Posts tagged oil
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
Cashed-up emirate Abu Dhabi will invest over RM18 billion (US$5.9 billion) in the Malaysian aluminum industry, building a new and advanced aluminum smelter for RM12.7 billion ($4.17 billion) and investing a further RM5.4 billion ($1.77 billion) developing downstream industries. Abu Dhabi’s Mubadala Development Company will form a joint venture corporation with Malaysia’s 1Malaysia Development Berhad (1MDB) to complete the projects.
Abu Dhabi has shown a lot of interest in Malaysia lately and this week’s announcement came as members of the emirate’s government and Royal Family visited to discuss potential new agreements. Malaysian Prime Minister Najib Razak said Abu Dhabi saw “abundant economic opportunities” in Malaysia’s Economic Transformation Programme (ETP) and that Crown Prince Sheik Mohamed Zayed Al-Nahyan had reiterated a commitment to invest in Malaysian projects.
Abu Dhabi is also cooperating with Malaysia on an oil block development in Sarawak, and Mubadala has invested RM1.2 billion ($394 million) in the Iskandar Malaysia project. Not to mention the 34-hectare Kuala Lumpur International Financial District (KLIFD), which is another Malaysia-Abu Dhabi joint venture costing around RM25 billion ($8.2 billion) to house the city’s financial services sector.
source & article: The Star Business
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
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
Of ASEAN countries, which are most dependent on Japan for exports? Check out this chart from The Economist which shows Brunei’s exports of US$3 billion per year (28% of its GDP) and Malaysia’s $15.5 (18% of GDP) as having the highest exposure to any changes brought by Japan’s recent disasters. That’s not to say they’re in most danger though, as Brunei’s oil and natural gas and Malaysian timber will likely play a large role in Japan’s reconstruction. At greater risk are Singapore ($12.3 billion/7% of GDP) and Thailand ($15.7 billion/6% of GDP), also large exporters, but who also rely on Japanese made components for manufacturing.
source & article: The Economist
Japan’s government has requested an increase in energy exports from Indonesia, namely crude oil and Liquefied Natural Gas (LNG), to help Japan deal with severe energy shortages resulting from recent disasters. Already a major consumer of Indonesia’s energy, Japan is in desperate need of more supply to aid reconstruction operations and make up a drastic shortfall in electricity from the loss of nuclear power plants in Fukushima. Most of Japan, including the capital Tokyo, is enduring shortages and scheduled blackouts. Crews at the Fukushima plant are still struggling to keep radioactive fuel from causing a more serious catastrophe.
Indonesia is the world’s third largest LNG exporter (after Qatar and Malaysia) and the world’s largest exporter of thermal coal for power plants. 95% of Indonesia’s LNG comes from Arun in Aceh province and Bontang in East Kalimantan. A spokesman from BPMigas said the Bontang plant currently has excess capacity, with 20 cargoes still unsold, that could be used to satisfy Japan’s increased demand.
Effects on Indonesian nuclear industry
Meanwhile, Indonesia’s own plans to expand its nuclear power capacity have come under scrutiny, given their geographic susceptibility to the kind of earthquake that led to the Japanese situation. A possible location for a new plant, due to come online in 2022, is Bangka Island to the east of Sumatra. National Atomic Energy Agency (Batan) chief Hudi Hastowo said any Indonesian plant would meet international safety criteria and would ‘certainly’ use more sophisticated technology than Japan’s 40 year old plants at Fukushima.
International Enterprise (IE) Singapore expressed its optimism for Singapore’s trade outlook in 2011, reports the Straits Times, and actually increased its trade growth forecast to 8-10% from 6-8%. They gave these primary reasons for the upgrade:
- The International Monetary Fund has also raised its prediction for global economy growth from 4.2% to 4.4%, after seeing better than expected results at the end of 2010;
- Singapore’s domestic demand also grew and consumer spending was up 4.4% in Q4 2010, which in turn would boost exports;
- Rising oil prices and demand for electronics (electronics demand growth is expected to be lower in 2011 than 2010, but given that Asia-Pacific makes up 54% of the global semiconductor market, this will also help Singapore’s exports). Oil is now projected to reach US$90-100 a barrel in response to increased demand and political uncertainty in oil producing regions.