Long term visibility for Sapura Energy following new contract
KUALA LUMPUR: The latest award of contracts for Sapura Energy Bhd (Sapura Energy) from Saudi Aramco expanded the group’s new orders in financial year 2019 forecasts (FY19F) up to RM7.1 billion.
This is likely to gain further traction with tenders valued at US$7.4 billion (RM31 billion) and potential prospects worth US$10.2 billion (RM42 billion).
This came after Sapura’s wholly-owned Sapura Fabrication Sdn Bhd and Sapura Saudi Arabia have been selected for Saudi Aramco’s long-term agreement (LTA) programme to provide engineering,procurement, fabrication, transportation and installation (EPCI) for a period of six years with extension options.
Sapura is among the four new entrants into Aramco’s LTA programme, which also include China’s Offshore Oil Engineering (COOEC), a consortium comprising UK-based Lamprell Energy/ Netherlandsbased Boskalis/TechnipFMC and Malaysia Marine & Heavy Engineering Holdings (MMHE).
Aramco’s five existing preferred LTA contractors are McDermott International, USbased Dynamic Industries, Saipem, a JV of India’s Larsen & Toubro with Oslo-listed Subsea 7, which acquired Emas Chiyoda’s business last year in Saudi Arabia, and Abu Dhabi’s National Petroleum Construction Company (NPCC).
Currently, they are bidding for five large Aramco offshore contracts, including a major package for its Berri incremental offshore development that is expected to be worth over US$1 billion alone.
Researchers at MIDF Amanah Investment Bank Bhd (MIDF Research) said the LTA programme will allow Sapura Energy to participate in bids for engineering, procurement, fabrication, transportation and installation (EPCI) contracts to support Saudi Aramco’s offshore projects.
With Sapura’s participation in this long-term programme with Saudi Aramco, we opine that it will open further inroads into penetrating the Middle East region.
This is in line with Sapura’s ongoing effort of investing to open up new markets for the group. As of September 2018, Sapura Energy has invested approximately USD101.0b in Middle East.
Currently, Sapura Energy has minimal exposure in the Middle East with active bids for 14 projects worth approximately US$3.9 billion as of September 2018.
AmInvestment Bank Bhd (AmInvestment Bank) saw that Saudi Aramco’s InKingdom Total Value Add (IKTVA) programme is based on its long-term strategic Vision 2030 to reduce Saudi Arabia’s dependence on oil and diversify its economy.
The programme requires suppliers and service players operating in the kingdom to attain 70 per cent local content by 2021, with service providers exporting 30 per cent of local energy goods and services output.