KUCHING: Offshore activities is expected to pick up in year 2013 with various upstream projects to rollout, providing jobs for the offshore service players.
“These upstream projects were initially expected to be awarded by 2012 such as the marginal oil fields. We believe part of the reason for the delays in awarding of the contracts could be due to the uncertain timing of the elections,” RHB Research Institute Sdn Bhd (RHB Research) said in its research report.
As such, the research house predicted that most of the projects would only be awarded by the second quarter of 2013 as a result. The elections were expected to take place from March to May 2013.
Nevertheless, RHB Research believed that 2013 would see an uptick in offshore oil and gas (O&G) activities which would benefit various upstream players.
The increased offshore activities would also provide better utilisation rates and thus, better charter rates for the offshore support vessel players.
“Year-to-date, crude oil prices have averaged US$85 to US$90 per bbl and US$105 to US$110 per bbl for WTI and Brent respectively.
“We expect crude oil rices to remain at similar level for 2013. We do not expect any meaningful recovery in demand due to the weak global macro conditions,” the report added.
Meanwhile, the research house expected crude oil supply to outpace demand in 2013 as it remained mindful of potential supply disruptions in the even that the geopolitical situation in he Middle East deteriorates.
Despite the soft crude oil price outlook, RHB Research believed that on the home front, Petroliam Nasional Bhd (Petronas) would likely continue with its capital expenditure spending plans for the next five years of approximately RM186 billion.
To recap, Petronas has outlined three strategies to arrest its decline in production. These include enhanced oil recovery on existing fields, development of marginal fields and adding resources to its resource base.
“All three strategies remain economically viable under current crude oil price levels. This implies that there is ample buffer for these exploration and production activities to continue,” the research house said.
RHB Research also expected the Final Investment Decision (FID) of the Refinery and Petrochemical Integrated Development (Rapid) to spur the award of various contracts relating to the project.
“The FID is expected by the middle of next year. We thus expect the various jobs relating to the Rapid project to be awarded in the second half of 2013,” said the research house adding that companies such as KNM Group Bhd, Wah Seong Corporation Bhd and Dialog Group Bhd stand a chance to obtain a sizeable amount of the contracts.
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