Petronas ventures in Uzbekistan

STATE-OWNED Petroliam Nasional Bhd (Petronas) has signed three key agreements in Tashkent, Uzbekistan, boosting its presence and strengthening its business portfolio there.
Petronas, through wholly-owned Petronas Carigali Overseas Sdn Bhd (PCOSB), signed a deal on activities and main principles for the Baisun Block production-sharing agreement (PSA) and an exploration agreement for the Surkhanski Block with the Uzbekistan government in Tashkent yesterday.
Both blocks are located adjacent to each other in the Surkhandarya region, south of the country.
Petronas also signed a memorandum of cooperation (MOC) for petrochemical projects with the Uzbek national oil company Uzbekneftegaz National Holding Co (UNG).
Petronas was represented by its president and chief executive officer Tan Sri Mohd Hassan Marican, while the Uzbek government and UNG were represented by Deputy Prime Minister Ergash Shaismatov and chairman Ahmedov Nurmuhammad Ahmedovich, respectively.
The agreement on activities and main principles for the Baisun Block PSA outlines the main principles and provisions for the PSA.
Under the PSA, which PCOSB expects to enter into next year, the firm will hold a 100 per cent equity stake and will be the operator for the block.
Currently, it is already undertaking exploration work in the block, measuring 3,150 sq km, under a joint-study agreement signed with UNG in 2005.
The exploration agreement for the Surkhanski Block grants PCOSB the rights to carry out exploration work in the block, measuring 7,200 sq km, and will subsequently pave the way for a PSA upon discovery of hydrocarbons.
The agreements for the two blocks will enhance Petronas' presence in the upstream sector of Uzbekistan.
PCOSB is already actively involved in the Aral Sea PSA, in which it has 20 per cent equity.
Other partners in the venture, which is currently in exploration stage, are UNG, CNPC International Ltd, Korea National Oil Corp and Lukoil Overseas Holding Ltd.
Meanwhile, the MOC for petrochemical projects allows Petronas and UNG to undertake joint studies and paves the way for the two parties to cooperate in the development of downstream petrochemical projects in Uzbekistan.
UNG currently operates ethylene and polyethylene manufacturing plants at the Shurtan Gas Chemical Complex in the Qashqadaryo province.-www.btimes.com.my

Fed offers modest rate cut

WASHINGTON: The Federal Reserve cut benchmark US interest rates by a modest quarter-percentage point yesterday to help the US economy withstand tightened credit and a prolonged housing slump, disappointing Wall Street, which had hoped for more-aggressive action.The central bank’s decision takes the bellwether federal funds rate, which governs overnight lending between banks, down to 4.25 per cent. While the action was widely expected, some economists had thought the Fed might offer a bolder half-point reduction in the rate.The blue chip Dow Jones industrial average was down more than 130 points within minutes of the Fed’s announcement of its action, while prices for US government bonds and the value of the dollar rose.The Fed has now cut overnight rates, their key economic policy lever, by a full percentage point since mid-September in an effort to put a floor under an economy increasingly seen at risk of falling into recession.In a related move, the Fed trimmed the the discount rate it charges for direct loans to banks by a matching quarter point to 4.75 per cent.“Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time,” the Fed’s policy-setting Federal Open Market Committee said in a statement outlining its decision.The Fed noted that financial strains had increased in recent weeks and said some inflation risks remain. It refrained from offering its usual assessment of the balance of risks facing the economy.“Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation,” it said.The Fed’s decision follows renewed deterioration in credit markets after major financial institutions around the world reported billions of dollars worth of write-downs due to extensive exposure to delinquent mortgages. - Reuters

KFH shelves plan to bid RHBCap stake

KUWAIT Finance House (Malaysia) Bhd (KFHM) will temporarily shelve plans to acquire a stake in local lender RHB Capital Bhd to concentrate on its organic expansion strategy in Malaysia."We are not looking at any acquisition exercise at the moment. Our focus right now is on (achieving) organic growth (in profit and revenue) where we aim to increase the number of our branches in Malaysia," said managing director K. Salman Younis.He was speaking to reporters after the opening of KFHM's second branch by Kuwait Finance Minister Bader Mishari Al-Humaithi in Shah Alam yesterday.Salman said KFHM is still interested to acquire a stake in RHB Capital."We are always keen on opportunities to expand our franchise. However, until today, we have not received any formal invitation to discuss the matter," he added.For 2007, KFHM aims to open at least five new branches in the Klang Valley and other major cities such as Penang and Johor.Within the next four years, it plans to have between 40 and 50 branches nationwide.In line with its expansion plan, Salman said KFHM targets to introduce, on a large scale, financing facilities for the small and medium enterprises (SMEs) by this year."As a universal bank, we do not discriminate by going solely for big corporate clients. We are always interested to help take small businesses to other levels of development," he said.He believes that SMEs are vital to the economy. In most developed countries, their contribution account for between 85 per cent and 95 per cent of total economy."There is indeed huge potential in the SME sector. We expect to see strong growth in this segment," he added.Meanwhile, Bader Mishari hopes KFHM will promote greater bilateral cooperation in economic activities as well as in the Islamic financial market."It is my hope that KFH will continue to play a major role and (take the) initiative to further develop Islamic banking in the region and the Middle East," he said.The presence of KFH, an Islamic bank from the Middle East, provides alternative banking to consumers via-a-vis conventional banking for the benefit of the company as well as consumers in Malaysia through its innovative products and services, he added.

Petronas awards onshore block to NOEX & Petronas Carigali

KUALA LUMPUR, Dec 7 (Bernama) -- Petroliam Nasional Bhd (Petronas) today awarded a production sharing contract to Nippon Oil Exploration Ltd (NOEX) and Petronas Carigali Sdn Bhd for onshore Block SK333 in Sarawak.According to Petronas, the award of the contract signalled the possible revival of active onshore explorations in Malaysia, as part of its continuous efforts to enhance and augment the country's hydrocarbon reserves.Covering an area of 3,100 square kilometres, Block SK333 is located in the Baram area, the site of thriving exploration activities in the early 1900s, Petronas said in a statement.The national oil corporation said under the contract, NOEX with 75 percent interest will the operator of the block while Petronas Carigali, the exploration and production arm of Petronas, owns the remaining 25 percent.The minimum financial commitment to the block is US$40 million (US1.00=RM3.30), according to Petronas."The partners will acquire and process 500 line kilometres of 2D (two-dimensional) seismic data and drill two wildcat wells with an aggregate depth of 4,000 metres," it said."An airborne gravity and magnetic survey over the block will also be conducted," it added.Signing of the contract was held here today with Petronas represented by its vice president of exploration and production business Ramlan Abdul Malek, NOEX by its president and chief executive officer Teruo Omori and Petronas Carigali by its managing director and chief executive officer Datuk Abdullah Karim.

CIMB to free RM3.6b in capital from building sale

CIMB Bank Bhd expects RM3.6 billion of capital release from the sale and lease back of Menara Bumiputra Commerce at Jalan Raja Laut, in Kuala Lumpur, due to be completed early 2008.Bumiputra-Commerce Holdings Bhd (BCHB) is selling the prime property to Pelaburan Hartanah Bumiputra Bhd for RM460 million which CIMB Bank will lease back for 10 years with an option for five plus five years.“Modern banks should not do other things but banking. We should rent our buildings. Other people are good at owning buildings and we rent from them,” said CIMB group chief executive officer Datuk Nazir Razak.The RM3.6 billion will be ploughed into the group’s business, he said, pointing out that the same structure was deployed for Bangunan CIMB, its new headquarters.He said under the sale and lease programme for Menara Bumiputra Commerce, the banking group’s cost saving based on the group’s entire consolidation, mainly in terms of rental, will amount to RM7.5 million a year.“At the moment we are in 25 buildings, and we will streamline our operations into two or three buildings and this will result in some cost savings for us,” he explained.There could be another such exercise as the group still owns several bank branches as well as a building at Jalan Tun Perak, describing it as part and parcel of its capital management exercise.

MMC-Gamuda set to win RM12.5b rail deal

A CONSORTIUM comprising MMC Corporation and Gamuda is poised to snare a RM12.5 billion (S$5.3 billion ) contract from the government to electrify and double-track a 329-kilometre portion of the railway grid between Ipoh, the capital of Perak state, and Padang Besar on the Malaysia-Thai border.
The award is likely to refocus attention on Malaysia's increasingly expensive penchant for opaque and so-called 'negotiated' contracts. In this case, the uproar could be even louder: the contract award represents almost 86 per cent of a much larger project in 2003 that would have electrified the entire North-South railway grid from Johor Baru to Padang Besar, an extra 268 km over the current award.
The latter project had been awarded in the twilight days of the administration of former Prime Minister Mahathir Mohamad but was abruptly cancelled two months after he stepped down by his successor Abdullah Ahmad Badawi in the name of fiscal austerity: Malaysia was, and still is, running a fiscal deficit. Mr Abdullah's decision then was the genesis of an acrimonious break between the two men that flared into the open a year later.
Now Mr Abdullah seems to have changed his mind in spectacular fashion. Executives familiar with the matter said that the government was likely to make the announcement 'soon' and that it was to be a government contract and not a private finance initiative as had been re-proposed by the consortium in November, 2006. If true, Mr Abdullah is following in the footsteps of Dr Mahathir who had always envisaged the project as being government funded.
Infrastructure specialist Gamuda is controlled by businessman Lin Yun Ling while MMC, a power, ports and construction conglomerate, is the flagship company of tycoon Syed Mokhtar Al-Bukhary.
The enormous cost escalation of the project is expected to be explained away by the government as a function of rising commodity prices over the last three years.
Indeed, in January this year Gamuda's Mr Lin was quoted as saying that 'it would make more sense to build the railway sooner rather than later given the rising costs of raw materials such as fuel (up 300 per cent) and copper (up 100 per cent).' Mr Lin also said that with double tracking, the saving in fuel consumption over the next 30 years - at the then oil price of around US$70 a barrel - would be RM150 billion.
Even so, at RM12.5 billion, the Gamuda-MMC bid would come in at around RM38 million a kilometre which some consultants say is expensive. According to them, Ircon, or the Indian Railway Company of India, which is bidding for the southern stretch of railway between Gemas and Johor Baru, has valued its bid at around RM31 million a kilometre.

Ranhill joint venture bids for pipeline jobs

RANHILL Bhd and its Australian partner, McConnell Dowell, have bid for jobs under the Sabah-Sarawak Gas Pipeline project.
Ranhill president and chief executive Tan Sri Hamdan Mohamad said that Petroliam Nasional Bhd (Petronas) had got back to them to clarify some technical details on their proposal.
"Technical clarification is at the tail-end of their evaluation, and once that is done, they should be looking at commercial valuation and the awarding should be soon after that," he said.
Hamdan added that the company had also pre-qualified for the Sabah-Sarawak oil and gas terminal facilities for processing gas and oil.
On another development, he said that the Senai-Desaru Expressway will only be fully completed in February 2009.
Speaking to reporters after the group's annual general meeting in Kuala Lumpur yesterday, Hamdan said the Senai-Pasir Gudang stretch, under Packages 1 and 2 of the project, will be opened by August next year.
However, the section from Cahaya Baru to Desaru will be delayed by about six months.
"If I was only half through with the earthworks, I would be worried. But I am almost done (90 per cent) with that and I don't see any further delays in the completion of the expressway as we have all the supplies we need," he said.
Last Thursday, RAM Holdings Bhd put Senai-Desaru Expressway Bhd's RM1.46 billion bonds on "Rating Watch with a negative outlook" because of the project delays since last year.
On its Sudan project, Hamdan said the group had reached a settlement agreement with its client, a joint venture between China National Petroleum Co and Petronas, to recoup the US$200 million (RM672 million) cost overrun it incurred.
They have agreed on a combination of variation order and charge order of US$50 million (RM168 million), an expansion contract to 300,000 barrels a day worth US$150 million (RM504 million), and the main contract of a water injection facility worth US$167 million (RM561 million).
Ranhill currently has a RM15 billion order book for engineering, procurement, commission and construction work under its belt, which will last it another seven years.
About 85 per cent of the orders are from overseas.