“This does not happen with the NOCs or IOCs (national or international oil companies), but it is more on the part of the main contractors.”

Late payments to smaller vendors in the sector have been occurring for decades, information gathered by The Edge reveals.

However, it has got worse following the prolonged oil price downturn in 2015, and unfortunately, shows no signs of improvement despite the nascent recovery in the sector.

Delayed payments could put a dent in Petroliam Nasional Bhd’s (Petronas) consolidation agenda.

According to Petronas president and group chief executive Tan Sri Wan Zulkiflee Wan Ariffin, the norm is for Petronas to pay the main contractors as they are its “single point of contact”.

That payment is then to be made down the line to the subcontractors. However, when certain main contractors do not keep their end of the bargain, subcontractors may no longer wish to participate, never mind consider mergers and consolidation.

The payout may be small relative to the main contractor’s finances, but it is critical for small and medium enterprises. Halting payment amounts to tightening the cash flow — the lifeblood of a company.

The national oil and gas company is cognisant of the problem. “We are pretty conscious; we know about the cash flow issue faced by some of our service providers,” Wan Zulkiflee said at Petronas’ FY2018 results briefing last Friday.

“On our part, we do take this into account [in] our selection of main contractors [based] on their previous [payout] performance,” he says, adding that Petronas does intervene in some contracts.

However, sometimes its hands are tied.

“The main contractors are our single point of contact, [and] there are certain terms in the contract that sometimes restrict us from full intervention. So, it is kind of on a contract-by-contract [basis], but we are fully aware of this issue, [and] we have taken initiatives.”

Separately, last year, Petronas initiated a matchmaking scheme, called the Vendor Financing Programme, under which seven financial institutions have been roped in to provide vendors easier access to financing.

“Essentially, all these efforts are to ease the cash-flow problems faced by subcontractors,” Wan Zulkiflee says.

The industry executive confirms that Petronas has intervened in the past and that certain small vendors managed to bypass the main contractors to be paid directly by Petronas and its partners.

“We also understand the grievances … for main contractors, the rates are still low. They show profit on paper but cash flow is another issue altogether.

“But [the non-payment] is a valid complaint,” the executive says.

Malaysia has in excess of 2,700 active O&G companies, most of which are SMEs. Fewer than 50 are listed on Bursa Malaysia.

Previously, Petronas had said it would leave industry restructuring and consolidation to market forces as less capable SMEs are expected to drop out and the more capable ones emerge stronger in the long run.

This year, Petronas expects to allocate RM15 billion out of “slightly over RM50 billion” in capital expenditure for the domestic upstream segment, up from around RM12 billion last year.

But if the issue of non-payment of smaller players persists, O&G SMEs — including the better ones — may end up adrift due to cash-flow concerns, preventing the successful implementation of Petronas’ agenda to build a stronger O&G industry for the future.

SO HERE WE SEE THE PROBLEMS SOLVED

PETRONAS WILL BYPASS OGSEs & DEAL WITH SMEs like T7 GLOBAL DIRECTLY

AND T7 GLOBAL SHOULD SEE MUCH BETTER TIMES AHEAD

Seeing this Insiders in 2019 have bought more T7 Global shares

See

TAN SRI DATUK SERI TAN KEAN SOON	12-Mar-2019	Acquired	72,000	0.530
TAN SRI DATUK SERI TAN KEAN SOON	11-Mar-2019	Acquired	455,000	0.510

NOW T7 GLOBAL ALSO SECURED 2 FRESH JOBS THIS YEAR

MULTIPLE PROPOSALS T7 Global Berhad (the Company or T7Global) - Letter of Award for provision of splash zone structural repair and maintenance from Petronas Carigali Sdn. Bhd. and Letter of Award for umbrella contract for the provision of manpower services from Vestigo Petroleum Sdn. Bhd.

T7 GLOBAL BERHAD

Type	Announcement
Subject	MULTIPLE PROPOSALS
Description	T7 Global Berhad (the Company or T7Global) - Letter of Award for provision of splash zone structural repair and maintenance from Petronas Carigali Sdn. Bhd. and Letter of Award for umbrella contract for the provision of manpower services from Vestigo Petroleum Sdn. Bhd.
The Board of Directors of T7Global wishes to announce that Tanjung Offshore Services Sdn. Bhd. (“TOS”), a wholly-owned subsidiary of the Company had received the letter of award dated 24 December 2018 from Petronas Carigali Sdn. Bhd. for the provision of splash zone structural repair and maintenance. In addition, Fircroft Tanjung Sdn. Bhd., a subsidiary of TOS, which in turn is a sub-subsidiary of the Company had received the letter of award dated 19 October 2018 from Vestigo Petroleum Sdn. Bhd. for an umbrella contract for the provision of manpower services. Please refer to the attached file for details of the announcement. This announcement is dated 12 March 2019 T7 won not just one, but 2 Fresh Jobs

KUALA LUMPUR: European aerospace firm Airbus expects the value of works undertaken in Malaysia to grow more than 30% to US$550mil (RM2.24bil) per year by 2023.

This will be achieved on the back of higher production rates, the company’s investment in its local subsidiaries and joint ventures, as well as potential new projects currently under evaluation.

Airbus Asia-Pacific president Jean-Marc Nasr said the drivers for growth would be the increase in air traffic production and maintenance, repair and overhaul (MRO) services.

“The US$550mil is up over a third from US$400mil (RM1.62bil) in 2018,” he said at a briefing ahead of the upcoming Langkawi International Maritime and Aviation Exhibition (LIMA) 2019 air show this week.

“Passenger traffic growth over the next 20 years is projected to grow 5.5% annually in the Asia-Pacific compared with 4.4% for the rest of the world. The MRO business is also growing and having more aircraft to work on means more jobs,” Nasr said.

Airbus’ local suppliers include CTRM, SME Aerospace, Spirit AeroSystems and SDMK.

“Our supply group in Malaysia is the largest in South-East Asia. We’ve been in operations here for about 20 years and we see strong potential in Malaysia compared with other countries or regions,” said Nasr.

According to him, about 727 Airbus aircraft have been ordered to date by Malaysia Airlines (MAS) and the AirAsia group. Of this, 592 units are from AirAsia; 96 from AirAsia X and 39 from MAS.

“So far, 219 units have been delivered to AirAsia and AirAsia X have taken delivery of 20 aircraft. MAS has taken delivery of all its aircraft,” said Nasr.

Additionally, Nasr said Airbus’ Malaysian workforce is expected to grow to about 1,200 employees by 2023 from 850 people today.

Malaysia is Airbus’ third largest market in the Asia-Pacific after China and India, with the country’s airlines having ordered more than 700 commercial airliners from the company.

Today, around 300 commercial aircraft and about 100 helicopters manufactured by Airbus are in service in the country.

Separately, Nasr said Airbus is “monitoring the Brexit situation very closely.”

“Brexit is a key concern for us. It’s a government situation and we have taken certain provisions. It’s still too early to say if something bad will happen but we are monitoring the situation closely.”

Airbus will be the largest international exhibitor at this week’s LIMA 2019, with a major presence covering its entire range of commercial aircraft, defence, space and helicopter products and services.

Read more at https://www.thestar.com.my/business/business-news/2019/03/26/airbus-expects-jobs-in-malaysia-to-hit-rm224bil/

SEE T7 GLOBAL AEROSPACE FACTORY IN SERENDAH

T7 Global positive on aerospace venture

20 AUG 2018 / 20:55 H.

KUALA LUMPUR: T7 Global Bhd, which believes its diversification effort into aerospace manufacturing will break even in three to four years, is positive about the prospects moving forward with the oil price stabilising and more contract awards from Petroliam Nasional Bhd (Petronas).
T7, formerly Tanjung Offshore Bhd, is principally involved in providing comprehensive services to the oil and gas (O&G) industry. It has an order book of RM800 million to keep it busy for the next few years and a tender book of RM2 billion to sustain the group’s operations and diversification plans.
Executive deputy chairman Tan Sri Tan Kean Soon said O&G is still its core business, constituting 80% of its revenue.
“Over the past few years, oil price plunged low but as of today, we’re hitting over US$70 per barrel, hence more and more projects will be coming from Petronas. We’re also bidding for a number of tenders, hopefully by year end or next year, things will look up for the O&G industry,” he told a press conference after its EGM today.
Tan said T7 is banking on its three businesses – O&G, aerospace and infrastructure & construction.
On its diversification into aerospace, the group expects its factory in Serendah to be operational by year-end and for it to obtain the necessary accreditation by the first quarter next year, before getting customer approvals and subsequently the aerospace contracts. It is partnering Kilgour Aerospace Group, a UK high value manufacturing company to set up the surface metal treatment facility.
Chairman Datuk Seri Dr Nik Norzrul Thani said an aerospace contract has a tenure of 30-40 years and provides a good margin, generally better than O&G contracts. He said there is a backlog on supply, adding that the government is also interested to push the agenda for aerospace.
“Our aim is to become a high value manufacturing company. We aim to depend less on O&G ultimately, but growing it at the same time.”
On dividends, Nik said the group is tightening its belt now to invest for the future.
“If you’re willing to wait and have staying power for the long term, we’re all involved. It’s our aim to make sure the value (of the company) goes up, by being in an industry and having projects that make money. We feel aerospace is one of them.”
Meanwhile, he explained that the review of the East Coast Rail Link by the government will not affect T7 as they are just bidding for the work packages at this stage.

SO HERE YOU GO:--- LIKE NAIM BEING WELL DIVERSIFIED YET WITH OIL & GAS EXPOSURE THROUGH DAYANG,,,T7 GLOBAL HAS ITS TANJONG OFFSHORE EXPOSURE TO OIL & GAS BUSINESS --- BUT IT HAS A WHOLE LOT OF OTHER INTERESTING BUSINESSES

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