Samling, a trail blazer?

THE oil and gas (O&G) industry may not be exciting in Peninsular Malaysia, but it sure is sizzling in Sarawak.

The Samling group this week increased further its interest in Barakah Offshore Petroleum Bhd to 13.19%, underling its interest in the O&G company. It does not take much to guess the interest of Samling group in Barakah – it obviously has to do with the greater development of the O&G industry in the state.

Last month, the state set up its very own version of Petronas – Petros Sarawak. Petros is now actively looking for a chief executive and other key officials to drive the organisation.

All O&G-related jobs in Sarawak will likely be channelled through Petros.

As this is unfolding, obviously Sarawakcontrolled O&G companies would stand a better chance to bag jobs from Petros.

At the moment, there are not many large O&G companies from Sarawak. And it would be futile to build one from scratch when there are many O&G companies that are going for a song.

Two years ago, nobody would have been able to buy into an O&G company such as Barakah at such low valuations. Today, it is very possible because the peninsula-based O&G companies are fighting for a small pool of jobs.

Margins are low and many have assets that are left idle with a bank loan to service.

The time is ripe for more merger and acquisition activities in the O&G sector.

For companies such as Samling that made its fortune in timber, switching focus to the O&G sector with the help of Petros is apt.

Timber is a tough industry, as the easy log- ging concessions have all been taken up. The O&G sector is not easy. But valuations are low and good companies with strong manpower are up for sale at a bargain.

So, is the Samling group’s move into Barakah just the start of a new acquisition trail?