Sumatec surges on partner’s pre-sale gas agreement

PETALING JAYA: Sumatec Resources Bhd, one of the most actively traded stocks on Bursa Malaysia since the beginning of the year, yesterday announced that its business partner CaspiOilGas LLP (COG) has entered into a pre-sale gas agreement with Kazakhstan’s NIPIneftegas (NIPI) consortium for the sale of 6.2 billion m3 of gas (36.5 million barrels of oil equivalent) over a 15-year period, at the market price for gas.

Sumatec, and COG’s parent company Markmore Energy (Labuan) Ltd have a gas development & production agreement for the development of gas resources at the Rakushechnoye oil and gas field in the Karakiyan District of the Mangistau Oblast, Kazakhstan. COG is the concession holder Rakushechnoye oil and gas field.

Sumatec is also looking to buy Markmore Energy for RM1.55 billion. A heads of agreement was signed in October 2017, but is yet to be completed.

Sumatec’s share price gained 9.5% yesterday on the news to close at 11.5 sen. It was the most actively traded stock with some 565.97 million shares done. Year to date, the stock’s price has more than doubled.

In a filing with the stock exchange, Sumatec said the securing of the deal was informed by newly appointed COG general director Izbassarov Saurbay on Jan 21. Saurbay was appointed on Jan 10, 2018.

Sumatec’s website has the letter written by Saurbay to Sumatec oil & gas general director Anelya Baitleuova and copied to Sumatec Resources Bhd managing director Abu Talib Abdul Rahman detailing the salient points of the agreement.

The letter stated that NIPI will convert the gas into petroleum products and has proposed a gas-to-liquid (GTL) project.

NIPI-led consortium will convert the feed gas into petroleum products through a proprietary GTL technology.

Sumatec noted that the proposed capital expenditure (capex) for the gas utilisation plan, which is tied to the gas development production agreement between Sumatec and COG will start at US$60 million (RM240 million) and the total capex of the plant over the period to bring it to full capacity will be US$360 million.

The first phase of the plant operation is expected to kick off in 2019 and it will be financed and operated by the NIPI-led consortium.

Sumatec said the pre-sale gas agreement allows for COG or Sumatec to take up participating equity in the GTL plant at a later date if either party chooses to opt in.

“In addition to the sharing of the oil produced under the joint investment agreement executed between Sumatec and COG, Sumatec will receive share of the oil/ condensates produced, as well as the fee for processing the raw gas prior to the sale/ supply to NIPI.”