The Edge Billion Ringgit Club 2013 Dialog rides on adding value to black gold

by **Cals** Wed 16 Oct 2013, 13:44

The Edge Billion Ringgit Club 2013 Dialog rides on adding value to black gold

Business & Markets 2013

Written by Charlotte Chong of theedgemalaysia.com

Wednesday, 16 October 2013 09:22

KUALA LUMPUR: Alongside other oil and gas (O&G) companies listed on Bursa Malaysia, Dialog Bhd has grown from strength to strength into the country’s third largest O&G firm in terms of market capitalisation, which stood at RM6.72 billion yesterday, an increase from RM5.7 billion on March 29 this year.

Judging from the market capitalisation of the listed oil and gas services firms in Malaysia, Dialog ranked third on the list after SapuraKencana Petroleum Bhd, which has a market capitalisation of RM23.1 billion and Bumi Armada Bhd’s RM11.5 billion.

Dr Ngau Boon Keat, Dialog’s executive chairman and co-founder, attributed the success of many Malaysian oil and gas companies to Petroliam Nasional Bhd (Petronas).

Moving forward, Ngau said it is going to be a buoyant market for Dialog’s upstream O&G services.

“All these service sectors will continue to grow, and we are very excited going forward,” said the 64-year-old who found his roots in the industry with a stint in Petronas.

Dialog is involved in a spectrum of oil and gas services concentrated in seven divisions. It includes logistics services, plant maintenance, engineering and construction, fabrication and ePayment technology and solutions.

Ngau pointed out that Petronas could choose to invest overseas but the national oil company opted to put its money at home. “[It has] helped to create many high-value jobs in the country.”

Dialog raked in a net profit of RM193.3 million for its 2013 financial year ended June 30, an increase of 9.2% year-on-year from RM177 million. Revenue has increased 36.9% to RM2.2 billion compared with RM1.63 billion a year ago.

In an announcement to Bursa Malaysia on Aug 20, Dialog said the higher revenue was mainly attributed to the increasing engineering, procurement, construction and commissioning activities at Pengerang Deepwater Terminal in Johor as well as the increased fabrication activities and the consistent performance of the specialist products and services division.

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Ngau: All these service sectors will continue to grow, and we are very excited going forward.

“The group will continue to extend its capabilities to further the development of marginal fields and the rejuvenation and redevelopment of mature oilfields,” it said in the report.

It said BC Petroleum Sdn Bhd (BCP), a 32% jointly controlled entity, has successfully drilled five wells and is currently planning its development programme. Halliburton Bayan Petroleum Sdn Bhd (HBP), a 50% owned jointly controlled entity, has commenced activities for the redevelopment of the Bayan Field.

“Both these projects will yield long-term sustainable earnings and provide the group with opportunities to participate in the field development cycle,” it said.

With the completion of the Dialog Jubail Supply Base in Saudi Arabia, the company has secured services contracts in the Middle East and expects the jobs to increase due to its strategic location.

The setting up of the Dubai sales office also enabled the group to secure the supply of drilling-base fluids contracts from oil majors operating in that region and is expanding its business area coverage.

On the local front, Dialog’s independent deepwater petroleum terminal (PIDPT) in Johor has gathered much attention from the media and international O&G firms since the launch of its first phase in October 2011.

Ngau is confident the RM2 billion project will be completed by year-end. It is on track to commence operations in the first quarter of next year.

“In April, we will taste the first fruit,” said Ngau. “The company will see revenue flowing by April next year. If we can’t deliver on time, investors won’t have confidence to invest in Pengerang,” he said.

Ngau said the PIDPT project would not be affected by possible delays in Petronas’ refinery and petrochemical integrated development (Rapid) project.

But he conceded that it would be a bonus if Rapid progresses as planned because it would help attract international downstream players to utilise Dialog’s storage facility.

However, he said Rapid was never in the picture when Dialog was planning its PIDPT project.

Rapid is a RM60 billion initiative launched by Petronas to build an integrated oil and gas downstream facility in the Pengerang area. It was launched a year after Dialog had announced its PIDPT project.

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“Our project is not built just for Rapid. There are many potential customers [which can take up our storage facility]. Most people don’t understand, they just link us to Rapid,” said Ngau.

He envisaged that in the medium to long term, the PIDPT will help attract investments into southern Johor.

“Once we complete building the port, others will come eventually,” he said. “We are naturally gifted with the resources [petroleum] in the country,” said Ngau, adding that 40% of government income comes from petroleum.

“There is no reason why we can’t increase the added value in petroleum.”

This article first appeared in The Edge Financial Daily, on October 16, 2013.