Highlight MMHE, SapuraKencana, THHE said shortlisted for RM1.5b Baronia gas project tender

by **Cals** Tue 11 Feb 2014, 01:44

Highlight MMHE, SapuraKencana, THHE said shortlisted for RM1.5b Baronia gas project tender

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Monday, 10 February 2014 15:48

KUALA LUMPUR (Feb 10): Petronas Carigali Sdn Bhd has shortlisted Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), SapuraKencana Petroleum Bhd and TH Heavy Engineering Bhd for the Baronia gas project tender worth an estimated RM1.5 billion.

The three Malaysian firms were among 11 local and foreign oil & gas (O&G) firms shortlisted for the tender, according to Upstream Online on its web.

The O&G news portal reported that a turnkey contract for the Baronia central processing platform (CPP) is now open for tender.

The contract stipulates the engineering, procurement, construction, installation and commissioning of a new CPP for the existing Baronia gas compression platform.

The outcome of the tender would be announced before June, said the specialist news portal.

Alliance Research, quoting Upstream Online in its research note today, said the local players may have an edge for this project due to their available yard capacity.

“Based on our estimates, SapuraKencana and MMHE are now running at 50%-60% capacity utilisation,” said Alliance’s research analyst Arhnue Tan.

“For THHE, it is roughly at 40% or lower as the company has recently expanded its yard space.”

The Baronia CPP project is tasked to be delivered by early 2017 that include installing about 13,000 metric tonnes of topsides, 6,800 metric tonnes for the jacket and also a connecting bridge, said Upstream Online.

In its report, Upstream Online also reported that two small satellite platforms were up for tender, namely Baronia and Tukau Timur, which would be linked to the central processing platform.

MMHE, SapuraKencana, THHE are also in the running for the satellite platform projects, apart from five other fabricators – Boustead Heavy Industries Corp, Labuan Shipyard & Engineering, Brooke Dockyard, KKB Engineering Bhd’s Ocean Might and Muhibbah Engineering (M) Bhd.

“If the installation of pipelines and facilities are tendered separately, that could see another RM500 million in contracts from this project bringing the total to RM2 billion,” said Tan.

She said new players like KKB Engineering and Muhibbah might be running at extremely low utilisation.

“No major fabrication jobs have been announced by them since their license awards,” she added.

Additionally, Tan said Petronas’ final investment decision would be known in March this year, which would see another slew of jobs for downstream O&G to emerge from the RAPID project.

Maintaining “overweight” on the O&G sector, Tan said SapuraKencana was chosen as the sector’s top pick due to its undemanding forward price earnings ratio valuation of 17.1 times and solid earnings visibility of RM24 billion order book.