Monday, December 28, 2009

Various spin-offs from 2nd gas plan

THE second liquefied natural gas (LNG) project will provide opportunities for PNG to participate in the full chain of the petroleum business, including shipping, gas-based industries and marketing. According to State-owned Petromin PNG Holdings Ltd, the project has provisions for domestic market obligations for third party access. “Therefore, the Elk/Antelope LNG project will give more value in terms of downstream processing businesses such as power generation and petrochemical industries,” Petromin managing director Joshua Kalinoe said.Mr Kalinoe said this last Wednesday shortly after National Government and project developer InterOil Corp signed the project agreement officially concluding that PNG has now two LNG projects underway.He said it was his first association with the project agreement in his remaining days as Chief Secretary to Government in early 2007 where he chaired the first meeting on the first draft in Cairns, Australia.Mr Kalinoe thanked InterOil’s chief executive officer and chairman Phil Mulacek, executive director Christian Vinson, InterOil lawyers, Petroleum and Energy Minister William Duma, Acting Chief Secretary, Treasury Secretary, Petroleum and Energy Secretary, the State Solicitor (George Minjihau), and Petromin staff including Henry Leia of the gas facilitation office for making efforts to reach the agreement.Mr Kalinoe was particularly thankful to Prime Minister Sir Michael Somare. “Without his vision and dedication, we would not have any LNG project at all,” he said of Sir Michael.Mr Kalinoe revealed how Sir Michael worked the setting up of national vehicle company that would hold the State’s equity as well as involve in exploration and development in the minerals and petroleum sector. “His vision was realised when Parliament created Petromin in early 2007 by enacting the Petromin PNG Holdings Limited Authorisation Act.“The signing ceremony marks the culmination of your dreams where Papua New Guineans are to fully participate in the development of their resources,” he said.Mr Kalinoe also said Petromin, together with the project partners, sought the support of political leaders, the executive Government and the respective State entities to realise the second LNG project.

Friday, December 25, 2009

Two LNG projects for PNG

Source:
SHEILA LASIBORI
PAPUA New Guinea now has two liquefied natural gas (LNG) projects, Petroleum and Energy Minister William Duma said.He said this moments after the Government and developer of the Elk/Antelope LNG project, InterOil, signed the project agreement at Government House in Port Moresby.“The signing means there are now two LNG projects and if both are realised, they will bring big benefits for this country.“The project agreement now paves the way forward in the implementation phase,” he said.Prime Minister Sir Michael Somare said he was pleased that “we get a second LNG coming through at the Christmas eve. It must be the feeling of Him (referring to God) that decided that PNG should be blessed during this Christmas eve”.He acknowledged everyone from the State departments, Gulf provincial government and administration, project joint venture partners and landowners alike.The gas agreement between the Government and Liquid Niugini Gas Ltd (LNGL) which is 52%-owned by InterOil, was signed yesterday for the construction of the LNG complex for processing resource.The agreement was signed by acting Governor-General Dr Allan Marat, Mr Duma, InterOil’s chief executive officer and chairman Phil Mulacek and executive director Christian Vinson and was witnessed by State Solicitor George Minjihau in a packed room which included departmental heads, company executives and other dignitaries.“These two projects are the ideal Christmas presents that we can give to the people of Papua New Guinea,” Sir Michael said.With the project agreement in place, Mr Mulacek said financing was the next thing on the list of things to do which would be done together with project partners including Petromin PNG Holdings Ltd (for State’s 22.5% interest) and Department of Petroleum and Energy. “We have a number of people that are interested in the financing. We are going to evaluate with the Department and the Government and our partner Petromin,” he said.It is understood a Japanese group had made a financing proposal to the Prime Minister’s Department details of which were not immediately available.Mr Duma said the initial proposal was for a 360km pipeline and LNG processing facility to be built at Napanapa for the gas to be supplied initially from Elk/Antelope gas fields in Gulf province.Petromin managing director Joshua Kalinoe said: “The project has provisions for domestic market obligations for third party access … the Elk/Antelope project will give more value in terms of downstream processing businesses such as power generation and petrochemical industries.”

FEED for second gas project on: Mulacek

Source:
SHEILA LASIBORI
THE US$450 million (K1.22 billion) front-end engineering and design (FEED) work for the second liquefied natural gas (LNG) project has finally started after almost two years of delays.The pre-FEED started two months ago when Prime Minister Sir Michael Somare gave his assurance that the project agreement would be signed, InterOil Corp’s chief executive officer and chairman Phil Mulacek saidAnd the US$450 million (K1.22 billion) FEED for the LNG itself would start later during the course of the project now that project developer InterOil Corp and the National Government have signed the deal.Mr Mulacek said the FEED, which started two months ago, was that of early condensate and also had commissioned some of the early work for the Elk/Antelope project in Wabo, Gulf province.“Pre-FEED, heavy pre-FEED and earlier condensate began two months ago and along the way everything else will fall into place,” he said, adding there were bigger partners being considered for the FEED work and InterOil was now in the process of selecting them. “Some technical work we will get done and others will wait for bigger partners,” he said.FEED was to have started in January last year, 30 days after a project agreement was signed, but this had not happened until two months ago following Sir Michael’s verbal assurance for an agreement.Liquid Niugini Gas Ltd (LNGL), a company in which InterOil has 52% ownership, was to have executed the FEED following negotiations also on engineering, procurement, and construction (EPC) it held with Bechtel in December 2007.The US$450 million (K1.22 billion) was put together for FEED by the joint venture partners during the initial stages of the project.“We are designing a plant that will last for decades with proven technology, so that means, we are going to have a lot of cost-efficiencies versus other applications,” Mr Mulacek said.Petromin PNG Holdings Ltd, a 100% State-owned entity, will participate in the project for the Government’s 22.5% (2% for landowners) interest in the project.According to InterOil, the LNG project targeted a US$6.0 billion (K17 billion) two-train LNG facility, with each train capable of producing about four million tonnes of LNG per year.

PNG oil palm industry ‘sustainable’

THE Papua New Guinea Palm Oil Producers Association (PNGPOPA) has maintained the industry is committed to sustainable oil palm production.Reacting to recent attacks from non-governmental organisations (NGOs) and negative media reports, PNGPOAP said the oil palm industry (OPI) remained committed to ensuring the development of oil palm in the country was carried out “in a sustainable manner”.“In recent times, NGO environment groups and individuals protested the manner in which the oil palm industry has been operating in PNG and the level of destruction it has caused to the environment and the people,” PNGOAP said in a statement.“Recent reports included the one on mongabay.com, a conservation website, and a 12-minute documentary by a European freelancer attacking Higaturu’s operation in Popondeta.”The documentary was aired on Kundu 2 last month.The statement said the OPI in PNG “acknowledges and welcomes concerns or criticisms that are continually raised against the manner in which it operates”.It said it had always maintained an open door policy and welcomed any form of feedback pertaining to any aspects of its operation in the country.However, PNGOAP said the industry has noted that most often, these attacks on the industry carried little or no specifics.

Wednesday, December 23, 2009

Gas project snares deal with Japan's Osaka Gas

THE PNG liquefied natural gas (LNG) project has closed a deal with Japan’s Osaka Gas Co Ltd for the supply of about 1.5 million tonnes of LNG per annum.This was announced by Esso Highlands Ltd, a subsidiary of Exxon Mobil Corp and operator of the PNG LNG project, yesterday.The PNG LNG project is an integrated development that includes gas production and processing facilities, onshore and offshore pipelines and liquefaction facility with the capacity of 6.6. million tonnes per year.As of yesterday, about 5.3mta of LNG has been signed off with LNG buyers.Apart from Osaka Gas (1.5mta), UNIPEC Asia Co, Ltd., a subsidiary of China Petroleum & Chemical Corp (Sinopec) signed off for about 2.0mta per year while about 1.8mta was to Tokyo Electric Power Co Inc (Tepco).All the agreements are effective for a 20-year period.The balance is now about 1.3mta that should be signed up with China Petroleum Co (CPC) of Taiwan next month. “We are pleased to have entered into this important agreement with a leading LNG customer in Japan and to have started a new relationship with Osaka Gas,” Ron Billings, vice-president, LNG, ExxonMobil gas and power marketing, said. “The PNG LNG project will provide a clean-burning supply of natural gas to help meet growing energy demand in Japan.”

Tuesday, December 22, 2009

Oil holds above US$74 in Asia Wed after OPEC decisio(update)

SINGAPORE: Oil prices held above $74 a barrel Wednesday in Asia after OPEC left output levels unchanged and a report showed U.S. crude inventories fell last week.
Benchmark crude for February delivery was down 7 cents to $74.33 at midday Singapore time in electronic trading on the New York Mercantile Exchange.
The contract rose 68 cents to settle at $74.40 on Tuesday.
The Organization of Petroleum Exporting Countries said Tuesday that the 12-nation cartel won't change production quotas, a move widely expected by investors.
OPEC leaders called on group members to adhere more closely to current quotas and reduce cheating.
Prices were boosted by signs U.S. oil demand may be picking up. U.S. crude inventories fell more than expected last week, the American Petroleum Institute said late Tuesday.
Crude stocks fell 3.7 million barrels while analysts had expected a drop of 2.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The Energy Department's Energy Information Administration plans to announce its inventory report later Wednesday.
In other Nymex trading in January contracts, heating oil was little changed at $1.95 while gasoline rose 1.1 cent to $1.90. Natural gas rose 1.3 cents to $5.73 per 1,000 cubic feet.
In London, Brent crude for February delivery fell 9 cents to $73.37 on the ICE Futures exchange. - AP
Earlier report
NEW YORK: Oil prices rose after the world's biggest oil producers on Tuesday opted to leave production volumes unchanged, a decision that could mean short-term stability for energy prices after a volatile year.
Benchmark crude for February delivery rose 68 cents to settle at $74.40 a barrel on the New York Mercantile Exchange, after dropping to $72.72 earlier in the trading session.
OPEC negotiations in Africa can have a direct impact on consumers and what they must pay to heat their homes or fill up the car.
Crude prices peaked in late October and have been edging downward since.
So have retail gasoline prices and other fuels that are derived from oil.
Energy in the past year have rebounded quickly overall.
The price of crude doubled after OPEC agreed to reduce output by a combined 4.2 million barrels each day in late 2008.
Yet as oil prices have climbed, some OPEC nations have begun to cheat on those production quotas, putting more oil than they had agreed to on the market to raise sorely needed revenue.
Compliance is with those quotes is believed to have dropped from 80 percent at the beginning of the year to 60 percent now.
Crude prices have fallen about $10 per barrel in two months.
Sticking to the production agreement was the focus of oil ministers meeting Tuesday in Angola, and also of investors who see that OPEC compliance has been sliding.
"OPEC's decision to hold production steady is bearish because we know production is going up," PFGBest analyst Phil Flynn said.
Still, prices appear well within the comfort level for the Organization of Petroleum Exporting Countries.
It's part of the reason that retail gasoline in the U.S. has remained steady for weeks at about $2.60 per gallon.
In other Nymex trading in January contracts, gasoline rose almost 2 cents to settle at $1.8880 per gallon and heating oil rose less than a penny to settle at $1.9486. Natural gas rose 4.6 cents to settle at $5.715 per 1,000 cubic feet.
In London, Brent crude for February delivery rose 47 cents to settle at $73.46 on the ICE Futures exchange. - AP

IPBC opens Brisbane office for LNG watch

By YEHIURA HRIEHWAZI in Brisbane
THE Independent Public Business Corp (IPBC) opened an office in Brisbane recently and is manned by chief executive officer Glenn Blake.Mr Blake has been operating out of Brisbane since his appointment several years ago and only recently opened a proper office.He is now advertising for a project analyst to work with him in Brisbane whose primary role is to oversee and monitor the K42 billion PNG liquified natural gas (LNG) project.The advertisement for the IPBC’s project analyst was published in the Brisbane daily newspaper, Courier Mail by advertising agency, Northern Recruitment.The advertisement read in part: “In the role of project analyst, you will be located in IPBC’s Brisbane office, report to the general manager LNG and support a small team based in Port Moresby. You will develop and use the necessary tools to undertake very detailed modelling, forecasting, analysis, interpretation and reporting to identify and report against potential risks and benefits.”The successful applicant would also be required to liaise with ExxonMobil, project operator and other stakeholders and monitor their contractual and stakeholder agreements to ensure accurate compliance and fulfillment.The person IPBC is looking for must have initial training in commerce, engineering or both and must be a “self-starter with unflappable personality and indefatigable work ethic,” the advertisement said.If this advertisement is not in the local newspapers, IPBC is obviously looking for an expatriate for the job.The IPBC has a 16.6% stake in the project which was given the green-light to go ahead last Tuesday.

Gas project fixes US$14bil commitments from lenders

THE PNG liquefied natural gas (LNG) project has secured US$14 billion (K38 billion) of commitments by lenders for project financing.This would be enough to meet the estimated US$13 billion (K35 billion) of debts required for the project on an agreed 70% gearing basis.Yesterday in New York, the lenders signed the various financing that make up the PNG LNG project financing.Peter Botten, managing director for Oil Search Ltd, while announcing the commitments by export credit agencies (ECA), said in a statement that the financing had been led by US$8.3 billion (K22 billion) of commitments from key ECAs, including US Exim, JBIC and NEXI from Japan, China Exim, SACE from Italy and EFIC from Australia.In addition to the ECAs, the financing also included US$1.95 billion (K5.25 billion) of uncovered commitments from a 17 commercial banks (without ECA or political risk insurance) and US$3.75 billion (K10.09 billion) of co-lending from project owner ExxonMobil Corp. “Following formal commitments from lenders, all parties will now move expeditiously to clear the remaining conditions precedent to first drawdown, with financial close targeted by next mid February,” Mr Botten said.Meanwhile, the stock market reacted positively in the ASX yesterday when Oil Search announced that financial deal for the PNG LNG project.Oil Search shares which have been freefalling since last week, moved up 3.07% to trade at A$5.69 (K14) on the ASX yesterday.The PNG LNG project is being operated by Esso Highlands Ltd, a subsidiary of ExxonMobil.Esso holds 33.2% interest in the project, Oil Search 29%, Independent Public Business Corp on behalf of the PNG Government holds 19.6% (Mineral Resources Development Corp – 2.8% and Eda Oil, a subsidiary of Petromin PNG Holdings Ltd – 0.2%), Santos 13.5%, and Nippon Oil Ltd 4.7%.

BSP now the biggest bank in the Pacific

BANK South Pacific (BSP) has confirmed that settlement of the transaction to acquire all of the Colonial Group in Fiji from Commonwealth Bank of Australia (CBA) has been completed making it the major banking group in the Pacific with total assets in excess of K9 billion and nearly 3,000 employees.BSP chief executive officer Ian Clyne said BSP was also the best capitalised bank operating in the Pacific with a ratio of common equity to total assets of more than 20%.He said this ratio was an industry measure of balance sheet strength and at 20% and was more than twice its peers in the Pacific region.Clyne said: “Fiji, with the second largest economy in the region, was critical to BSP’s plans to build a substantial Pacific franchise. “BSP is already bigger in Papua New Guinea than its competitors ANZ and Westpac combined.”He said the value of its assets in the region was considerably higher than that of the entire Fiji banking system. “Its regional growth initiatives have included acquisition of banking businesses in Niue and the National Bank of Solomon Islands which now operates under the BSP name and is the largest bank in the Solomon Islands.”Clyne also pointed out that BSP’s ambition was not to be the biggest, but to be the best. “The bank,” he said, “has deservedly established a reputation as one with a powerful customer focus and understanding of shareholder value”.He added that BSP has been operating in the Pacific for over 50 years and could justifiably claim a solid understanding of the financial needs of the people in the region.The BSP brand would be unveiled in stages throughout its new Fiji branch network over the next 12 months.Chief financial officer Johnson Kalo said BSP’s performance this year is in line with expectations despite the difficult economic environment.He said BSP is well-placed to benefit from the increased economic activity associated with the PNG LNG project.

US OKs US$3bil financing to LNG

THE US Export-Import Bank (Ex-Im Bank) has approved the largest financing transaction in its 75-year history amounting to US$3 billion (K8 billion) to support US exports for the PNG liquefied natural gas (LNG) project.Workers at more than 55 US companies will provide goods and services to the project.Ex-Im Bank, the official US export credit agency (ECA), five other ECAs and 17 commercial banks would provide financing for the project.Total project costs are estimated to be US$18.3 billion (K49.59 billion).The project has the potential to double the gross domestic product of PNG.“Our approval of this project is yet another demonstration of how Ex-Im Bank is achieving its mission to provide financing for US exports, and supporting US export-related jobs, by supplementing what commercial lenders are able or willing to provide,” Ex-Im Bank chairman and president Fred P Hochberg.The ECAs and commercial lenders involved in financing the project conducted extensive research into the potential impacts of the project.The resulting study found that the production and export of LNG from this project would represent a net reduction in global greenhouse gas emissions compared to the case where customers were to meet their energy requirements by coal, fuel oil or diesel commonly used in the regional market, even though the project would add to PNG’s total emissions of greenhouse gases.At the ceremony announcing the investment, Prime Minister Sir Michael Somare said: “ExxonMobil and our other private sector development partners have shown significant confidence in our nation.“Co-operation between the public and private sectors will create value for the PNG society as a whole and grow our economy in the future.”The project would involve development of upstream natural gas fields, a 692km onshore and offshore pipeline, a 6.3 million metric-tonnes-per-year liquefaction plant near Port Moresby, and marine facilities from which the LNG would be shipped to overseas buyers.The project would sell the LNG in the large Asia-Pacific market.

InterOil expected to issue major announcement on gas project

Source:
The National
INTEROIL Corp is expected to make a major announcement this week on its Antelop/Elk gas project in the Gulf province, despite a loss of US$14 million (K38 million) in the nine months to December.Communication between InterOil staff and the public on the company's discussion forum on internet revealed that some company heavies were expected in the country this week for a big announcement and celebration.Japanese petroleum company, Mitsui Petro-Chemical, are expected to participate in the gathering and there is some suggestion that an announcement for US$1 billion (K3 billion) plant was a possibility.Mitsui is one of Japan’s largest petro-chamical company producing chemicals for plastic-making, polymers, solvents and variouis synthetic materials.InterOil executives could not be reached for comment over the weekend despite a request by The National for clarification on a statement it released to the US Securities and Exchange Commission last Friday regarding a settlement on some shares issue and a loss of A$14 million (K38 million) in operations which it said did not affect its net-cash situation.

RD Group investing US$45 million to increase production

GENERAL SANTOS: THE Philippines’ biggest tuna exporter RD Group is investing a total of US$45 million (K122 million) next year for the expansion of its operations in General Santos city in Mindanao, Indonesia and Papua New Guinea.The Business Mirror reported that Rodrigo Rivera Sr, chairman of the RD Group of Companies, told reporters the company was spending US$15 million to increase its semi-processed and canned-tuna manufacturing facility in General Santos from the current 140 tonnes per day to 200 tonnes.It would also expand its PNG facility with an investment of US$13 million (K35 million).The expansion plan would require up to 1,500 more employees, the company said.

Govt to sign deal on secound LNG project

THE National Government is set to sign the gas agreement for the second liquefied natural gas (LNG) project being developed by InterOil Corp.Acting Governor-General Dr Allan Marat will sign the deal tomorrow at 2pm at the Government House.Then at 3pm, InterOil and the State will sign at Parliament, and at 4pm the documents will be registered with Department of Petroleum and Energy (DPE).The agreement will pave the way for further development of the project.The National Executive Council (NEC) approved the project agreement in principle last Dec 10, just two days after project developers for the PNG LNG project led by ExxonMobil Corp gave the nod for the project to proceed starting with the construction phase next year.Prime Minister Sir Michael Somare had announced the NEC decision.InterOil has already applied for petroleum retention licence (PRL), a first step to getting the petroleum development licence (PDL) for the Elk/Antelope fields in Wabo, Gulf province.The InterOil project targets a US$6 billion (K17 billion) two-train LNG facility, with each train capable of producing about four million tonnes of LNG per year.Petromin PNG Holdings Ltd is the State’s nominee to participate in the project for State’s 22.5% (2% for landowners) interest.

MAS' plans for saving RM649mil

By TEE LIN SAY
Carrier plans to buy six A380s, ‘bundle’ four planes from PMB for RM3.19bil
PETALING JAYA: Malaysia Airlines System Bhd (MAS) will have a cost savings of RM648.9mil over the next three financial years (FY) beginning FY 2010 with its proposal to acquire six Airbus A380s and “bundle” four Boeing aircraft from Penerbangan Malaysia Bhd (PMB) for RM3.19bil.
The national airline will pay PMB RM1.54bil cash for novation of the purchase of the A380s from PMB to MAS under the deal.
It is also paying RM190mil cash and undertaking liabilities of RM1.46bil to bundle two B777 and two B747 aircraft.
Tengku Azmil Zahruddin and Airbus senior vice-president, sales, customer affairs, Thomas Friedberger at the MoU signing ceremony. They are flanked by MAS stewardesses
The bundling concept refers to MAS paying cash upfront as pre-lease rental to PMB, hence allowing a certain amount of discount to MAS.
At the end of the lease period, PMB will have an option to buy back the planes from MAS.
MAS is also expecting a compensation of about RM330mil for the delay in the deliveries of the Airbus A380 from January 2011 to August 2011.
MAS’ strategy, moving forward, is to transform from a 100% leased fleet to owning at least a third of the aircraft in its core fleet.
“While leasing ensures that we have the flexibility with our fleet, we pay a premium for this. In practice, we do not need full flexibility for the entire fleet,” MAS managing director and CEO Tengku Azmil Zahruddin told reporters at a press conference yesterday.
To fund this acquisition, MAS has proposed to offer 1.67 billion new shares to raise about RM2.67bil.
The rights shares will be offered to shareholders on the basis of one rights share for every one share held at a date to be announced later.
At RM1.60 each, the rights shares are priced at about 32.1% discount to the theoretical ex-rights price of about RM2.36 based on a five-day volume weighted average market price up to Dec 21.
Of the proceeds, RM500mil will be used for the acquisition of A330-300 aircraft, RM1.78bil for working capital, RM365mil for the repayment of bank borrowings and the remainder for estimated expenses.
PMB and Khazanah Nasional Malaysia, which collectively own 69.33% of MAS, have agreed to fully take up the rights issue.
The listing of the new rights share is estimated to happen in early March 2010.
Earlier, MAS and Airbus signed a memorandum of understanding covering the order of 15 A330-300 and acquired purchase options for another 10.
The total cost of the 25 aircraft is US$5bil.
These fuel-efficient aircraft will be delivered from 2011 to 2016 and will serve the growing markets of South Asia, China, North Asia, Australia and Middle East.
When all 15 A330 aircrafts are received by 2016, MAS expects annual savings gains of RM300mil.
MAS will also have the youngest, most fuel-efficient and environment-friendly fleet in Asia.
“This is the best time to order aircraft.
“When you order in a downtime, you get better deals and the aircraft is received when the economic cycle picks up,” Azmil said.
Maybank Investment Bank Bhd senior analyst Khair Mirza views the deal positively, saying that apart from cost savings, the acquisitions would bring in new revenue and improve yields due to the planes’ larger capacity.
Khair expects MAS to stage a turnaround in FY10. “Don’t be surprised if fourth-quarter earnings surprise on the upside, as cost has come down significantly. I think we should see some recovery in MAS’ yields,” he said.
Meanwhile, upon completion of the rights issue and proposed aircraft acquisition, MAS’ gearing ratio will fall to 1.3 times.
Gearing will peak in 2011 to 2.1 times due to the delivery five A380, five A330-300 and three B737-800.
Come 2016, with the increased capacity and new product offering from its new aircraft, MAS’ gearing will drop to one time.

Oil prices rise after OPEC decision

NEW YORK: Oil prices rose after the world's biggest oil producers on Tuesday opted to leave production volumes unchanged, a decision that could mean short-term stability for energy prices after a volatile year.
Benchmark crude for February delivery rose 68 cents to settle at $74.40 a barrel on the New York Mercantile Exchange, after dropping to $72.72 earlier in the trading session.
OPEC negotiations in Africa can have a direct impact on consumers and what they must pay to heat their homes or fill up the car.
Crude prices peaked in late October and have been edging downward since.
So have retail gasoline prices and other fuels that are derived from oil.
Energy in the past year have rebounded quickly overall.
The price of crude doubled after OPEC agreed to reduce output by a combined 4.2 million barrels each day in late 2008.
Yet as oil prices have climbed, some OPEC nations have begun to cheat on those production quotas, putting more oil than they had agreed to on the market to raise sorely needed revenue.
Compliance is with those quotes is believed to have dropped from 80 percent at the beginning of the year to 60 percent now.
Crude prices have fallen about $10 per barrel in two months.
Sticking to the production agreement was the focus of oil ministers meeting Tuesday in Angola, and also of investors who see that OPEC compliance has been sliding.
"OPEC's decision to hold production steady is bearish because we know production is going up," PFGBest analyst Phil Flynn said.
Still, prices appear well within the comfort level for the Organization of Petroleum Exporting Countries.
It's part of the reason that retail gasoline in the U.S. has remained steady for weeks at about $2.60 per gallon.
In other Nymex trading in January contracts, gasoline rose almost 2 cents to settle at $1.8880 per gallon and heating oil rose less than a penny to settle at $1.9486. Natural gas rose 4.6 cents to settle at $5.715 per 1,000 cubic feet.
In London, Brent crude for February delivery rose 47 cents to settle at $73.46 on the ICE Futures exchange. - AP

Sunday, December 13, 2009

Kenmore’s K30m steel plant in Tari

Source:
By ANDREW ALPHONSE in TARI
THE Kenmore Group will put up a K30 million plant in Tari, Hela province, to produce steel products for the upcoming liquefied natural gas (LNG) project.Kenmore’s third steel plant in the country under Atlas Steel PNG will manufacture iron roofing sheets, nails, steel and wire fencing and steel frames.These products are currently being produced by Atlas Steel in Lae and Port Moresby.The new factory would mainly supply steel products to Hela and the rest of the Highland provinces.A groundbreaking ceremony for the new plant was held last Friday at Piribu village, just outside of Tari town, with TariPori MP and Education Minister James Marape and Allan Fleay, general manager Kenmore Industrial devision, in attendance.Mr Fleay said the new Atlas Steel factory would be the group’s third in the country, after Lae and Port Moresby.Employing about 100 skilled and semi-skilled workers, the factory expects to have its first output by middle of next year.Mr Fleay said it was a tough decision for Kenmore to build the factory in Tari which does not have electricity, telecommunications and other basic services.However, he said Kenmore had “confidence” in the Hela people and its leadership led by Southern Highlands Governor Anderson Agiru.Mr Fleay said the raw materials for the factory would be transported from Lae port.He said with the projected opening of the new Gulf-Southern Highlands highway, raw materials would also be outsourced via Kopi port at Kikori.

InterOil soars on Wall Street

Source:
By YEHIURA HRIEHWAZI in Brisbane
INTEROIL Corp’s shares in the New York Stock Exchange jumped 7.6% last Friday after the PNG Government gave approval for the Canadian oil company’s US$6 billion (K16.1 billion) gas project in the country.InterOil shares shot up US$4.97 (K13.43) to trade at US$70.33 (K190.08) per share.Bloomberg reported that earlier in the day, the stock traded at US$70.99 (K191.86) for the biggest intra-day gain since Oct 27 this year.The situation facing Oil Search Ltd is the opposite.Despite the K42 billion PNG liquefied natural gas (LNG) project sanctioning last Tuesday, its stocks slipped the whole of last week to trade at A$5.43 (K13.43) per share on the Australian Stock Exchange.Meanwhile, Oil Search company secretary Stephen Cardiner gave notice to ASX late last Friday that the company intended to issue a large portion of shares at a considered value of A$5.79 (K14.32).Mr Gardiner said the proceeds of the shares issued would be used to support OSL’s equity funding for the PNG LNG project and support a range of growth initiatives and provide enhanced financial flexibility.There was no response from messages left at OSL’s media liaison officers late last Friday regarding the share price drop and the proposed shares issue.But other sources spoken to said OSL shares slip was due largely to the falling price of crude oil.“The global oil demand is key … crude oil prices were sliding so the OSL share performance is expected.“Also, the market would take notice and respond once bankers and financiers of the PNG LNG project give their firm approval for the project,” the source said.The massive project was to be financed largely by a consortium of bankers (on a 70:30 basis), so their approval is crucial, the source said. Meanwhile, InterOil's vice president for capital markets Wayne Andrews told Bloomberg the company's share prices hike was related to the PNG Government's approval of its LNG project.InterOil stock has more than quadrupled in price this year after chief executive officer Phil Mulacek and his PNG team of exploration staff discovered oil and gas fields in the Wabo area of Gulf province.It plans to build a plant to liquefy gas and export it to Japan and South Korea.

Kina to benefit fom gas decision

A POSITIVE investment decision outcome for the PNG liquefied natural gas (LNG) project may result in some positive impact on the kina.The kina depreciated 0.4% against the US dollar in the interbank market late last week on strong demand for the greenback, which may remain steady in the near term in the coming months.This week’s key risk as such the US retail sales, Australian GDP data and the Reserve Bank of Australia (RBA) monetary policy minutes would determine the direction of PGK crosses.According to ANZ Weekly Market Report, the kina relatively gained some ground against the yen, euro and the British pound, but mildly depreciated against other major currencies.There were mix results on the kina crosses last week on a surge in last month’s US employment figures and a surge in risk aversion following European sovereign credit outlook downgrades.

Thursday, December 10, 2009

Petrochemical industry is next goal, says Agiru

DEVELOPING a petrochemical industry is the next goal for Southern Highlands Governor Anderson Agiru, now that the PNG LNG project has been approved.“That’s my next target. My vision was achieved on Dec 8. I’m a satisfied man and I thank ExxonMobil and Oil Search, and the State team led by ministers William Duma and Arthur Somare.“Now I’ll dedicate the next 10 years working on developing a petrochemical industry, starting with LPG,” he said.LPG is the byproduct of LNG, after the wet gas is stripped. Since the PNG to Queensland gas pipeline project was mooted, Mr Agiru had consistently campaigned for an LNG plant to be built on shore, rather than piping the gas to Queensland.He believed the country would benefit more when the gas was processed in-country.He fully backed Oil Search and ExxonMobil when the PNG to Queensland pipeline project was abandoned, and the LNG project was pursued.PNG would have been a passive player, and gained less financially, had the Queensland pipelineproject gone ahead.“The pricing today is much better. The price of gas is around US$8.45/mmbtu which is better than the US$3.60/mmbtu that we would have got.“The sale price concluded with customers is in the double digits, so we are much better off,” he said.Meanwhile, Mr Agiru said Enga province, the brother of Hela, would not miss out on benefits.At the just concluded licence-based benefits sharing agreement forums, Mr Agiru ensured that Enga provincial hospital would be built as part of the agreement.Also to be built would be a road linking Tari to Porgera, Kandep, into Laiagam and Wabag and Wapenamanda.Enga leaders were invited to the umbrella BSA in Kokopo and the LBBSA forums, but they did not attend.“Despite their absence, I can assure the people of Enga that we will deliver these projects,” Mr Agiru said.

Petromin wins big role in second LNG project

A WHOLLY-owned State entity, Petromin PNG Holdings Ltd, has been confirmed the State nominee to participate in the second liquefied natural gas (LNG) project being developed by InterOil Corp.And the National Government’s equity in this project is 22.5% in the upstream, made up of 20.5% to Petromin and 2% for project landowners.In addition, State has been offered a further 22.5% in the LNG Project.Prime Minister Sir Michael Somare made this known in a statement yesterday following the National Executive Council (NEC) approval of the project agreement.Petromin would participate in the upstream and midstream components of the project.Petromin managing director Joshua Kalinoe, while welcoming the endorsement of Petromin, said the company had started discussions with potential strategic partners to fund its 20.5% equity participation. “The approval of the LNG project agreement by Cabinet has given us the confidence to complete these discussions and move forward with certainty in the project implementation process,” Mr Kalinoe said.As at August this year Petromin had so far contributed US$8.4 million (K23 million) in part towards its 20.5% interest in the development of the Elk/Antelope upstream project.Earlier in the March quarter it contributed US$3.4 million (K9.3 million) and then US$1 million (K3 million) in the June quarter but had much earlier made initial deposits.According to InterOil all funds received were being treated as deposits until a petroleum development licence (PDL) was granted.

2nd LNG plan gets green light

THE National Executive Council (NEC) has approved the project agreement for the second liquefied natural gas (LNG) project being developed by InterOil Corp.Prime Minister Sir Michael Somare yesterday announced the Cabinet decision, two days after the ExxonMobil-led K42 billion PNG LNG project was approved to proceed with production of about 6.6 million tonnes of LNG a year.The NEC approval means InterOil can now embark on capital raising drive and proceed with expenditure needed to further the LNG project at its Elk/Antelope fields in Wabo, Gulf province.It has already applied for petroleum retention licence (PRL), a first step to getting the petroleum development licence (PDL).InterOil said the LNG project targeted a US$6.0 billion (K17 billion) two train LNG facility, with each train capable of producing about four million tonnes of LNG per year.Sir Michael said: “The InterOil led project will contribute significantly to the economic prosperity of the Gulf province and PNG in general. “I am very pleased that Cabinet has given InterOil and Petromin the green light to develop a second LNG project for the country after two years of detailed negotiations between the State and the project developer. “The project agreement offers the same fiscal and regulatory benefits to that approved for the PNG LNG project.“This is a significant milestone for PNG to have two LNG projects that will gainfully add value to the development of country and its people,” he said, adding the country would be transformed even further with the prospects of a third LNG project, led by Talisman Ltd.“I commend everyone that has worked tirelessly to bring to completion this project agreement,” Sir Michael said.Petromin PNG Holdings Ltd, the State’s nominee to participate in the project for the 22.5% (2% for landowners) State equity, has commended the Government for making strategic investment decisions for the benefit of the country this week.Managing director Joshua Kalinoe said the approval meant Petromin and InterOil would now start the project implementation process.“The Government has taken a very mature and strategic approach in handling the two projects which set the foundation for a positive development outcome for the future,” Mr Kalinoe said. Petromin and InterOil would continue the drilling programme to determine the full extent of the field which has indicated presence of liquids, including oil.Last March 2 at Antelope-1 InterOil flared a world record 382 million cubic feet of gas per day (mmcfpd) of gas and on Dec 1 flared 705 mmcfpd claiming another world record.It is developing its proposed Antelope-3.

Wednesday, December 9, 2009

Compact Bungalow in Sri Hartamas


Let’s face it; a 3000 sq. ft. residence is not what commonly referred to as bungalow. But Monica Wong of PDI Design begs to differ, as she has proved with her recent project in Sri Hartamas that it is possible to have five bedrooms, a spacious kitchen and a music room built on a 3000 sq. ft. built-in area.
The homeowner, who prefers to remain anonymous, prides herself in her stunning residence. She seems contented whenever Wong, the interior designer from PDI Design she had hired, refers to her residence as a bungalow.
The quandary over the term 'bungalow', however, has long been debated. It is said that the term ‘bungalow’ derives from the Gujarati word of baṅgalo (Hindi word baṅglā), which used elliptically for a house in the Bengal style - traditionally a small, one-storey house with a wide veranda.
The term was first used in English vocabulary in 1696 to describe "bungales or hovells" in India for English sailors. And thanks to the British navy, the term had since travelled around the world and interpreted differently.
As a result, exceptional difference in the modern use of the term ‘bungalow’ can be found across the globe. In Malaysia and Singapore, for instance, bungalow refers to a detached, family house that is usually of two to three storeys with its own compound. If we were to agree with this definition, then yes, the homeowner and her designer have every right to call this beautiful, modern classic house, a bungalow.
The Concept: Modern Classic
Music room overlooking the pool deck, serves as the gathering spot for the family.
“To suit my client’s fancy, I have chosen a classic modern concept for this bungalow,” says Wong, the interior designer. According to Wong, her client is a stylish woman who lives with three daughters.
Wong insists that one of the biggest challenges in conceptualising the bungalow is to find the common ground between the ladies in the family.
“Each and every one of them has different tastes towards designs. What you are looking at right now is a tailored interior to satisfy everyone!”she says.
What was agreed by the family members is a modern classic design, a style that conforms to the modern luxury standard without going overboard with the obligatory stark feel. It was not that kind of sophistication the family was aiming for. To the contrary, the family wanted something classically modern, a design concept that is easy to understand, warm yet contemporary.
Classic element such as wood is set against modern furniture and lightings. Such mixture is best illustrated by the living room, where a set of hardwood ceiling panel is put in contrast against the uber modern centerpiece, which is a crafted acrylic layered on a coloured mirror.
The designer masterpiece, which also functions as a space divider, forms a harmonious blend of modern and classic design that complements to the timeless concept of the house.
The modern feel is further highlighted by the colourful furniture and large window walls decorated with free falling drapes. The juxtaposition of all these elements creates a staggeringly opulent look.
The Optimum Use of Space A swimming pool is an exquisite addition to any home.
The swimming pool of this home is located at the center where the living room, dining room and the music room open out to it. What’s interesting about the swimming pool is that there is a connecting pool deck in between from the second floor, from which the water cascades into the pool on the ground floor.
“It is built in such a way so that the family can enjoy the tranquil spaces while appreciating the calming effect of the water that falls into the pool,” says Wong.
The music room that overlooks the pool, too, displays modern classic design. Wooden floor and a grand piano represent the classic touch, while contemporary furniture, quirky table lamp and chandelier, plus avant-garde wallpaper on one side of the wall give a modern finish to the room.
Another interesting feature in the house is the kitchen, which is stylishly designed in sleek white. The careful coordination of colour starts from the tiles, the cabinets and the island.
Nothing finishes a clever design better than a smart combination of artificial and natural lightings, and Monica Wong knows exactly how to do this.
“To control the contrast between classic and modern elements, it is crucial to create an ambiance that suits both concepts. The key to it is the usage of downy sheers, which filters partial sunlight without blocking it entirely,” she explains.
As Wong and the homeowner put it, there is no stopping you from calling your home a bungalow when brilliant spacing strategy and smart lighting concept are applied. By Ellen Tang

SP Setia eyeing more land in JB

By ZAZALI MUSA
JOHOR BARU: SP Setia Bhd is eyeing more land in the Johor Baru district for future development projects in view of the good long-term business prospect, said president and chief executive officer Tan Sri Liew Kee Sin.
To date, the company has 607ha left for development from four projects in Johor Baru, namely Bukit Indah and Setia Eco Gardens in the Nusajaya Corridor, Setia Indah in the Tebrau Growth Corridor and Setia Tropika in Kempas, according to Liew.
“The remaining land here will keep us busy for the next three to five years and we are looking to add 607ha for future projects,’’ he said yesterday.
Liew said Johor’s contribution to SP Setia’s earnings was significant and for the financial year ended Oct 31, RM500mil of its RM1.6bil turnover came from Johor.
A Starbucks employee (left) showing Tan Sri Liew Kee Sin (right), Mohd Jaafar Awang (second from left) and Berjaya Starbucks Coffee Co Sdn Bhd executive director Datuk Francis Lee how he makes coffee at the opening of the drive-thru outlet at Setia Tropika.
He was speaking at the official opening of the drive-thru Maybank and Starbucks Coffee outlet as well as the KFC and Pizza Hut outlets at Setia Tropika’s central business district (CBD) by Johor Baru Datuk Bandar Mohd Jaafar Awang.
Maybank offers the first-drive thru banking services in Johor and the second private banking here after its outfit at the Johor Baru City Square Office Tower and is connected to Malaysia’s first Starbucks drive-thru.
Liew said a three-star hotel by a local operator and serviced apartment blocks would be coming up in Setia Tropika’s CBD next year, occupying 0.40ha and 1.21ha respectively.
“We are going to sign the agreements with the respective parties in the first quarter of 2010 but at this point, I cannot give more details on the two projects,’’ he said.
Liew said the company did not plan to build a stand-alone shopping centre in any of its ongoing projects in Johor Baru as there were already too many shopping centres here.
He said it would instead focus on the niche markets such as drive-thru outlets, hotels and serviced apartments as demand for such products and services in Johor Baru was not fully tapped.
Liew said that for instance, Johor Baru could offer good hotel accommodation alternative for those attending seminars, conferences or business meetings in Singapore as the rates here were much lower.
He said the company would also be looking at Sabah and Sarawak and the contract to build a state-of-the-art transportation hub Aeropod @ Tanjung Aru in Kota Kinabalu would be a starting point.

Petronas likely to give less money to Govt


By IZWAN IDRIS
PETALING JAYA: Lower crude oil prices that hit Petroliam Nasional Bhd’s (Petronas) bottomline hard this year are likely to limit the national oil firm’s ability to repeat the huge payout to the Government last year.
Recent official statements indicated that Petronas’ petroleum payments to the Government are expected to fall between 14% and 19% in the financial year ending March 31, 2010 (FY10) to between RM60bil and RM64bil.
“We suspect the shortfall will come solely from the petroleum income tax portion, down 35% to RM19bil, while dividend distribution will remain at RM30bil,’’ Maybank Investment Bank said in a report yesterday.
Income from Petronas made up a significant chunk of the Govern-ment’s annual revenue.

To recap, total income distribution from Petronas to the Government amounted to RM74bil in FY09.
Of the total amount, RM67.8bil went straight to the Government’s coffers, while RM6.2bil was for royalty payments to several oil producing states.
The Government’s total revenue was estimated at RM162bil in 2009, but is expected decline to RM148bil in 2010.
In the Economic Report 2009/2010 published in October, the Government said its current year revenue from petroleum income tax – assessed on the preceeding year basis – would amount to RM27bil as crude oil had averaged at US$103.69 per barrel in 2008.
This year, the Government is predicting that crude oil price would average at US$65 per barrel. For the first nine months of this year, the Tapis blend – the main type produced in the country – averaged at US$60.70 per barrel.
The oil and gas industry is the Government’s biggest source of tax revenue.
Since October, crude oil price in the international market has consistently remained above US$70 per barrel.
The benchmark price for New York light sweet crude oil futures rose to a high of US$81 per barrel in late October and was traded at US$73 per barrel yesterday.
The rising crude oil prices may help shore up Petronas’ revenue in the second half of its FY10.
The national oil firm announced on Tuesday that its pre-tax profit fell 51% to RM31.2bil during its first six months ended Sept 30, while revenue declined 37.5% to RM98.2bil.
In FY09, Petronas made a pre-tax profit of RM89.1bil on revenue of RM264bil.
Prime Minister Datuk Seri Najib Tun Razak announced in October that the Government intends to bring down its budget shortfall from a 22-year high of RM51.1bil, or 7.4% of gross domestic product in 2009 to 5.6% next year.
To achieve this, the Government plans to cut down on subsidy spending and lower its operating expenditure.

Japan’s Chiyoda snares LNG jobs

Source:
By YEHIURA HRIEHWAZI in Brisbane
ONE of world’s top engineering firms in gas processing plants, Chiyoda Corp of Japan, has won the leading job of designing and building production equipment for the PNG liquefied natural gas (LNG) project, it was reported yesterday.The contract is worth US$4.53 billion (K12 billion) and would be undertaken together with another Japanese firm, JGC Corp. The deal was disclosed yesterday by Japanese news agency, Nikkei English News, a day after the Exxon Mobil led team of joint-venturers signed on the final investment decision (FID) paving the way for construction to begin as soon as all the financing arrangements were concluded.Esso Highlands Ltd, a subsidiary of Exxon Mobil Corp and operator of the PNG LNG project yesterday announced the approved engineering, procurement and construction contracts for the project, pending completion of the project sales and purchase agreements with LNG buyers and finalisation of financing arrangements with lenders.In a statement Esso stated that the approved contracts included:nChiyoda Corp and JGC Corp for the 6.6 million tonnes per year LNG plant including facilities for processing and treating natural gas, liquefaction, storage and loading;*A joint venture between CBI and Clough for the Hides gas conditioning plant;*SPIECAPAG for onshore pipelines and infrastructure;*Saipem for the offshore pipeline; and*A joint venture between McConnell Dowell Constructors and Consolidated Contractors Group Offshore for support infrastructure.Esso Highlands Ltd has 33.2% stake in the project as developer with JV partners; Oil Search Ltd 29%, Independent Public Business Corp (PNG Government, 19.6% (PNG landowners through Mineral Resources Development Co. 2.8%, and Petromin PNG Holdings Ltd’s Eda Oil Ltd 0.2%); Santos 13.5%; and Nippon Oil 4.7%.Esso Highlands managing director Peter Graham said at the final investment decision on signing on Tuesday that sales and purchase agreements and financing arrangements with lenders were expected to be completed early next year.He said the project expected to release information shortly regarding approval of engineering, procurement and construction contracts.The Nikkei report said the Chiyoda and JGC Corp won an order worth about 400 billion yen (K12 billion) in the LNG project outside Port Moresby. The Japanese companies would build two production lines, each capable of making 3.3 million tonnes of LNG a year, it reported, stating the contract was expected to have been signed as early as yesterday and construction was scheduled to be completed in 2013.

Hevi Lift eyes aviation deals in gas project

Aviation company Hevi Lift Ltd is eyeing aviation contracts in the K42 billion PNG liquefied natural gas (LNG) project.With plans to purchase additional aircrafts, Hevi Lift’s managing director Peter Booij said: “We are now looking at expanding our Twin-Otter base and into the fixed wing aircraft.”Now half-owned by Mineral Resources Development Corp (MRDC) and the other held by Regional Aviation Group headed by the Booij family, Hevi Lift would target the resource sector, particularly the oil and mineral sector.Hevi Lift and MRDC last Monday announced the equal stake in ownership (50-50) of Hevi Lift, which was initially sealed two weeks ago in Port Moresby.MRDC managing director Augustine Mano said the partnership marked a milestone for MRDC and its subsidiary four landowner companies as they now had direct control in a company, unlike several of MRDC’s investments where it has no management role.The companies are namely, Petroleum Resources Kutubu (PRK) Ltd, Petroleum Resources Gobe (PRG) Ltd, Petroleum Resources Moran (PRM) Ltd and Mineral Resources Star Mountain (MRSM).The four chairmen – John Kapinato (PRK), Philip Kende (PRG), Pape Punga (PRM) and Bill Menim (MRSM) – witnessed the announcement.Mr Kapinato while for the chairmen’s said: “We did not dream that we would be in the aviation business …we have all been involved in small contracts and small businesses in oil”.He also acknowledged the efforts of Mr Mano that since taking office, he has sought opportunities and invested MRDC interests.

Global demand for LNG to rise

LARGE-scale liquefied natural gas (LNG) projects would be necessary to meet increasing global demand for natural gas, Tom Walters, president of ExxonMobil Gas and Power Marketing Co, said at a panel presentation at the international petroleum technology conference (IPTC) in Doha.Presenting information from ExxonMobil’s 2009 energy outlook, Walters noted that despite the current economic environment, economic progress would be a key driver of energy demand over the long term.“We expect global energy demand to grow from about 230 million barrels a day of oil equivalent (mbdoe) in 2005 to over 300mbdoe by 2030 - an increase of almost 35%,” he said.“The world’s growing demand for gas will challenge our industry to deliver projects on a scale that was barely considered even a decade ago.“The ability to conceptualise, commercialise and execute large-scale, multi-billion dollar projects has become an increasingly important differentiator, which will remain over the coming decades,” he said.He said with gas demand expected to experience strong growth over the next 20 years, resource holders must find ways of developing supplies to meet this growth.Recognising that all types of energy were needed to meet demand, Walters said: “Not only will energy demand be much larger in 2030 than it is today, the mix of fuels used to meet that demand will change as well.“Gas, in particular, will play an increasingly important role in meeting the world’s future energy needs, growing at 1.85 over the 2005 to 2030 period.” - BusinessWire

Tuesday, December 8, 2009

Property overhang raises concerns over viability of new mega projects


By DANNY YAP
Spotlight on mega development projects

PETALING JAYA: Some analysts and property consultants say the development of mega property projects in the nation’s capital, worth billions of ringgit, may provide abundant jobs for players in the construction industry, but note that these projects could be detrimental to the property market in the long term if not implemented properly, and especially if the take-up rates are slow.
It is reported that mega development projects would take place at Dataran Perdana in Jalan Davis, the area surrounding Merdeka Stadium and the vicinity of the Matrade Centre in Jalan Duta.
A property analyst with OSK Research said the mega projects, including the proposed 100-storey skyscraper near the Matrade Centre bordering Jalan Kuching and Jalan Duta, would negatively impact the property market.
“The property market is still in an oversupply position, especially in the high-end sector in the Kuala Lumpur city centre,” he told StarBiz.
Amy Chung notes that current demand for prime properties in the city is in the ‘affordable’ segment.
The analyst said mega property projects like the proposed 100-storey skyscraper near Matrade should have due considerations to ensure satisfactory occupancy and take-up rate, and that they are built within the set timeframe to ensure return-on-investment targets are met.
“The approved mega projects and proposed high-end mega projects are in decentralised locations that may not have the population and infrastructure to support the huge development,” the OSK analyst said.
Although the area near Matrade has a certain level of affluence, as it is located close to Bukit Kiara and Sri Hartamas, it remains questionable whether the population, road access and infrastructure are sufficient to support the mega development.
“For the 100-storey skyscraper to be feasible, it would require significant Government commitment and support, possibly even funding to develop the required infrastructure such as roads, tunnels, bridges and highways to ensure the project is a success,” the analyst said, noting that “so far we have not heard of any major Government commitment for these projects.”
Another local property analyst said with the current property overhang, perhaps the priority should be to address the situation, especially unsold properties in the high-end sector.
“We are not saying that mega projects should not go ahead in this current environment (property overhang), but they should be carefully selected and implemented to ensure these projects do not adversely impact the property market, particularly when the market is still recovering,” he said.
Amy Chung, a real estate property agent who specialises in selling and renting prime properties in the Golden Triangle area in Kuala Lumpur, noted that the current demand for prime properties in the city was in the “affordable” segment, and the recent Dubai debt crisis had exacerbated the demand for high-end properties.

“Even foreign investors from the Middle East are now opting to buy more affordable and smaller properties here,” she said, adding that some developers were now risk averse, choosing to build fewer high-end units and only in strategic locations where they were confident of sales.
Chung said the property sector was market driven and developers and government planners of high-end mega property projects should take note of this fact.
A local property consultant concurred with Chung, saying that any mega property project worth billions of ringgit must be well planned and carefully thought through.
“Many of the prime properties in the city are bought for investment by individuals and institutions expecting attractive yields and favourable capital gains over time.
“Currently, we still have an oversupply of prime properties, especially in the high-end segment, that do not give the expected yields. As such demand for such properties is low,” he said.
And with more high-end mega property projects expected to come onstream, the current oversupply position would get worse and likely depress the prices of properties that are currently unsold and even affect rental prices, according to the local property consultant.
“We believe there is a need to perform a comprehensive impact assessment on the Malaysian property market before any funds are used to finance mega high-end property projects worth billions, which may very well end-up as white elephants,” he said.
He added that the fall in property prices in Dubai was a lesson for everyone, including Malaysia, noting that the prices of prime properties in Dubai had fallen 50% or more since the debt crisis.
The property consultant also criticised the banks that had funded the Dubai projects, questioning whether they had performed sufficient due diligence on the commercial viability of the projects.

Lower oil prices drag down Petronas H1 profit




By IZWAN IDRIS
It posts pre-tax profit of RM31bil on RM98bil revenue
PETALING JAYA: Petroliam Nasional Bhd’s (Petronas) pre-tax profit for the first half ended Sept 30 fell 51% to RM31.2bil, versus a year earlier, as revenue declined 37.5% to RM98.2bil.
“The decrease in revenue was mainly due to the overall decrease in product prices and lower sales volume,’’ Petronas said in an 11-page summary of the group’s latest first-half results posted on its website yesterday.
The sharp decline in profit resulted in lower tax expenses for Petronas for the period under review. The national oil firm’s tax bill stood at RM8.9bil against RM20.6bil paid to the Government in the previous corresponding period.
The group’s net profit declined 48% to RM22.3bil compared with RM42.7bil previously.
Sales of refined petroleum products remained the mainstay of Petronas, generating RM40.5bil in revenue, or 41.2% of the group’s total turnover.

The group’s liquefied natural gas (LNG) business generated RM13.9bil, or 14.1% of total sales, followed by crude oil at RM13.1bil, or 13.4% of total revenue.
“International operations have been the biggest revenue generator for the group since March 2008 and contributed 48.6% to the current-period revenue compared with the first half of 2008,’’ Petronas said.
Domestic business accounted for 21.4% of the group’s revenue, while exports contributed 30% to total sales.
The national oil company said the weak ringgit during the period under review helped mitigate some of the “negative impact” from lower sales price.
Crude oil prices on the international market climbed 50%, from about US$50 a barrel in early April to US$70 per barrel as at the end of September.
However, crude oil was consistently traded above US$100 per barrel in the corresponding six months a year ago. Light sweet crude oil traded in New York rose to a record US$145 per barrel in July last year.

The Tapis blend, the main light sweet crude oil produced in Malaysia, normally trades at a slight premium to prices in New York.
Meanwhile, Petronas’s balance sheet remained healthy.
Total assets at Sept 30 grew 3.8% to RM402.8bil due to the “addition to property, plant and equipment for ongoing capital projects and acquisition of new subsidiaries.’’
The group’s cash balance remained at a solid RM92.7bil, but slightly lower compared with RM94.8bil as at March 31. But the lower revenue means net cash generated from operating activities decreased 69% versus a year earlier. This in turn affected the group’s net cash used in financing activities, which dropped 61.9% to RM6.8bil from RM17.7bil a year ago.
“Net cash used in financing activities for the first half of 2009 includes dividends paid to the Government and minority shareholders, as well as repayment of bonds and borrowings,’’ Petronas said. (December 9, 2009)

Let’s not jeopardise PNG LNG project

I would like to highlight some stumbling blocks with regard to “land ownership issue” in the development of LNG project.Land in the Highlands society and Papua New Guinea, for that matter, is held in high esteem because it gives us our identity and, above all, provides our everyday needs.The Government, before embarking on major deal with potential investors and developers, should have carried out awareness with landowners to assure them of the benefits.There should be a special committee established to get collective views of the resource owners.For the Government to take the land away in the name of development may be welcomed by the handful of educated people in the project area who see this as a perfect opportunity to get rich at the expense of the silent majority who are either semi-educated or illiterate.However, when it comes to the real issues of who gets what, the dialogue with a villager may not be a walk in the park as the Government assumes.From past experiences with oil companies, royalties, equities, etc, only a few individuals have benefited.The sad part is they squander all the money while those back in the villages get nothing and their standard of living today is no better than their forefathers although they are said to be rich.The provincial government has failed to act because it, too, is just as guilty by grossly misusing tax revenue.Thus far, there has been no public inquiry into such wanton abuse.Now that the people of Hela will get a province of their own, is this how the Government is saying thank you to Southern Highlands?For the Government, project developers and landowners to strike a deal, the LBBSA should have come in after a proper social mapping to identify legitimate landowners.I am not an expert but as a citizen, I find that we have not set our priorities right and squander millions just to lure support, not on merit, but purely to speed up the whole process.If we fail to do things properly and in a transparent manner, ExxonMobil may pull out and leave us with a huge debt.This is a real prospect and it is a frightening one. Kanaka observerVia email

InterOil soars 8% in New York trade

INTEROIL Corp, a Canadian energy company, jumped 8% in New York trading after saying a gas well in Papua New Guinea pumped a record amount of the fuel.InterOil, which is based in Whitehorse, Yukon Territory, and run from Cairns, Australia, rose US$4.53 (K12.05) to US$60.43 (K160.72) in New York Stock Exchange composite trading. The shares earlier advanced to US$62.19 (K165.40), the biggest intraday percentage gain since Sept 18.InterOil’s Antelope-2 well pumped the equivalent of 705 million cubic feet of gas a day during a test, the company said on Tuesday in a statement.The rate set a record for a vertical gas well, surpassing the previous high of 382 million cubic feet a day at the company’s Antelope-1 well, Wayne Andrews, vice-president of capital markets for InterOil, said in an interview.“Results continue to exceed the expectations of supporters and challenge the credibility of doubters,” Evan Calio, an analyst at Morgan Stanley in New York, said yesterday in a note to clients.Calio, who has an “overweight” rating on InterOil’s shares, called the flow rate “staggering” and said it probably would spur additional exploration by InterOil and other companies.The flow rate confirms InterOil’s onshore Antelope and Elk fields will be able to produce at least 1.2 billion cubic feet of gas a day, Andrews said in a telephone interview from Australia.The company is planning to buy an additional rig to accelerate plans for eight more wells at the 186 square-km prospect, Andrews said.US households burned an average of 3.98 billion cubic feet of gas a day in September, the most recent month for which figures were available on the energy department’s web site.InterOil stock has more than quadrupled in price this year after chief executive officer Phil Mulacek discovered oil and gas fields in the South Pacific nation and sought partners to help build a US$5 billion to US$7 billion plant to export liquefied gas from Papua New Guinea to Japan and South Korea. – Bloomberg 3Dec09

PNG, Sinopec ink 20-yr supply deal

PAPUA New Guinea will supply liquefied natural gas (LNG) to Sinopec’s LNG terminal in Shandong province, China, for a period of 20 years.This is under a binding sales and purchase agreement for the long-term sale and purchase of LNG totalling about two million tonnes per year.Unipec Asia Co Ltd, a subsidiary of China Petroleum & Chemical Corp (Sinopec) and Esso Highlands Ltd, a subsidiary of ExxonMobil Corp and operator of the PNG LNG project, yesterday announced that Sinopec and the project participants have entered into the agreement. “We are pleased that the project has completed this important agreement with a key Asian LNG customer and look forward to a long and mutually beneficial relationship between Sinopec and the project,” Ron Billings, vice-president LNG, ExxonMobil Gas & Power Marketing Co, said. “This is a key milestone in the project’s schedule.“Sinopec is very pleased to reach the final sales and purchase agreement with the PNG LNG project.“The LNG we have committed will supply an LNG terminal that Sinopec is going to build in Qingdao, Shandong province. “Phase one capacity of the terminal is three million tonnes per annum … with the developments of the market, we will expand the facilities to receive five to six million tonnes per year in a phase two stage.“This LNG terminal will provide long-term and reliable clean natural gas resources to the Shandong market and will play a positive role in meeting the local demand, optimising the energy mix and improving the local environment,” Wang Zhigang, senior vice-president of Sinopec Corp, said.Sinopec is listed in Hong Kong, New York, London and Shanghai, and it is also a fully-integrated energy and chemical company.The PNG LNG project, an integrated development which includes gas production and processing facilities, onshore pipelines and offshore pipelines and LNG plant facilities.Participating interests are ExxonMobil (through various affiliates, including Esso Highlands Ltd as operator) 41.5%, Oil Search 34.0%, Santos 17.7%, Nippon Oil 5.4%, Mineral Resources Development Co 1.2%, and Petromin PNG Holdings Ltd 0.2%.(Participation will change when the PNG State nominees join as equity participants at a later date).

Oil prices fall for fifth straight day

Published: Wednesday December 9, 2009 MYT 7:45:00 AM

NEW YORK: Oil prices dipped below US$73 a barrel Tuesday on a stronger dollar and a slew of economic data that did not indicate a quick rebound in demand from big energy users or from consumers.
Reports from Britain and Germany showed that international manufacturing remains weak.
And U.S.-based economists noted that while America's jobless numbers improved last week, that doesn't necessarily mean consumer spending or energy consumption will return anytime soon.
"The residue of this recession will linger in the psyche of the American consumer - (whose) spending drives two-thirds of the U.S. economy - for quite some time to come," analyst Stephen Schork said in his energy market report.
Crude has fallen now for five days and the sell-off has been particularly strong for January contracts.
More contracts are being sold in future months at higher rates, which indicates few people want to take ownership of oil right now.
Most energy experts believe the U.S. government will report Wednesday that crude supplies rose again last week, just as it has in seven of the past 10 weeks.
Benchmark crude for January delivery dropped $1.31 to settle at $72.62 a barrel on the New York Mercantile Exchange.
In London, Brent crude for January delivery fell $1.24 to settle at $75.19 a barrel on the ICE Futures exchange.
The Confederation of British Industry said one quarter of manufacturers expect output to fall over the next three months.
Meanwhile, Germany said industrial output dropped 1.8 percent in October because of weak production of machinery and cars.
The dollar also rose, which can push oil prices lower. Because crude is priced in the U.S. currency, investors holding other currencies like the euro must spend more to buy oil.
In other Nymex trading in January contracts, heating oil fell 1.88 cents to settle at $1.9909 a gallon while gasoline gave up 1.6 cents to settle at $1.9246 a gallon.
Natural gas rose 14.3 cents to settle at $5.114 per 1,000 cubic feet. - AP

Petronas spends RM13.7bil on exploration and production

Wednesday December 9, 2009

PETALING JAYA: Petroliam Nasional Bhd (Petronas) spent RM13.7bil on its exploration and production (E&P) business in the first six months ended Sept 30, or 9.8% more than in the year-earlier period.
The higher E&P spending was by “upstream subsidiaries for the production and development of various blocks,’’ it said but gave no further information.
The national oil company also spent RM2.1bil to shore up its shipping segment during the period.
According to figures posted on the group’s website, Petronas increased capital expenditure (capex) at home by 27% to RM13.7bil during the period under review, but cut spending overseas by more than half to RM5.5bil.
This led to a drop in Petronas’ total capex to RM19.2bil in the first half, down 17.2% against RM23.2bil the year before.
On the production side, Petronas said the group’s total oil and gas output declined in the first six months “due to the implementation of reservoir management plan and flaring reduction efforts.’’
“There has also been an increase in maintenance activities,’’ it said.
Petronas’ oil output stood at 725,800 barrels per day (bpd), while gas production was one million bpd in oil equivalent.
Its overseas production made up 275,400 bpd in oil and 367,400 bpd in gas production.
Africa was the biggest contributor to Petronas’ overseas production volume, followed by South-East Asia.
The figures from Petronas also showed that Malaysia’s total oil production was 658,100 bpd and the national oil company’s share of the output was 450,400 bpd.
In the gas segment, total domestic production was 939,800 bpd with Petronas-owned gas wells contributing 632,600 bpd.
Total national production of oil and gas was 1.6 million bpd in the six months ended Sept 30.

IPBC Govt’s nominee for LNG project

THE Independent Public Business Corp has become the latest major player in the liquefied natural gas (LNG) project representing the Papua New Guinea Government, with a total stake now of 19.6%.The final investment determination by project owners ExxonMobil yesterday has allowed the State to get a further 0.2%, thus boosting its initially estimated ownership of only 19.4%.With bigger stake at the project, the Government finally nominated IPBC as its nominee.Peter Graham, managing director for project operator Esso Highlands Ltd, said this yesterday shortly after the project partners and the National Government gave the approval for the project to go ahead after making the final investment decision (FID).He said the initial 19.4% determination was based on the hydro carbon contributions and the capital costs associated with each of the licences, which were factored into a formula, thus resulting in the 19.4%.Mr Graham said with State gaining the 0.2%, some stakes of project partners had either gone up or gone down, but could not reveal the exact figures as of yesterday.“And there will be several others (fluctuation of stake ownership) through the life of the project as we develop the gas.“There will be another check on the reserves and then there will be re-determination and there would be slight adjustments,” he said, adding all project participants had paid their share in the project.Funding for National Government’s 19.6% stake in the project through IPBC is from Abu Dhabi’s International Petroleum Investment Co (IPIC).The Mineral Resources Development Corp (MRDC) has 2.8% stake in the 19.6% and Eda Oil Ltd, a subsidiary of Petromin (PNG) Holdings Ltd has 0.2%.Managing director for Petromin, Joshua Kalinoe said Petromin had already contributed about US$3 million (K8 million) towards the project.He said an estimated total contribution would be over US$10 million (K27 million) for the 0.2% equity, as calculations were continuing.Funding would be from cash reserves and other arrangements.He said Eda Oil was currently participating in the project because of its Moran oil interest.But he regretted that Petromin did not have a bigger stake in the project.

Japan eyes pipeline deals

Source:
By YEHIURA HRIEHWAZI in Brisbane
Picture:

JAPAN’s integrated steel makers are confident of winning the multi-billion kina contract to supply pipes for the construction of natural gas pipeline from the Highlands to the planned Port Moresby LNG processing plant.With the final investment decision (FID) scheduled today, the Japanese appear to be acting on “inside” information that the project is set to get the clearance to proceed.Information made available to The National by the steel and allied metals industry yesterday indicated that “Japan’s integrated steelmakers will win contracts in early this month”.Three of Japan’s big steel manufacturers will supply the pipes, namely Sumitomo Metal Industries Ltd, Nippon Steel Corp and JFE Steel Corp.They will supply a total of 300,000 tonnes of UO pipes to run over 700km from the HelaTari gas region in Southern Highlands through the Gulf and Central provinces and into Konebada outside Port Moresby.Tenders for the supply of steel pipes were called last year and the three Japanese companies were also among companies that submitted tenders along with three Malaysian companies, of which two are specialised in coating the pipes and could be given the contracts to work alongside the Japanese suppliers.The report said the three Japanese integrated steelmakers made separate offers to the tender.Under the existing circumstances, there is a strong possibility that the Japanese steelmakers will get the whole orders for the UO pipes required, in which Sumitomo is expected to account for 170,000 tonnes, Nippon Steel nearly 100,000 tonnes and JFE Steel 33,000 tonnes.Indications are that Nippon Steel’s UO pipes will be used in the onshore section of the gas pipeline, Sumitomo Metal’s in the submarine section and JFE Steel’s in the deepest of the submarine section.“PNG’s gas pipeline project represents the largest in Asia this year. Besides, new pipeline projects in Australia and Scandinavia are on track to final settlements between yearend 2009 and early 2010.“As a result, UO pipe supply negotiations are perking up in the world’s various nations,” the report said.“As matters now stand, it is likely that the three Japanese steelmakers will succeed in working out rolling plans to meet their UO pipe production in the first half of next year if they can promote negotiations smoothly on their UO pipe exports to the world’s destinations,” the report said.

Sunday, December 6, 2009

US$3b push for ExxonMobil

US$3b push for ExxonMobil
Source:
By YEHIURA HRIEHWAZI in Brisbane
ONLY a day before the final investment decision (FID), the PNG liquefied natural gas (LNG) project received a kiss of approval from the US Export-Import Bank last weekend with a US$3 billion (K8 billion) loan to ExxonMobil for the project.A further US$5 billion (K13 billion) is expected from three other government’s export-credit agencies.Two weeks ago, the Australian government announced that its facility - Export Finance and Insurance Corp (EFIC) – would assist Australian companies in the US$15 billion (K40 billion) project.The news of US government support quickly spread globally last Saturday (Friday US time) as the announcement was made by Eximbank vice-president Phil Cogan, and carried immediately by major financial online agencies like Bloomberg, Forbes and Financial Times.ExxonMobil’s financing arrangement comes only days after it signed a sales and purchase agreement with Chinese energy company, Sinopec, for a 20-year supply of two million metric tonnes of LNG a year from its two-train processing plant that will be located outside Port Moresby.The PNG LNG partners will decide tomorrow whether or not to go ahead with the project.All indications are that, the companies will give the final approval tomorrow - a decision that is expected to greatly change the economic landscape of PNG.If in the affirmative, this will be the single largest foreign investment in the country’s history that will earn over K50 billion in revenue for the Government, not to mention benefits to landowners and businesses.Mr Cogan said the funding from the US and about US$5 billion (K13 billion) from the export-credit agencies of three other governments will allow a consortium of companies to build a pipeline and liquefaction plant.The project is led by Esso Highlands Ltd (41.4%) and its partners Oil Search Ltd holds a 34% stake, Santos Ltd of Australia 17.7% and Japan’s Nippon Oil Corp. 5.4%, and the rest by Petromin’s Eda Oil and landowners. The US Export-Import Bank is a state-owned agency that provides loans or guarantees to help US companies or exporters secure sales in projects overseas, especially in areas where there commercial banks were unwilling to participate or where there is high commercial and political risk.Mr Cogan said the Eximbank board gave a preliminary endorsement to the plan last month and final approval was granted last Thursday (Friday PNG time).The details of the financing were set to be announced this week, he said. Houston-based KBR Inc is doing the project design.