The Borneo Post (Sabah)
New contract offshore Sarawak a boost to MMHE
KUALA LUMPUR: Analysts are upbeat on Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) a er it has secured a contract from SapuraOMV Upstream (Sarawak) Inc to undertake engineering, procurement, construction, transportation & installation, and hook-up & commissioning services (EPCIC) for the SK408W Jerun development project, offshore Sarawak.
MMHE is a wholly-owned subsidiary of Malaysia Marine and Heavy Engineering Holdings Bhd (MHB), an integrated and complex solutions provider for the oil and gas industry.
In a filing with Bursa Malaysia, MHB said the EPCIC contract comprises the construction of an approximately 15,000-tonne topside, 10,000-tonne jacket and 5,000-tonne piles of Central Processing Platform (CPP).
The contract includes design engineering of a 76.2-centimetre carbon steel pipeline with a length equivalent to 80 kilometres distance from the CPP to an existing E11RB platform to commingle with the existing trunkline to the Petronas Malaysia LNG Plant in Bintulu, Sarawak.
Upon completion, the facilities will be installed in the Jerun gas field, which lies in the SK408W Block located offshore Bintulu.
SapuraOMV Upstream (Sarawak) Inc is the operator of SK408W Block, with Sarawak Shell Bhd and Petronas Carigali Sdn Bhd each holding 30 per cent stake.
MHB managing director and chief executive officer Pandai Othman said the industry is ge ing back on an upturn a er the slowdown in 2020 due to the low oil price and Covid-19 pandemic, resulting in capital expenditure cutback by oil and gas giants.
“This year has been coined as our recovery year and what a be er way to start it other than with a major EPCIC project like Jerun.
“With this being our first project with SapuraOMV, we hope this marks the beginning of a long-lasting business relationship and mutual support between the two companies,” he said.
Channel checks by Hong Leong Investment Bank Bhd (HLIB
Research) suggested that the Jerun CPP project is estimated to be worth c.RM1-1.5bn with a duration of about 3 years.
“We believe that the award of the Jerun CPP project to MMHE can be a ributed to Sapura’s inability to undertake the project internally as its yard is almost fully utilised for existing projects,” it added in its reearch note yesterday.
“While contract wins should be inherently positive to MMHE, we view this as a mixed bag as past large scale projects have encountered hiccups. The securement of the Jerun CPP project would bring MMHE’s orderbook backlog to c.RM3bn, representing an orderbook cover of about 2x.
“Despite its robust orderbook, we believe that it is crucial for MMHE to improve on its operational efficiency to become profitable, a feat that it has not achieved from FY18-FY20.
“Nevertheless, we believe that the recent trend of contract awards in the Malaysian O&G space is a leading indicator towards a recovery in the O&G sector.”
In a press statement, SapuraOMV said the Jerun gas field development is its latest and largest operated project and is expected to produce 500 million standard cubic feet per day (mmscfd) of gas when it comes onstream in 2024.
“Gas produced from the field is expected to be sold to customers in
Bintulu, including to the Petronas LNG Complex,” it said.
The Jerun development is SapuraOMV’s third major upstream gas development project in Sarawak and Sabah, following the development and commencement of production from the SK310 B15 gas field in 2017, and the completion of the SK408 Phase 1 development comprising Gorek, Larak and Bakong fields in 2019/2020.
“Currently, the gross production from these fields is about 575 mmscfd.
“When Jerun comes onstream, it will add 500 mmscfd of production, making SapuraOMV one of the largest gas suppliers in Sarawak,” it added.