Genting Bhd chairman/CEO Tan Sri Lim Kok Thay (second from left) shaking hands with Wison New Energies Co Ltd chairman Liu Hongjun after signing the agreement to buy a 49% stake in SDIC Jineng (ZhouShan) Gas Power Generation Co Ltd. With them were Genting president/COO Datuk Seri Tan Kong Han and deputy chief executive Datuk Indera Lim Keong Hui. (Photo by Patrick Goh/The Edge)

(June 20): Genting Bhd (KL: GENTING) has unveiled energy ventures to China and Indonesia worth nearly RM5 billion on Thursday, as the group seeks to grow its energy business.

It is going to operate Indonesia’s first floating liquefied natural gas (LNG) facility and acquire a 49% stake in a company that is developing a gas-fired power plant in ZhouShan, eastern China’s Zhejiang province.

Genting president and chief operating officer Datuk Seri Tan Kong Han said the group’s energy division is currently a “small fraction” of Genting’s total business, and that these investments are to strengthen the group’s presence in the sector.

“We have decided that we will now grow it (energy business). We are taking bold steps to actually go forward in this particular industry,” he told reporters after unveiling Genting’s energy ventures.

He also assured that these investments do not signal a shift away from the company’s core gaming business, which has been its mainstay for over 50 years.

Last year (FY2023), Genting’s energy business contributed about US$365.7 million in revenue, compared to the US$4.9 billion generated by its leisure and hospitality business. But competitive gas prices could potentially boost its annual energy revenue over US$1 billion, Tan said. “That is why we (are spending) a lot of time and energy in this particular space [energy division],” he added.

Genting posted an annual net profit of RM929.2 million for FY2023 — after three years of losses — against a net loss of RM299.91 million in FY2022, on the back of higher revenue from its leisure and hospitality division. Annual revenue expanded 21.15% to RM27.12 billion from RM22.39 billion in FY2022.

Genting’s chairman and chief executive Tan Sri Lim Kok Thay, who was also present, said the energy investments are part of the company’s long-term business strategy. “When it comes to the expansion or diversification of our business, away from gaming, we [work] very quietly and hard to make sure that we can prove it (its worth). So in this case, as you notice — the energy business itself has been transformed,” Lim said.

However, Lim reiterated that Genting’s core business remains firmly rooted in gaming, a sector in which the company has made its mark over the past five decades.

“To still be sitting here in this room with you [the press] and to talk about the expanded footprint of that [energy] sector of the business… I think it is clear and it is very rare that we try to explain our long-term strategy [to the press],” Lim said.

For the floating LNG facility in Indonesia, which will be deployed at Teluk Bintuni, West Papua, Genting has commissioned Wison New Energies Co Ltd to build the facility for US$1 billion (RM4.71 billion). It is expected to have an annual capacity of up to 1.2 million tonnes and be built in 27 months, according to Genting in a statement.

First drop of LNG from the facility — which will be the 9th floating LNG facility in the world — is expected in the third quarter of 2026, Genting said. Feed gas for the facility will come from the Asap, Merah and Kido structures within Genting’s concession area of the Kasuri Block in West Papua.

Wison, who was awarded the engineering, procurement, construction and commissioning (EPCC) contract for the facility, will build it in their shipyards in China’s Nantong and ZhouShan.

To ensure the project is completed within schedule, Genting’s 95%-owned PT Layar Nusantara had on Sept 8, 2023, entered into a limited notice to proceed (LNTP) agreement for the purchase of long lead items worth US$43.04 million (RM202.73 million), noted Genting. “The LNTP agreement has been extended further to cover the progress of the engineering work up to the date of signing of this EPCC contract including hull steel cutting on June 7, 2024 to enable first drop of LNG to be achieved in accordance with schedule in the third quarter of 2026.”

To date, PT Layar Nusantara has committed a total sum of US$188 million (RM885.54 million) to the LNTP agreement, which brought total investment for the LNG project to over US$1 billion, including the latest contract to Wison.

Genting plans to finance the project using internal funds and project financing. It is also securing project financing from a group of Chinese and international lenders.

49% stake in the Chinese gas plant can bring US$8.6 bil revenue over 25 years

Separately, Genting is acquiring a 49% equity interest in SDIC Jineng (ZhouShan) Gas Power Generation Co Ltd, which is developing a gas-fired power plant in ZhouShan with a capacity of up to 1,490MW, from Jineng International Energy Co Ltd for 100 million yuan (RM64.87 million).

It expects another pro-rata equity investment of 328 million yuan (RM212.8 million) will be required until the targeted commercial operation next year. It plans to finance the stake buy and further equity investment totalling 428 million yuan (RM277.68 million) using internal funds.

Genting’s indirect unit Genting MZW Pte Ltd has inked a share sale and purchase agreement with Jineng International Energy Co Ltd for the stake buy. Genting’s indirect subsidiary Genting Sanyen (Malaysia) Sdn Bhd has also signed a heads of agreement with SDIC Power Holdings Co Ltd, who owns the remaining 51% stake in SDIC Jineng, to cooperate in the power project.

SDIC Jineng is expected to contribute up to US$346 million (RM1.63 billion) yearly in revenue for 25 years, or a total of US$8.65 billion, Tan told reporters after the signing ceremony.

Construction works on the plant started in the fourth quarter of 2023 and is now at 10% progress.

Trading in Genting’s shares, which has been suspended from 4.20pm on Thursday pending the announcements, will resume on Friday. Genting was last traded at RM4.69, giving the group a market capitalisation of RM18.18 billion.