Race for Malaysia's oilfield reopens

Gurmeet Kaur in Petaling Jaya/The Star
Asia News Network

Petaling Jaya (The Star/ANN) - The race for the risk-service contract (RSC) to be awarded by Petroliam Nasional Bhd (Petronas) for the Tembikai marginal oilfield off Peninsular Malaysia has re-opened after the bid by frontrunner Scomi Group Bhd-Cue Energy Resources Ltd is said to have faced some problems.

The development was related to management issues facing the Australian-based Cue Energy, sources revealed.

A November 14 filing with the Australian Stock Exchange (ASX) showed that Cue Energy's chief executive officer Mark Paton had resigned on that day. The board appointed an interim chief executive officer (CEO), but then its chairman also decided to throw in the towel.

In the chairman's address filed with the ASX the following day, chairman Richard Tweedie said he too "will be vacating the chair position and resigning as a director in 2013".

He named a new interim chairman. Rarely do the chairman and CEO of a company leave at the same time, pointed out market players, unless it was a signal that all was not well.

In addition, in his chairman's address, Tweedie pointed out that Cue Energy's total production volumes in 2012 fell by 23 per cent, with oil production volumes falling substantially by some 44.28 per cent.

Cue Energy's largest producing asset is the Maari oil and gas field in New Zealand, although this asset has turned out to be a disappointment due to a string of technical difficulties, according to Australian news reports.

The company's notes to accounts in its latest annual report stated that a dispute had erupted over the Jeruk oil and gas field in Indonesia, which is operated as a joint venture with Australian and Indonesian partners, for which a maximum provision of US$5.3 million (16.11 million ringgit) had been booked. Arbitration is scheduled to try and settle the dispute.

Scomi officials had yet to respond to queries at press time.

With the Scomi-Cue Energy bid rumoured to be out of the running for now, one party that's going to be vying hard for the RSC will be tycoon Ananda Krishnan's Bumi Armada Bhd, which had earlier sought to secure the RSC.

Industry sources indicate that SapuraKencana Petroleum Bhd, which is already doing well with its first Petronas RSC for the Berantai oilfield, could also be interested. The Berantai field, which is located about 150 kilometres offshore Terengganu, is close to the Tembikai oilfield.

In October last year, StarBiz had quoted Bumi Armada chief executive Hassan Basma as saying that the company had tendered for two RSCs from Petronas but declined to reveal the name of its international partner or the marginal oilfields involved. Some analysts had said that Bumi Armada was poised to secure an RSC contract by 2013, given its strong balance sheet, outstanding track record and synergistic oilfield services that fit into the criteria for RSCs.

Industry players had said that bidding for Tembikai was extremely competitive as it was said to be among the juiciest marginal oilfields in shallow waters with the most reserves to boot.

Petronas' goal is to develop one-quarter of the country's marginal fields, and it had said in March 2012 that it would announce the contracts for 22 additional fields in the near future.

It is unclear how this new development might affect Scomi's ongoing corporate restructuring that would see Scomi Marine Bhd emerging as a full-fledged integrated oil and gas (O&G) marine and drilling services provider to take on more O&G jobs.

Also vague is whether this would change IJM Corp Bhd's view of its investment in Scomi its vehicle to regain entry into the lucrative O&G sector. Last year, IJM Corp had bought a 10 per cent stake in Scomi and would emerge as the party clearly in control if Scomi issues debt papers to it that can be converted into another 15 per cent equity holding in Scomi.