Malaysia investing in O&G infrastructure for future demand

Local media reported that Terengganu state government, through its unit Eastern Pacific Industrial Corp (EPIC), is planning a MYR2bn ($533.5m) expansion for the Kemaman Supply Base (KSB) in the state.

Construction work on the project at the over 30-year-old KSB is expected to begin in 2016 and be completed in 2019.

"We have been planning for an expansion for a long time as we need to prepare for growth. We want to make sure that Terengganu is serious and be exposed to as many opportunities as possible in the oil and gas sector," Terengganu chief minister Seri Ahmad Razif Abdul Rahman was quoted as saying.

Pengkalan Bekalan Kemaman, which is a subsidiary of EPIC and the operator of KSB, has entered into a lease service agreement with five petroleum production companies in a MYR500m deal.

The five companies are Carigali Hess Operating Company, Vestigo Petroleum, Coastal Energy KBM, EQ Petroleum Production Malaysia and Sapura Kencana Energy Peninsula Malaysia.

In January, seven production sharing contractors signed a similar deal worth MYR1b to use Kemaman supply base. They were Petronas Carigali, Exxon Mobil Exploration & Production Incorporated, Talisman Malaysia, Lundin Malaysia, Petrofac Energy Development, Petrofac (Malaysia-PM304) and Hess Exploration & Production Malaysia.

Pengkalan Bekalan Kemaman md and ceo Noor Fadzil Mohamed Nor said discussions were going on with several local and international investors to expand the base. "One of the companies from China, Huaxi group, has shown interest to cooperate with us," Noor Fadzil said.

Neighbouring Kelantan state also recently announced plans to develop an offshore supply base in Pasir Puteh, further up the coast from Kemaman. The Tok Bali Supply Base (TBSB) which was set to begin construction in April is seen attracting up to MYR1bn worth of investments in the next three years.

"At present, over 100 companies have expressed interest to invest in Tok Bali. In the next two to three years, we expect MYR500m worth of investments, which can go up to MYR1bn, depending on how fast they build the facilities," International Trade and Industry Minister Seri Mustapa Mohamed had said earlier this year.

The 328-acre base has attracted O&G support service providers and is set to complement KSB by helping to ease congestion and provide a closer alternative to oil fields further to the north.

"With this project, Kelantan is set to attract direct and indirect investments, which will spur economic activities in the state," Mustapa said.

Meanwhile, TB Supply coo Jim Iler said the present low oil price would benefit TBSB as companies look for alternatives to save cost, such as a closer facility where resources could be delivered to them at much cheaper rates.

"TBSB can complement the congestion and delay currently faced in the Kemaman Supply Base. We are currently in talks with 10 other O&G listed companies; we hope to see some results soon," he said, adding that TB Supply had invested MYR39m to construct a mud plant, which it would operate.