Offshore services to fuel Scomi Marine growth

KUALA LUMPUR: Scomi Marine Bhd expects offshore marine services to fuel growth going forward, said chief financial officer Mukhnizam Mahmud.
“While coal transportation will provide steady income, the area of growth will be in offshore services,” he told StarBiz yesterday.
Scomi Marine’s offshore marine services are provided by 29.1% Singaporean associate CH Offshore and 80.5% subsidiary PT Rig Tenders.
The division contributed 20% of the group’s revenue currently and the figure was likely to increase, Mukhnizam said.
CH Offshore is expecting delivery of six newly-built anchor-handling tugs and supply vessels of 12,240 brake horsepower and 150-tonne bollard pull each between 2008 and 2010.
The company is moving towards a different approach of “build first, contracts later” instead of securing contracts first before buying more vessels.
Mukhnizam said the upswing in the market would mitigate any risk. Besides, the offshore market “is an asset business,” he added.
The new vessels, suitable for deepwater exploration, will be targeted for potential markets like Malaysia, Vietnam, Indonesia, Australia and India.
As technology advanced and operating cost decreased, deepwater exploration would become more efficient and attractive for oil and gas players, Mukhnizam said.
Moreover, deepwater exploration fetches better margins than shallow water exploration.
The North Sea was another potential market as charter rates were attractive but more studies were needed as the weather conditions only allowed six months of operability, he said.
The tug and barge business, on the other hand, faces rising cost from docking fees and fuel prices.
“It affects everyone in the industry. We’re conscious on the amount of docking fees that we incur,” Mukhnizam said.
As a form of mitigation, the company had chosen Indonesia as an alternative docking venue as the journey to the country was shorter and the docking fees lower, he added.
Meanwhile, Scomi Oiltools (Europe) Ltd regional manager Ken Carlsson said Britain was its biggest market for drilling waste management operations. Other European markets include Norway, Russia, Holland and the Caspian Sea.
Scomi Oiltools unit KMC Oiltools Ltd general manager of Russia Stephen R. Zagdan said the group had set up a representative office in Russia about 13 years ago to offer oilfield-related equipment.
The group started providing oilfield-related services only two years ago, he said.
In May, Scomi Group secured its latest contracts from Russia amounting to RM167mil to supply solids-control equipment, including RM116mil from Rosneft and RM28mil from Burgas.
Zagdan said the group had over 50% of market share for distribution of oilfield-related equipment.