- Upstream reported that Petronas has invited expressions of interest from international contractors in a pre-qualification exercise for a new central processing platform (CPP) to be installed at the Baronia field, which is part of the second phase development of the Baram Delta gas gathering project (Bardegg-2) off Sarawak. An engineering, procurement, construction, installation and commissioning (EPCIC) contract for the platform will be the third such development to be opened up to international bidding after the Malikai tension leg platform and SK316 CPP projects.

- The topsides of the CPP, previously projected at 10,000 tonnes, is now expected to weigh in at over 13,000 tonnes. The total weight of the CPP, together with an eight-legged jacket, is now estimated at 22,000 tonnes. With its larger size, this project’s potential value of over US$1bil is likely to have contributed to Petronas’ decision to reach out to the international contracting community for expressions of interest.

- Petronas has also indicated preliminary interest in offering a turnkey contract, including the detailed design of the CPP, which was previously expected to be carried out as an extension of Malaysian engineering company RNZ’s front-end engineering and design work on the Bardegg project. The formal tender document is expected to be issued by March next year, leading on to the potential award of the EPCIC contract in early 2015. That schedule suggests that production start-up will take place at the earliest in late-2016 or early-2017.

- The Baronia CPP will be equipped with gas processing and compression facilities including condensate stabilisation, gas and water injection and water treatment units. The CPP is the anchor infrastructure of the Bardegg-2 project, which also includes a new 16-slot drilling platform. Produced water and non-associated gas will be transported from the new drilling platform to the Baronia CPP for treatment and compression before being re-exported to existing production structures for injection. Sources expect the 16-slot platform to be tendered out separately to Malaysian yards such as Malaysia Marine & Heavy Engineering, SapuraKencana Petroleum and TH Heavy Engineering.

- Petronas has teamed up again with Shell on early studies under the Baram Detla EOR scheme, looking at injecting either produced gas from existing oilfields and stranded discoveries or carbon dioxide from the LNG plants in Bintulu. The joint studies have earmarked six fields - Betty, Bokor, Baram, Baronia, West Lutong and Tukau — for enhanced oil recovery (EOR) efforts. Together with 3 non-EOR fields— Fairley Baram, Bakau and Siwa - the nine Baram Delta discoveries hold a combined reserve of 4 billion barrels of oil.

- Petronas is not only limiting itself to studies at Baronia, having also carried out a separate study for a multi-platform EOR development at the Bokor field in the Baram Delta, which is still undergoing field economics studies. Further to boosting recovery from the existing fields, the new Baronia CPP would also serve as the production hub for two new wellhead platforms on the table for the development of Tukau Timur, Malaysia’s first high-pressure, high-temperature gas discovery.

- Besides the above projects, there are also other CPP projects such as Sepat, Bergading and Bekok off Terengganu which are open for tenders, As such, we expect order flow momentum to gain traction over the next 2-3 years, with the value of oil & gas contracts having surged by 4.9x YoY to RM27bil in 9M2013. Hence, we maintain our OVERWEIGHT call on the sector with our top pick being SapuraKencana Petroleum while our other BUYs are Alam Maritim, Bumi Armada, Malaysia Marine & Heavy Engineering Holdings, Dialog Group and Petronas Gas. 

Source: AmeSecurities