Petronas may soon dish out mega contracts for local and foreign firms to develop marginal oil fields. And reports say the frontrunners are believed to be Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd.
“The local players will tie up with foreign oil and gas majors in a consortium where the former would have a minor role as it is something new to them. The locals need to learn,” The Star quoted an industry source as saying. (In other words, the locals can’t handle the job themselves?)
According to Kencana’s Annual Report for 2010, Mokhzani Mahathir has a 39 per cent interest in the firm, mostly via Khasera Baru Sdn Bhd.
The Edge cited industry sources as saying oil and gas contracts for the development of marginal oil fields are scarce but these contracts could be worth about RM3 billion. It added:
The Edge had earlier reported that Kencana and its technical partner London-based Petrofac Ltd have emerged as frontrunners to bag the exploration of the Berantai O&G field at PM309.
Kencana is also understood to be ahead of the race for the US$250 million engineering, procurement, construction and commissioning job at Block PM313, the Sepat oilfield. Reports have said that Petrofac has secured a US$280 million contract from Petronas Carigali covering work on the Sepat offshore early production system with the first oil expected before end-2011.
Industry players note that the O&G player has the requisite expertise in drilling after making several acquisitions last year.
What I don’t understand is, if Petronas lacks the resources or expertise to develop marginal oil fields by itself, why can’t it engage the foreign expertise directly and learn rather than allowing another private firm to share profits, which rightfully should go to public coffers. Is this what Najib means by ‘economic transformation’ and ‘public-private partnership’?
The Star’s P Gunasegaram puts it this way:
It is pretty obvious what these foreign partners would do – extract concessions (pardon the pun) from Petronas in return for taking local partners. Petronas might as well directly give money to these local companies instead!
The only way to do this is to let anyone compete openly for marginal fields, with some slight, clearly prescribed preferences for local companies or those with JVs with local companies. And then give the contract to the best bidder.
We must realise that large rewards come with large risks and competition breeds competence. Otherwise, Petronas’ latest bid to award multi-billlion-ringgit marginal oil fields to local companies will become just another means of dispensing patronage.
Worse, this opens up avenues for Petronas to be pillaged and plundered, eventually seriously undermining its role of raising valuable revenue for the Government.