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Barakah terminates rescue deal with Lecca
FINANCE & INVESTMENT
MALAYSIAN offshore service provider Barakah Offshore Petroleum has agreed with Singapore’s Lecca Group to terminate a deal that would have lifted the former out of exit Practice Note 17 (PN17) status.
Barakah had proposed re-organis- ing its finances via a deal with Singapore’s Lecca Group that would have seen the latter become Barakah’s single largest shareholder with a 44.87% equity interest. Barakah also intended to sell a pipe-laying barge to Lecca for MYR88mn ($21.4mn).
State-owned Petronas’ decision in July to sus- pend the operating licence of Barakah’s wholly owned PBJV, on account of non-performance, has scuppered those plans.
“Due to the suspension of the licence held by its wholly owned subsidiary PBJV Group from Petronas, the board is of the view that it will be challenging for Barakah to implement its pro- posed regularisation plan,” Barakah said in a filing to the stock exchange.
“The board will continue to explore other avenues to formulate a plan to regularise its financial conditions. Further announcements will be made as and when necessary to Bursa Securities with regards to the development of
the matter in accordance with the requirements under PN17 of the Listing Requirements,” it said. Petronas suspended the service provider’s licence for three years from July 8, owing to a report by subsidiary Petronas Carigali complain- ingaboutPBJV’snon-performanceinrelationto
an underwater services contract.
Barakah said at the time that PBJV would
be allowed to complete existing contracts, but would be prevented from bidding on future con- tracts tendered by Petronas as well as petroleum arrangement contractors (PACs) such as Royal Dutch Shell, Murphy Oil and ExxonMobil.
The suspension prompted PBJV to sue Pet- ronas and Petronas Carigali for MYR1.02bn in August, claiming its licence had been sus- pended after the latter had positively appraised PBJV’s completed work. PBJV then demanded a further MYR179.84mn from Petronas Gas (PetGas) on October 2, claiming compensa- tion for losses incurred in relation to several service contracts.
Malaysian daily The Edge reported in March that Petronas had originally suspended PBJV’s licence in June 2018 over similar reports of non-performance from several other unnamed oil and gas developers.
Philippines studies SPR options
POLICY
THE Philippine government has begun exam- ining development options for a strategic petro- leum reserve (SPR), following last month’s attacks on key Saudi Arabian oil infrastructure.
Philippine Energy Secretary Alfonso G Cusi said the government had approach Brunei Darussalam, Saudi Arabia, Qatar and Russia to discuss allocating oil to an SPR.
“We have been negotiating for a bilateral agreement that we should get allocation from oilproducersjustincaseaproblemarises,”local daily Manila Bulletin quoted Cusi as saying. He added that Manila would prefer a govern- ment-to-government agreement, though the details were still being reviewed.
Cusi said the Philippines had begun looking for SPR oil supplies following drone and missile attacks on Saudi oil processing facilities at Abqaiq and Khurais in September 14. The attacks knocked out 5.7mn barrels per day (bpd) of Saudi production, though Saudi Aramco officials said on October 12 that facilities at both sites had resumed processing at near full capacity.
Despite the restoration of production capac- ity, the attacks highlighted the vulnerability of Saudi production as well as the risks of relying on producers in the volatile Middle East.
The Manila Bulletin quoted Energy Under- secretary Donato D Marcos as saying the coun- try could also opt to store oil in tankers until an onshore SPR could be completed. He suggested the government was looking at a two-year time- table for the onshore facility.
Marcossaidstate-ownedPhilippineNational Oil Co. (PNOC) would have to spearhead such a development, which would have to be located at company facilities in either Bataan or Batangas. Such a project would require a feasibility study.
Asia’s biggest oil importers have developed SPRs to insulate themselves from possible dis- ruptions. Japan and South Korea both have stockpiles in line with the International Energy Agency’s (IEA) recommended 90 days of net imports, while China is working towards that figure. India, meanwhile, has about 12 days’ worth of supply.
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