Malaysian O&G Expects Large Acquisitions

By The Star
Malaysia’s oil and gas (O&G) acquisitions are expected to total between RM10bil and RM15bil this year, as players look to acquire expertise and reserves out of their horizon to ride sectoral growth.

Singapore-based Deloitte & Touche LLP’s tax partner and leader for South-East Asia mergers and acquisitions Steven Yap said that this would likely be seen within the upstream and midstream segments.

“This (projected) figure of RM10bilRM15bil this year is not going to be surprising. Should Petroliam Nasional Bhd (Petronas) decide to (launch another) acquisition offer for MISC Bhd, you would easily meet RM10bil quite fast. It can be quite huge,” Yap said at a press briefing at the Deloitte O&G Summit yesterday.

He noted that acquisitions within the O&G sector were not only limited to the local front but were increasingly becoming more international as well.

Deloitte Malaysia’s corporate finance and financial advisory services executive director Nizar Najib said that this was in line with the global trend of huge capital expenditure allocation budgets.

On this note, Nizar said the marginal oilfields financing space might see smaller players with very limited financing capacity facing difficulties.

“Not many local companies have this sort of financial capacity. If you look at the smaller offshore support vessels, their chances are a bit slim, given that they would need bigger capacities and higher gearing to boot. The ones that have secured the contracts thus far are the big boys: SapuraKencana Petroleum Bhd, Dialog Group Bhd and Petra Energy Bhd, as they would need the financial capacity for these (projects),” he said.

“We foresee that for the next round of risk service contracts (from Petronas), if the first mover players like SapuraKencana and Dialog execute their contracts well, this could very well see them (being) at the forefront for subsequent contracts,” Nizar added.

Moving forward, Nizar said that institutional investors such as pension funds and private equity firms could start to pour more money into the O&G sector due to high demand for upfront investments that had to be made in the industry.

“Not many local players have this kind of capacity today. Don’t be surprised when institutional investors such as Permodalan Nasional Bhd, the Employees Provident Fund and Lembaga Tabung Angkatan Tentera jump on the bandwagon as well,” he said.