Watch Mokhzani Mahathir’s SapuraKencana Petroleum go…

SapuraKencana Petroleum Bhd, whose executive vice-chairman and part owner is Mokhzani Mahathir, has reportedly entered into a partnershp with Vestigo Petroleum Sdn Bhd, a subsidiary of Petronas, to bid for a second risk service contract to extract oil from a marginal oil field.

Watch it fly

The Edge cited sources as saying that SapuraKencana has signed a heads of agreement with Vestigo to bid for the Bubu marginal oil field off the Terengganu coast.

Petronas had opened up the development of 108 marginal oil fields in 2010. But Vestigo was only set up in early July by Petronas Carigali to develop marginal oil fields. Under Petronas guidelines, a foreign company with the necessary expertise in marginal oil fields has to team with local partners of its choice to develop such marginal oil fields.

So far, four RSCs have been awarded:

1. Berantai marginal oil field (off Terengganu): Petrofac-SapuraKencana joint venture (January 2011)
2. Balai-Bentara (off Sarawak): ROC Oil Co Ltd (listed in Australia), Dialog Group, Petronas Carigali (August 2011)
3. Kapal-Banang-Meranti (off Peninsula): Coastal Energy Co (listed in UK), Petronas Carigali (July 2012)
4. Tembikai (off Terengganu): awarded to Cue Energy Resources-Scomi Group joint venture – but later aborted. Eventually passed by Petronas Carigali to Vestigo.
5. Bubu (off Terengganu): ???

Source of above information: The Edge, 26 August 2013

A total of 25 lucrative contracts could be awarded in coming years.

Just weeks before the 5 May general election, Anwar Ibrahim had vowed to revoke the RSC contractawarded to Mokhzani’s SapuraKencana.

Risk service contracts are a profitable business as the internal rate of return is around 16 per cent.

For the seven months to July 2013, SapuraKencana Petroleum made a profit before tax of RM610m (on the back of turnover of RM4.1bn or a 15 per cent return) compared to RM361m (on the back of turnover of RM2.7bn or a 13 per cent return) for the same period last year.

Mokhzani, son of Petronas adviser Mahathir Mohamad, has a 13.2 per cent stake in SapuraKencana. He was previously the major shareholder of Tongkah Holdings but disposed of his interests in 2001. Tongkah Medivest was one of three firms awarded government concessions for support services at government hospitals and medical institutions.

Shahril Shamsuddin is the other major shareholder of SapuraKencana. Shahril’s father Shamsuddin Abdul Kadir, a close Mahathir associate, had moved the Sapura group from telecommunications to oil and gas.

Mokhzani’s company, Sapura Crest Petroleum Bhd, and Shahril’s firm, Kencana Petroleum Bhd, merged in May 2012 in a RM12bn exercise to form SapuraKencana.

In June, Kuala Terengganu MP Raja Kamarul Bahrin Shah claimed that Mahathir’s status as Petronas adviser violated the Petroleum Development Act. He said under the Act, a National Petroleum Advisory Council should advise the Prime Minister.

-anilnetto