UMW confident of O&G unit will turn around

UMW Holdings Bhd is optimistic that its oil and gas (O&G) division will make a turnaround this financial year with its NAGA
2 and NAGA 3 rigs having secured drilling jobs.

President and Group Chief Executive Officer Datuk Syed Hisham Syed Wazir said NAGA 2 had in September 2010 obtained a US$183.12 million drilling job in Indonesia's Ujung Pangkah Field while in March this year, NAGA 3 had been awarded contracts by Petronas Carigali Sdn Bhd for domestic drilling within Malaysia waters worth US$41.5 million.

"The O&G section, I'm quite confident we will be able to turn it around especially when we have the rigs now employed," he told reporters after UMW Holdings' annual general meeting here today.

He said that of the two rigs, NAGA 2's utilisation rate was presently over 90 per cent while NAGA 3 had just started operation and still being monitored but its utilisation rate would be in the region of 85 to 90 per cent also.


On the proposed listing of the O&G division, Syed Hisham said the flotation exercise was still in the pipeline despite a slight hiccup due to unutilised NAGA 2 and NAGA 3 rigs last year.

He said the group had to transform the O&G operations into a profitable business first.

"So, going forward this year and the subsequent year, we are planning to turn it around. With that, we intend to go for a bigger listing when the time is correct," he added.

The time for the listing should be also condusive in order for the group to secure better return values from the exercise, he said.

Syed Hisham said that besides, there were increasing trends of O&G exploration worldwide especially the United States and this development augured well for the group's O&G pipe manufacturing through its joint venture companies in India and China.

UMW Holdings' joint venture in India, United Seamless Tubulaar Private Ltd, which started operation last year in Hyderabad, has now reached full production capacity.

The group also has a joint venture company, WSP Holdings Ltd, in China which manufactures O&G pipes including Oil Country Tubular Good pipes.

The group would market its pipes outside China and India, and WSP was scouting for new markets in South America while continuing to cater for the strong China market, Syed Hisham said. -- Bernama