Gamuda, Protasco and WCT eye Sabah highway project

KUCHING: Sarawak will have its own multi-million ringgit integrated supply base in Bintulu next year to serve the needs of oil and gas (O&G) industry.

Phase one of the supply base project, which is undertaken by Bintulu Supply Base Sdn Bhd (BSB), is expected to cost RM300mil. It will provide a 370m long wharf able to accommodate four offshore supply vessels at any one time.

The supply base is scheduled to be operational in the fourth quarter of 2019.

Bintulu Supply Base signed an agreement to lease land at the Second Inner Harbour, Bintulu Port for the project from Bintulu Port Holdings Bhd (BPHB) yesterday.

The signatories were Bintulu Supply Base chairman Ahmadi Yusoff and BPHB chairman Hadzari Abang. Chief Minister Datuk Patinggi Abang Johari Tun Openg witnessed the ceremony.

Bintulu Supply Base is a smart partnership between Yayasan Sarawak and state-owned private companies OBYU Holdings Sdn Bhd and Kris Sakti Petroleum Sdn Bhd. It is a strategic asset and infrastructure for the growth of the Sarawak O&G industry.

“The integrated supply base will provide a one-stop solution for the O&G industry, from exploration to development to production needs, including provision of facilities and services to support drilling operations.

“The integrated asset and facilities hold the key to ensure a cost effective and efficient solution to the O&G players,” according to Bintulu Supply Base.

The company said the development of the supply base would be carried out in phases, taking into consideration the specific requirement of the O&G industry.

“The phased development approach is based on market demand and the fit for purpose of the O&G players.

“The supply base will operate in compliance with the industry health, safety, security and environment standard,” it added.

Bintulu Supply Base said as the project is strategically located in relation to the offshore fields in the Sarawak Basin in close proximity to fields offshore Sarawak, this would enable cost efficiencies to be attained by the O&G players from cost savings due to the shorter travel time from offshore to onshore.

Ahmadi said the set-up of the supply base was in line with Petroliam Nasional Bhd’s (Petronas) initiatives to achieve cost efficiency and operational effectiveness especially PETALING JAYA: Gamuda Bhd, Protasco Bhd and WCT Holdings Bhd are bidding for Pan Borneo Highway (PBH) Sabah portion which will entails construction cost of RM12.9bil, or 20% lower than Sarawak’s section.

CIMB Equities Research said that combined, they are the largest non-tolled highway in the country stretching over 2,000km.

“In our view, PBH Sabah is an election-driven project; we expect the award of the balance 18 packages worth RM9.7bil to be accelerated post-General Election 14 in May,” it said in a report yesterday.

Each PBH Sabah package could be worth RM500mil to RM1bil, by its estimates. It foresees peninsular contractors emerging as joint venture (JV) partners with Sabah players. In its coverage universe, Gamuda, Protasco and WCT are bidding for PBH Sabah.

To recap, phase 1 of PBH Sarawak (RM16bil) has been fully awarded, the RM12.9bil PBH Sabah will proceed with contract rollout in the months ahead. for players in Sarawak.

Johari described the integrated supply base project as a significant development of Sarawak’s O&G inclusion strategy.

“It will provide a strong platform for a most effective and efficient logistical service to the upstream activities undertaken by O&G companies on the continental shell, off the coast of Sarawak where valuable petroleum and natural gas resources are located,” he said.

The chief minister said the Sarawak government had decided to issue mining leases to the newly set-up Petroleum Sarawak Bhd (Petros), thereby vesting the mining rights unto Petros.

He said Petros would work out fair and equitable arrangement with Petronas and other companies relating to the mining of O&G from the areas covered by the mining leases.

“In regulating the upstream O&G production, Petronas must only deal with Petros to produce and extract oil and gas from beneath land within the state’s boundaries.

“Petros, under direction from the state government, will then enter into mining and production sharing agreements with Petronas and other major industry players,” he added.

Johari said the state government would also regulate gas distribution in Sarawak by July 1, this year with the enforcement of the

Based on statistics revealed by Borneo Highway PDP (BHP), seven packages of PBH Sabah worth RM3.2bil have been awarded, leaving the balance 18 packages to be awarded in 2018 (2Q18 onwards), with an estimated value of RM9.7bil.

CIMB Research said due to the shortage of Sabah contractors (14 qualified Sabah contractors, listed and non-listed across all tiers, according to Ministry of Works vs. 35 total packages up for grabs for PBH Sabah), it remains to be seen if each bidding JV would be able to secure more than one package.

As in the case of PBH Sarawak, the tenders for PBH Sabah are not exclusively for Sabah players.

This, on the flipside, is positive for Peninsular Malaysia contractors, whom, according to Ministry of Works, would be able to hold a 30% stake in the bidding JV with Sabah players, which will hold a minimum 70% stake in the JV.

In our view, actual execution of contract value would at least be in proportion to JV stakes, or more according to each contractor’s technical expertise and resources. Overall, PBH Sabah is divided into three phases, with the largest (706km or 57% of total 1,236km) being phase 1 that covers the SouthwestNorthwest-Central-Southeast Coast of Sabah up to Tawau.

“Within our construction universe, Gamuda, Protasco and WCT Holdings are known to be bidding for PBH Sabah.

“Gamuda and WCT Holdings are earlier beneficiaries of PBH Sarawak, after securing RM1.3bil to RM1.6bil contracts via their own JVs with Sarawak players.

“The sector’s recent turn of events increasingly points to a post-GE revival of contract flows with the latest edition coming from PBH Sabah’s RM9.7bil potential outstanding value in the pipeline.

“We stay sector ‘overweight’, with Gamuda as our top big-cap pick for rail exposure and upside via PBH Sabah. The key sector risk is foreign contractor competition but this is not the case for PBH Sabah,” it said.