Posts tagged energy
Indonesia is considering tax holidays for major foreign direct investors, targeting new and existing businesses in an attempt to bump the country’s FDI up to a total Rp240 trillion (US$28.2 billion) by the end of 2011.
Finance Minister Agus Martowardojo said details of the plan were still being discussed, but would probably feature 5-10 year tax breaks for investors in the base metals, telecommunications equipment, oil refinery, petrochemicals, machinery and renewable energy industries.
The new plan would also cover businesses which had been in operation less than a year. Projects such as a $6 billion joint venture by South Korea’s POSCO, a $4.5 billion petrochemical complex by Honam Petrochemical Corp (also of South Korea) and a $8-9 billion oil refinery from Kuwait Petroleum Corp were said to be waiting for an announcement on foreign investor tax breaks before going ahead.
Foreign direct investment (FDI) into Indonesia in Q2 is already up 21% on the same period last year, thanks mainly to the mining sector. The government is also mulling plans to give tax holidays to smaller investors employing 100-300 people, determined to take Indonesia’s economy into the global Top 10 by 2025 and making much-needed improvements to the country’s infrastructure.
Indonesia’s upstream gas industry regulator BPMigas has approved 10 major projects worth US$4.7 billion in investments over the next three years, claiming that in future, gas will dominate the energy industry rather than oil.
The Jakarta Globe reports all 10 projects would produce gas but one would produce both gas and oil, delivering a total of 1,750 million standard cubic feet per day (mmscfd) of gas and 20,000 barrels of oil per day (bpd). The two largest projects would be operated by the country’s biggest gas producer, France’s Total E&P Indonesie.
Indonesia has seen oil production fall in recent years as its wells have aged, though this has coincided with a boom in gas production which saw the country beat its target of 7,758 mmscfd by 15%. This year’s target of 7,769 mmscfd was reached in the first half of 2011 alone. Indonesia’s oil and gas industry contributed Rp240 trillion ($28.1 billion) in non-tax revenue in 2010.
Much of the gas produced will be gobbled up by domestic power plants and industry, which have been hungry for new finds to fuel Indonesia’s recent growth. State-controlled gas distributor Perusahaan Gas Negara currently has the price at $1.80 mmscfd, but BPMigas is negotiating to raise that to $5.50 in an attempt to boost state revenues.
source & article: The Jakarta Globe
Another Malaysian petroeum giant is set to emerge, with SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd announcing a RM11.9 billion (US$3.9 billion) merger plan to form Malaysia’s largest oilfields services provider by assets. The move is bound to please the government, coming just half a year after Prime Minister Najib Razak revealed incentives to explore less profitable oilfields, and the two companies jointly received a contract from government-linked Petronas to develop an eastern field in partnership with Petrofac Ltd.
The merger was orchestrated by Integral Key Sdn, a company set up especially to handle the merger by a unit of Malayan Banking Bhd (Maybank). The company made a bid of RM4.60 per share in stock and cash for SapuraCrest and the equivalent of RM3 per share for Kencana. The merged company would have around RM6 billion ($1.98 billion) in assets and would grow from there thanks to an increased ability to handle larger and more complex projects.
Integral’s offer, which is valid until 15 August 2011, is a 2.4% premium on SapuraCrest’s 8 July share price of RM4.49 and a 7.1% premium on Kencana’s RM2.80. SapuraCrest’s share price rose 0.7% to RM4.92 on the news and Kencana’s jumped 3.9% to RM2.91. Bloomberg reports the new entity would have a market cap of RM11.1 billion ($3.66 billion) based on current prices, making it Malaysia’s second largest company of its type by market cap (after Malaysia Marine and Heavy Engineering Bhd) but the largest by assets.
Analysts say the two companies are a good fit. SapuraCrest operates drilling rigs, installing pipelines and developing oil and gas fields, while Kencana is in the engineering and fabrication business. The merger is expected to prompt other smaller players into tie-ups, and the government’s offer of development investives still stands.
source & article: Bloomberg
The Indonesian government is set to re-negotiate some of its LNG sales contracts, looking for deals considered uneconomical or below market price, in order to increase natural gas revenues.
The government hasn’t specified exactly which contracts it will review yet, but is known to have its eye on the Tangguh natural gas at Bintuni Bay in West Papua. The plant is owned by BP, the China National Offshore Oil Corp. and Mitsubishi Corp and CNOOC’s 2002 contract allows the company to buy gas at $2.40 per million British thermal units for 25 years–a much lower price than Indonesia’s two other LNG plants at Arun (Aceh province) and Bontang (East Kalimantan). Those facilities sell gas to Japan at $13-18 per million BTU.
Tangguh’s LNG is also exported to South Korea and California, according to the Jakarta Globe.
The Director General of oil & gas at Indonesia’s Energy Ministry, Evita Legowo, said the government would “definitely review gas sales prices that are below the economical price,” including sales through pipelines to countries like Malaysia and Singapore. When re-negotiating contracts, the government has been advised to keep in mind other factors that increase costs for producers above the wellhead price, such as distribution.
source & article: The Jakarta Globe
Malaysia yesterday announced 15 initiatives, including nine new projects and seven recaps, as part of its Economic Transformation Programme (ETP). According to Prime Minister Najib Razak, the ETP is already bearing fruit despite running for only a short time.
Yesterday’s announcement was the sixth regular update of the ETP, and sees the programme reach 50% (or 65) of its 131 ‘Entry Point Projects’ launched. The 15 new initiatives promise to bring in RM2.77 billion (US$913.8 million) in investment, add RM66.31 billion ($21.87 billion) to Malaysia’s Gross National Income and create 36,595 new jobs by the target year of 2020.
The initiatives (with their national key economic areas) are: (more…)
Malaysia is about to set up a central coordination and promotion center called the Malaysian Petroleum Resource Corporation, designed to make it easier for foreign companies in the oil field services & equipment (OFSE) industry to invest in Malaysia.
It’s hoped that by attracting more foreign OFSE producers to Malaysia with its cost competitive and more business-friendly environment, the country can build its expertise in the area. Sights are set on some 10-20 prominent companies, with the hope they could base 10% of their global operations in Malaysia. Malaysian companies in deepwater exploration would also benefit from foreign technology and skills.
Malaysian Deputy Prime Minister Muhyiddin Yassin announced the new one-stop center at the 13th Asian Oil, Gas and Petrochemical Engineering Exhibition (OGA 2011) in Kuala Lumpur this week.
OFSE companies would benefit from Malaysia’s proximity to growing markets in the region, which is projected to consume about 420,000 barrels of oil a day by 2015 and should grow opportunities in the midstream logistics market for oil and oil product storage. The OFSE industry on the whole has grown 25% in the past few years, and is reportedly worth RM800 billion (US$264.7 billion) globally.
source & article: MIDA
Indonesia will add to its energy infrastructure with three new Liquefied Natural Gas (LNG) terminals due to come onilne in 2012. The terminals, in Jakarta, Belawan (North Sumatra province) and Arun (Aceh province) should help reduce Indonesia’s domestic supply problems.
According to this report, the director general of the Energy and Mineral Resources Ministry, Evita Legowo, said her government also has another terminal planned for Central Java due to begin operations in 2013.
Jakarta’s terminal, which broke ground this week, is a floating terminal which eventually will be able to handle 3 million tons (400 million cubic feet) of LNG per day after starting with 1.5 million tons. It will source 1.175 million tons from the refinery in Bontang, East Kalimantan province for ten years, and is also looking for other sources.
Arun already exists as a supply terminal and will be converted into a storage facility, and will also source LNG from Bontang or Tanggun in Papua province. It will supply energy to local industries such as fertilizer, paper, and power plants. Belawan terminal’s gas will go to PLN, a state-owned power company.
The new terminals are being constructed by PT Nusantara Regas, a joint venture between PT Pertamina and state-owned gas company PT PGN (60%-40% shares respectively). Pertamina will construct the Arun terminal and PGN will look after Belawan.
source & article: DownstreamToday
The Malaysian subsidiary of Qatar’s Gulf Petroleum (GPLM) has teamed up with a consortium of companies from China, Hong Kong and India to develop a RM17 billion (US$5.65 billion) integrated oil and gas complex near Port Dickson, about 90km south of Kuala Lumpur in Negeri Sembilan state.
Here’s a breakdown of the consortium members and roles: Indian Marmagoa Steel Ltd and Rukmani Finance Pte Ltd have teamed up with local (Malaysian) partner Extrarich Marine Sdn Bhd to undertake financing, construction and supply of steel to the site’s storage facility; Chinese telecommunications equipment supplier Huawei Technologies will cover all IT-related elements; and a company from Hong Kong called Oriental Air Energy Investment Corp Ltd will take care of power supply requirements with its patented ‘green air-powered technology’.
GPLM’s managing director Nor Azmi Abdullah has promised even more partnerships in the project, saying official proposals had arrived from banks, government-linked companies and other oil and gas developers from 35 different countries.
It’s hoped construction on the 607.5 hectare project will begin by Q2 next year, and be finished by 2015. Originally intended to be Gulf Petroleum’s Asia-Pacific regional hub, it will comprise a refinery, petrochemical plant and storage facility, capable of producing over 150,000 barrels of oil a day.
source & article: Business Times
A consortium of Japanese and Indonesian companies will spend US$3.2 billion on coal fired electricity plants in Central Java, after winning a contract with Indonesian state utility provider Perusahaan Listrik Negara (PLN).
The group consists of Indonesian coal miner Adaro Energy, Japanese trading house Itochu Corp and electricity company Electric Power Development Co (J-Power). News of the development comes as the Indonesian government realized a need to ‘fast-track’ efforts to add supply to PLN’s power grid. It was supposed to provide an additional 10,000 megawatts of electricity by this year, but had only added 4,000 megawatts since 2007. Indonesia’s power plants collectively supply 31,000 megawatts to the entire country.
Two new coal-fired plants in Pemalang will represent the first stage of the new efforts, producing 800-1000 megawatts. PLN wants to add 4,500 megawatts by the end of this year and another 1,000 by 2013.
Four companies had qualified to bid for the project, including one other Japanese firm. The other three were Japanese trading company Marubeni Corp, China’s largest coal producer China Shenhua Energy Company, and a consortium between China National Technical Import Corp and Guangdong Yudean Group.
source & article: The Jakarta Globe
Large multinationals Proctor & Gamble (P&G) and Samsung this week announced increases to their Indonesian manufacturing capacity, while Toyota also reaffirmed its commitment to Indonesia as a major production hub. As well as exports, their products are also aimed at Indonesia’s growing domestic demand.
Toiletries and Home Products giant P&G said it had experienced a double-digit growth in Indonesian demand for its products, which it will meet with a new local plant and office building to manufacture the Gillette, Pantene and Olay product ranges.
Korea’s Samsung C&T said it will invest US$150-200 million in a 50 megawatt solar power plant, after conducting feasibility studies into possible locations in Java, Bali or elsewhere.
Meanwhile Toyota, which has already exported 225,382 complete vehicles via its local subsidiary PT Toyota Astra Motor (TAM) since 1987, says Indonesian domestic demand is growing rapidly and may reach 1 million units a year within two years. It has already sold 85,494 units this year, a 24% increase on the same period in 2010, and has a 37.9% share of the Indonesian market.
TAM President Johnny Darmawan said his company intends to make Indonesia a major manufacturing base, but also sounded the familiar call for increased commitment from the government in the form of road, port and power improvements and reliable human resource skills.