rating takes into account the state's sizeable and rising debt burden, due largely to its assumption of contingent liabilities related to its ownership of a non-profitable semi-conductor plant in earlier years and more recently, due to large planned investments in infrastructure.

Currently, Sarawak's debt burden is estimated at 111% of revenues in 2011 following a large borrowing undertaken to attract industrial activity for the Sarawak Corridor of Renewable Energy.

Although the debt burden was offset by revenue growth and sinking funds, Moody's projected significant rise in the burden this year if the state proceeded with additional planned borrowings.

That said, Moody's pointed to the substantial liquid reserves, amounting to an estimated 186% of total direct and indirect debt last year, which provided an important financial cushion in support of Sarawak's elevated debt load.

“Such coverage could decline in 2012 if the state proceeds with additional borrowing, but will remain well in excess of the stock of debt outstanding. Furthermore, its reserves are conservatively invested in cash and short-term instruments held at a wide variety of Malaysian financial institutions,” it added.

Moody's further said that the new rating was unlikely to be revised upward anymore as it was now equivalent to Malaysia's rating and unlikely to exceed that.

Sarawak is the country's fourth largest state in terms of population, with 2.5 million inhabitants and the largest in terms of land area. Its economy is driven by rich resources like oil and gas extraction, forestry and crude palm oil. Tourism in Sarawak should not be underestimated too.

The state was first put under review for an upgrade by Moody's in November last year.

SEB identifies coal sources

By JACK WONG
jackwong@thestar.com.my

KUCHING: Sarawak Energy Bhd's (SEB) proposed 600 MW Balingian coal-fired power station in Mukah is expected to consume 5.2 million tonnes of coal annually.

The consumption rate for the 2x300 MW units is 592 tonnes per hour and the power station's requirements will be sourced from Mukah/Balingian coal fields, according to the project's detailed environmental impact assesssment report, which is being reviewed by Department of Environment.

The report said one of the two potential sources for coal was Buroi mine, which has a measured reserves of RM21.8mil tonnes.

A file picture shows SEB’s existing Mukah power plant. The company expects its proposed Balingian power station to cost more than RM3bil.

The second potential coal field is operated by Sarawak Coal Resources Sdn Bhd but its deposit is unknown.

Based on SEB figures, Sarawak is estimated to have about one billion tonnes of inferred coal reserves, mostly in the central region. The Mukah/Balingian belt has a reserve of some 550 million tonnes while another 470 million tonnes are in Merit-Pila area in Kapit, where the 2,400 MW Bakun and 944 MW Murum hydroelectric dams are located.

SEB also plans to tap the abundant Merit-Pila coal reserves by building a 1,200 MW power station in Nanga Merit to beef up its power generation capacity to meet the demand from energy-intensive industries in Sarawak Corridor of Renewable Energy (SCORE).

SEB has sold about 1,800 MW, representing 75% of its supply from Bakun dam (1,771 MW) and Murum dam (635 MW), to industries in SCORE.

The report said the Balingian coal-fired power station project would cover 680ha and would be located about 80km northeast of Balingian town.

There are 14 Iban longhouses with total population of about 1,600 residing within 5km radius of the project site. The two nearest settlements are located less than 1km away.

The project area was generally not rich in fauna because it could have been disturbed by anthropogenic activities like rice farming, logging and cash cropping, said the report.

Construction work for the power station is targeted to start in the third quarter on completion of land clearing and earthworks.

The first 300 MW unit is expected to be commissioned in January-2015 and the second 300 MW unit six months later.

“The power plant is necessary to enhance energy supplies, which is on rising demand. There is a need to increase generation capacity to meet industrial development in SCORE,” the report said.

According to Sarawak Industrial Development Minister Datuk Amar Awang Tengah Ali Hasan, SCORE had secured 17 projects with total investment of RM24.6bil and that negotiations were ongoing to attract 16 more projects with proposed combined investments of RM13bil.

The first batch of SCORE pioneer investors Press Metal Bhd, Tokuyama Corp, Asia Minerals Ltd and OM Materials (Sarawak) Sdn Bhd had signed long-term power purchase agreements with SEB.

The Balingian coal-fired power station is the third to be built by SEB, which owns the 2x135 MW Mukah power station and the 210 MW Sejingkat power plant in the state capital.

SEB chief executive officer Torstein Dale Sjotveit said recently that the Balingian power station would cost more than RM3bil.

Its implementation, which has been accorded priority, is to accelerate the next round of SEB's generation capacity expansion.

Sjotveit said another SEB's priority this year was to commence the development of a 500kV backbone transmission network from Bintulu to Kuching. Tenders for the project's major packages are under evaluation and the contracts are expected to be awarded soon.

Also on SEB's drawing board is the development of the proposed 1,000 MW Baram hydro dam in northern Sarawak. Some of the electricity output from the dam is expected to be exported to Brunei and Sabah.

Currencies - Bloomberg

Bustari Yusuf berganding dengan foochow untuk meraih keuntungan minyak dan gas Sarawak

Pan Sarawak invited to buy 26.9% stake in Petra Energy the company

By Jack Wong
jackwong@thestar.com.my

KUCHING:Sibu-based Pan Sarawak Holdings Sdn Bhd (Pan Sarawak), which controls public-listed Pansar Bhd, is keen to take control of the strategic 26.9% equity interest in Petra Energy Bhd, which has been put up for sale, as it sees a big upside potential in the oil services firm.

A source close to Pan Sarawak confirmed to StarBiz yesterday that the company had submitted a bid, on invitation, for the strategic block in Petra Energy.

The 26.9% stake is owned by Perdana Petroleum Bhd (formerly Petra Perdana Bhd) which has given CIMB the mandate to sell the block of shares under a bidding exercise which closed last Friday (June 15).

Petra Energy's main shareholder is Datuk Bustari Yusof, a prominent businessman from Sibu who not only has a business relationship with the Pan Sarawak group but also has been a longtime friend of the late Tan Sri Tai Sing Chii, founder of Pan Sarawak, and his children.

The late businessman and community leader's sons Datuk James Tai Cheong and Jason Tai Hee, are Pansar chairman and managing director respectively.

“James and Jason have known Datuk Bustari for about 30 years,” the source said.

Pan Sarawak owns 71.79% equity interest in Pansar, a trading and engineering company with a strong 50-year track record centred on established world-renowned brands.Pansar has installed marine engines for ships of various sizes catering to industries including oil and gas, power plants as well as large-scale air-conditioned systems.

Pan Sarawak's largest shareholder is Tai Sing Chii & Sons Sdn Bhd with a 32.9% stake.

Other shareholders are Inplaced Capital Sdn Bhd (27%), also linked to the Tai family,Ting Ming Hoi Enterprise Sdn Bhd (13%) and Ding Jack Sung Enterprise Sdn Bhd (5.08%).

Pan Sarawak and MISC Bhd are 35:65 joint-venture partners in MISC Agencies (Sarawak) Sdn Bhd since 1970s.

The joint venture firm is a subsidiary of MISC Agencies Sdn Bhd,which provides shipping and warehousing services.

The source said Bintulu-based MISC Sarawak also provided services to liquified natural gas (LNG) tankers.

“Pan Sarawak group is involved in providing services to the oil and gas industry and Petra Energy is an oil services company. Their businesses are co-related and there is synergy.

“Pan Sarawak sees a lot of upside potential for Petra Energy,”added the source.

On how Pan Sarawak would finance the acquisition of the 26.9% block in Petra Energy if it was successful in the bid, the source indicated that it would probably be via internal funds and borrowings.

It is understood that besides Pan Sarawak, one or two other companies could have submitted the bids.The outcome of the bidding, predicted the source, was expected in two weeks.

Petra Energy shares rose another 13sen to RM1.48 yesterday after adding 16sen last week.

Good results for CMS on the back of SCORE and Samalaju

Datuk Richard Curtis

KUCHING: Sarawakian infrastructure facilitator Cahya Mata Sarawak Bhd (CMS) revealed an improvement in the group’s performance for the financial year 2011 (FY11) yesterday on the back of developments in the Sarawak Corridor of Renewable Energy (SCORE) and Samalaju.

The group saw an increase in revenue for FY11 of 7.33 per cent compared with the previous year. This translated to a profit after tax and non-controlling interests to RM120 million, a return on equity growth of three to 8.8 per cent and an earnings per share increase by over 82 per cent.

Other key drivers for the group were the construction and road maintenance division (65.9 per cent increase) and the manufacturing division (27.3 per cent increase), among other divisions.

According to CMS group managing director, Datuk Richard Curtis, “The bedrock for this growth has been our management team’s concerted efforts in recent years to be fully engaged and focused on enhancing the profitability of all our businesses through sound decision making, more customer focus and through building on our core competencies with prudent synergistic investments and acquisitions.”

While the results of FY11 as well as the first quarter of 2012 had been stellar so far, Curtis outlined that these did not yet reflect the full impact of CMS’ transformation process.

“With the state’s infrastructure growth plans, the developments of SCORE underway and our strategic diversification into rising trend industries, 2012 is already showing signs of being another strong year for us.”

While CMS’ core business divisions of construction materials, manufacturing, property

development, construction and road maintenance continued to benefit from Sarawak’s accelerating economic growth, the group’s latest division – the Samalaju development – is poised to grow through the provision of workers’ accommodations and related services in Samalaju as master developer of the new Samalaju township.

Apart from that, CMS would add on to the Samalaju development via its 20 per cent stake in toe 600,000 metric tonne manganese and ferro alloy smelter which was being developed by Australia-based OM Holdings Ltd.

Borneo Post 1/6/2012

Petronas awards offshore Sarawak LNG facility job to consortium

KUALA LUMPUR : Petroliam Nasional Bhd (Petronas) has awarded a contract to a consortium consisting of Technip France SA, Technip Geoproduction (M) Sdn Bhd and Daewoo Shipbuilding & Marine Engineering Co Ltd.

The contract is for the construction and commissioning of Petronas’ first commercial floating liquefied natural gas (FLNG) facility in Malaysia.

The state-owned oil corporation said in a statement that the contract for the engineering, procurement, construction, installation and commissioning of the project was awarded via its wholly-owned subsidiary, Petronas Floating LNG 1 (L) Ltd.

The FLNG facility is scheduled to be ready by 2015 and would be moored about 180km off the coast of Bintulu, Sarawak. It has been designed to produce 1.2 million tonnes a year (mtpa) of LNG.

“Once on stream, the facility will boost Malaysia’s total LNG production capacity to 26.9 mtpa from 25.7 mtpa currently,” Petronas said.

It said the facility was expected to change the landscape of the LNG business where the liquefication, production and offloading processess of LNG, which was previously only possible at onshore plants, were now able to be carried out hundreds of kilometres away from land and closer to offshore gas sources.

Keuntungan bersih Petronas meningkat 62%

Petronas net profit up 62% to RM20.7bil

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) posted a 61.7% surge in net profit to RM20.7bil for the first quarter ended March 31 compared with the corresponding quarter a year ago on the back of higher margins.

Revenue grew 14.6% to RM75.2bil due to stronger crude oil and gas prices as well as higher crude oil trading volume.

President/chief executive officer Datuk Shamsul Azhar Abbas said at a media briefing yesterday that the first quarter performance came as a surprise.

However, he said a combination of demand destruction due to economic uncertainties, geopolitical issues and higher oil supply would weigh on oil prices going forward.

From left: Petronas chief executive vice-president, finance, Datuk George Ratilal; executive vice-president, gas and power business, Datuk Anuar Ahmad and Shamsul at the briefing. — Bernama

Shamsul said the first quarter was good. “We’ve been lucky, we had high oil price and high gas production,” he said, adding that what remains challenging would be maintaining crude oil production both in Malaysia and overseas.

The US economy was looking good at this point but recovery remained fragile with not much improvement for the rest of the year.

He said oil prices were likely to be capped in the range of US$80 to US$90 per barrel (Brent crude) over the next four to five years as new supply came in. Brent has fallen more than 16% after reaching a high of US$124.75 in mid-March. In recent days, it has been hovering around US$103 to US$104.

“I’m fairly bearish about oil prices going forward, I’ve said this before and I stand by it,” Shamsul said, addding that in spite of the low prices, the Saudis were still increasing production while the United States has started to export petroleum.

He said that gas production in the second quarter would not be as good as the first because with the advent of summer, demand from the temperate countries would be lower.

Shamsul pointed out that production facilties in oil fields straddling the border between Sudan and south Sudan would not resume until the end of the year due to the ongoing hostilities between both countries.

“We do not foresee any amicable solution so our bottomline may take a hit of RM3.2bil,” he added. The shutdown has caused Petronas to lose 130,000 barrels a day of production.

Meanwhile, Shamsul said the first of six risk-sharing contracts (RSC) for the development of marginal oil fields in waters surrounding Malaysia would be awarded in the next few days. “Its pending the approval of the Finance Ministry,” he said.

Shamsul said a data review of the 23 marginal oil fields (out of an original 25) have just been completed with the fields grouped into six clusters. “Proposals have been requested from the interested parties and the evaluation is ongoing with all the contracts to be awarded by the end of this year,” he added.

The first two marginal oil fields - Sepat and Berantai - was awarded to a consortium comprising SapuraCrest Petroleum Bhd/Kencana Petroleum Bhd (now SapuraKencana Petroleum Bhd) and London-based Petrofac Ltd early last year.

Shamsul said Petronas would continue to be on the lookout for merger and acquisitions (M&As) but this would entail selling off non-core assets such as its 3.9% stake in Centrica plc, a London-based supplier of gas. The stake was sold for over RM3bil in early February.

“We’ll need to fatten our cash pile if we’re to make any M&As since oil and gas prices will be lower,” he said.

Petronas’ shareholders approved in March a final tax-exempt dividend of RM28bil for the financial year ended Dec 31, 2011 payable in eight instalments between April and November 2012. The firm has indicated that from 2013 onwards, the payout ratio for dividends would be 30%.

SapuraKencana gets even more contracts from Petronas with RM 1.3 billion extension

SapuraKencana secures RM1.3b contract extension

UPDATED @ 10:11:36 PM 24-05-2012

May 24, 2012

KUALA LUMPUR, May 24 — SapuraKencana Petroleum Bhd has secured a RM1.3 billion contract extension for the transportation and installation of offshore oil and gas facilities and structures for 11 Petronas production-sharing contractors.

Its wholly-owned subsidiary, TL Offshore Sdn Bhd, received a confirmation from Petronas, which has exercised its option to extend for one year (2013) the current contract.

The contract extension will be formalised by the respective PSCs accordingly, it said in a filing to Bursa Malaysia.

The value for the expected scope of work for next year is about RM1.3 billion, said SapuraKencana in a filing to Bursa Malaysia.

The contract's extension has no effect on the issued and paid-up capital of the company and is expected to contribute positively to the group's earnings and net tangible assets for the financial year ending Jan 31, 2013, it said.

Under the primary contract, the work performed for the PSCs was for three years from 2010 to this year, with options for two further extensions of one year each. — Bernama

SapuraKencana: Bidding order book to hit RM12b by yr-end

See any Sabahan or Sarawakians in SapuraKencana shareholders?

SapuraKencana Petroleum Bhd, one of the world's largest full-fledged integrated oil and gas service providers, expects
to bid for RM12 billion worth of contracts by year-end, its President and Group Chief Executive Officer Datuk Seri Shahril Shamsuddin said today.

Currently, he said, the company was bidding for RM7 billion worth of jobs, of which 50 per cent are for local projects, while the remaining are in Australia and Brazil.

"Right now, we have about US$1.5 billion worth of businesses in Brazil, which is the base for us to enter West Africa. We are putting bids for the second round in Brazil," he told reporters after the launch of the company's prospectus and new corporate logo here.

Shahril said the bidding success rate was about 30 to 40 per cent. To maintain its operational sustainability, he said, the group needs to maintain an order book of about RM8 billion to RM12 billion a year.

Presently, the company's order book stands at about RM13.5 billion, which translated into backlog jobs that can make them busy for three-and-a-half years.

The merger entity is currently the world's fifth largest integrated oil and gas engineering, procurement, construction, installation and commissioning (EPCIC) services provider.

"There have been businesses already while we are merging, so I guess that's an illustration of how this merger has fit like a jigsaw puzzle and integration is not an issue because our people have been working together as EPCIC team," Shahril said.

Asked whether the merger and acquisition exercise will entail retrenchment, Shahril said that on contrary the company, which currently has 9,000 workforce under its wings, was still looking for more people to support the group in future.

He also said the company would continue to support and be a catalyst for local vendors development in the oil and gas industry in line with the country's aspirations.

"To date, we have dished out about RM1.5 billion to RM2 billion worth of works to small-and middle-sized companies. We are like mothership, supporting about 500 vendors and suppliers," he said.

On capital expenditure, Shahril said the group was spending US$1.5 billion over the next three years to finance the projects including drilling rigs and pipe-laying vessels.

Asked whether rising global oil prices would affect the group,
SapuraKencana's Executive Vice-Chairman Datuk Mokhzani Tun Dr Mahathir said the group started as two small companies and has faced many challenges to reach this stage.

"We know how to operate even on tighter margin, so I'm very confident that despite whatever happens in the market, we will be resilient and strong enough to pull through," he said.

The listing of the company on Bursa Malaysia's Main Market tomorrow will see the floatation of 5,004,366,196 shares at RM2 per share issue price.

As a result of the listing, the market capitalisation of Sapurakencana will be valued at slightly over RM10 billion. Also present at the event was Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop. -- Bernama

Kencana awarded RM 460 million contract offshore Sarawak.

Kencana Petroleum secures RM460m contract

KUALA LUMPUR: Kencana Petroleum Bhd has received a letter of award from Murphy Sarawak Oil Co., Ltd. for the fabrication of offshore topsides and the contract is valued between RM460mil and RM474mil.

It said on Tuesday Murphy Sarawak awarded the contract on April 20 for the provision of engineering, procurement, construction and commissioning (EPCC) of Serendah Production topsides facilities at the oil fields development off Bintulu, Sarawak.

"The value of the contract is estimated at between RM460mil and RM474mil. The contract is expected to be delivered from first quarter of calendar year 2013 to second quarter of calendar year 2013," it said.

Kencana expected the contract to contribute positively to the earnings and net assets per share of the group for the duration of the contract.

Yu family-owned gets RM 1.7 billion contracts in Sarawak

Hock Seng Lee secures RM45.7m Sibu flood mitigation job

KUALA LUMPUR: Hock Seng Lee Bhd (HSL) has secured a RM45.7mil sub-contract for further flood mitigation works in Sibu.

The Sarawak-based company said on Wednesday this was the latest project after it secured a construction contract for a RM10.6mil orphanage complex and a RM16.9mil government office, both in Bintulu.

"Together with the RM82mil 20.2-km road project at Balingian to Jalan Persekutan announced in February 2012, newly secured jobs for 2012 are worth RM155mil," it said.

HSL said that it had procured about RM313mil new projects for 2011, so it is in line to surpass this for 2012.

"The new contracts bring the total value of projects in hand for HSL to RM1.7bil of which some RM1.0bil is outstanding," it said.