Tuesday 05 Nov 2024
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This article first appeared in The Edge Malaysia Weekly on October 28, 2024 - November 3, 2024

A contract by national oil company Petroliam Nasional Bhd (Petronas) to ferry oil and gas (O&G) personnel to offshore rigs for a seven-plus-three-year quantum, possibly worth several hundred million to a few billion ringgit — depending on how the jobs are carved out — is likely to come up for grabs as early as January next year, sources familiar with the matter tell The Edge.

It is understood that five companies are in negotiations with Petronas for a slice of the pie, but the big three are believed to be businessman Tan Sri Syed Azman Syed Ibrahim’s Weststar Aviation Services Sdn Bhd, Armed Forces Fund Board (LTAT)-controlled Boustead Holdings Bhd’s MHS Aviation Bhd and Sarawak-based Hubline Bhd’s 51%-owned unit Layang Layang Aerospace Sdn Bhd.

“It could be a huge, lucrative contract, but we are not sure whether one company will get it all or there will be a number of companies getting jobs, based on regions,” one of the bidders says on condition of anonymity.

Another bidder thinks Petronas would not put all its eggs in one basket and make an award only to one company.

“I feel [the contracts] will be split up, to reduce risk,” another executive from one of the bidders says.

To put things in perspective, in April 2011, MHS Aviation was awarded a RM3.1 billion contract to provide helicopter services by Petronas and other O&G players operating in Malaysia, for a 10-year period with an option to extend the contract by three years to March 31, 2026.

In June 2017, however, Petronas Carigali Sdn Bhd, the exploration arm of Petronas — along with other major O&G players such as EQ Petroleum Production Malaysia Ltd, ExxonMobil Exploration and Production Malaysia Inc, and Sapura Exploration and Production (PM) Inc — issued a termination notice to MHS Aviation.

MHS Aviation countersued and sought damages, but an amicable settlement was agreed upon in 2018.

Judging by the reaction of the bidders, Weststar seems to be the one to beat.

As at end-2022, Weststar, which is majority-controlled by Syed Azman, had RM2.46 billion in total assets and its total liabilities were pegged at RM1.85 billion. For its financial year ended December 2022, the company suffered an after-tax loss of RM29.72 million, from RM662.61 million in revenue.

According to its website, Weststar’s areas of service include Malaysia, Indonesia, Gabon, Congo, Mauritania, Namibia, the Kingdom of Saudi Arabia and Italy. The company also lists a host of O&G players as its clients.

Layang Layang is 51%-held by Hubline, 15% by Rotorwing (M) Sdn Bhd, 14% by Dayang Majanga @ Mondongi, 10% by Wong Chong Kwang, 5% by James Ibrahim and 5% Johan Poong Abdullah.

For its financial year ended September 2023, Layang Layang chalked up after-tax profits of RM4.21 million on the back of RM91.83 million in revenue. The company had total assets of almost RM101 million, and its total liabilities were RM71.68 million.

On its website, Layang Layang says it has 21 fixed-wing aircraft, or small planes likely used for flying doctors, among others, and 15 rotary-winged aircraft, with bases in Kota Kinabalu, Kuching, Sibu, Ipoh, Johor’s Senai Airport and Miri.

Hubline had acquired the 51% stake in Layang Layang in May 2019 for RM14.19 million.

MHS Aviation is 95.8%-controlled by Boustead Holdings and the remaining 4.2% is held by DRIR Equities Sdn Bhd. In late 2010, Boustead Holdings acquired 51% in MHS Aviation for RM100 million.

As at end-2023, MHS had total assets worth RM143.15 million and total liabilities of RM86.08 million. For its financial year ended December 2023, MHS Aviation suffered an after-tax loss of RM30.34 million, from RM505,000 in revenue.

In its Activity Outlook 2024 to 2026, Petronas says it aims to grow Malaysia’s O&G production to two million barrels of oil equivalent per day by 2025, supported by O&G projects such as Kasawari, Jerun, Rosmari-Marjoram and Lang Lebah in Sarawak; Gumusut-Kakap Redev and Belud Clusters in Sabah; and Bekok Oil Redevelopment, Tabu Redevelopment and Seligi Redevelopment in Peninsular Malaysia. At present, Petronas produces about 660,000 barrels of liquid and seven billion cubic feet of gas a day.

Petronas also highlights that, over the next three years, its decommissioning plans include the plugging and abandonment of about 130 wells and 50 facilities. 

 

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