O&G MMHE, TH Heavy, SapuraKencana said among six vying for Petronas’ RM1.5b Baronia project

by **Cals** Mon 07 Apr 2014, 16:52

O&G MMHE, TH Heavy, SapuraKencana said among six vying for Petronas’ RM1.5b Baronia project

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Monday, 07 April 2014 15:06

KUALA LUMPUR (Apr 7): Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), TH Heavy Engineering Bhd and SapuraKencana Petroleum Bhd are still in the running for Petronas Carigali Sdn Bhd’s Baronia enhanced oil recovery (EOR) project worth an estimated RM1.5 billion, according to analysts quoting an industry publication.

Oil & gas (O&G) news portal Upstream Online reported Petronas had narrowed down the tenders to 6 from 11 that include consortia such as Technip-MMHE, McDermott-TH Heavy and SapuraKencana (with unnamed partner), apart from three other international competitors.

Besides the Baronia tender, MMHE, TH Heavy and SapuraKencana are said to be in the fray for three platform contracts tied to the Arthit field in the Gulf of Thailand, under the Malaysia-Thai joint development area.

Furthermore, SapuraKencana also qualified for the Zawtika gas project off Myanmar, amongst four other foreign bidders.

Alliance Research. quoting Upstream Online today, said year-to-date, it expects contracts to continue being awarded to Malaysian contractors, after RM13 billion worth of contracts had been awarded.

“This will come from oncoming capital expenditure outlay for marginal fields, EOR projects and new gas developments in Malaysia,” said analyst Arhnue Tan of Alliance.

Tan noted Petronas is ready to move on with two further water-alternate-gas (WAG) projects within the Baram Delta Operations EOR production sharing contract.

“We believe this will be for the Baram and Betty fields and would give rise to more tendering activity for fabrication and EOR solutions in 2014 and 2015,” she said.

Meanwhile, AmResearch said it was positive on the sector due to the roll-outs of Malaysia’s multiple EOR, in its research report last week.

Both Alliance and AmResearch maintained an ‘overweight’ call on the sector.

“Our top picks include SapuraKencana that we rate a ‘strong buy’ with target price (TP) of RM5.26,” said Alliance’s Tan.

“For small caps, we like TH Heavy given their upside potential from entering the floating production storage and offloading market, as well as potential doubling of their fabrication orderbook. This followed a partnership with McDermott International which was sealed just last year.”

Meanwhile, AmResearch analyst Alex Goh rated a ‘buy’ call for SapuraKencana and MMHE.