RM17b oil project in Johor

KNM says it is forming a consortium with Zecon and either a Korean or Chinese contractor to build a refinery and an oil storage terminal in Teluk Ramunia
 

Kuala Lumpur: KNM Group Bhd and Zecon Bhd has entered into an agreement with Gulf Asian Petroleum (GAP) Sdn Bhd to build a refinery and an oil storage terminal worth a combined RM17 billion in Teluk Ramunia, Johor.

GAP, which on April 30 2010 obtained an approval from the Malaysian Industrial Development Authority for the manufacturing licence for the integrated petrochemical plant, is 50 per cent owned by Mubadala Capital Sdn Bhd (MCSB).

The remaining shares in the firm is owned by Abdul Aziz Hamad Al-Dulaimi, the president of Gulf Petroleum Ltd, whose shareholders include Qatar General Insurance and Reinsurance Company, Al-Mana Group, National Petroleum Group and the banking arm of Al-Sari Group.

MCSB's controlling shareholder, Datuk Zainal Abidin Ahmad, is also the chief executive and controlling stakeholder of Zecon.

The deal, bound to cause waves of interest in the oil and gas sector here, came on a day when two other oil and gas projects were announced.

Petroleum Bhd and Kencana Petroleum Bhd announced a RM11.5 billion merger plan that will become the country's largest oil and gas (O&G) service provider.

In a late statement to the stock exchange, KNM said it was forming a consortium with Zecon and either a Korean or Chinese contractor to undertake both the projects.

The projects comprise a RM15 billion oil refinery and a RM2 billion oil storage terminal.

The refinery will have a capacity of up to 200,000 barrels a day and 525,000 tonnes-a-year polypropylene processing plant, while the oil storage terminal will have a capacity of 2.328 million cubic metres.

The refinery and the storage facility are expected to be completed within 40 months and 18 months respectively, KNM said, adding the refinery project will be funded by 30 per cent equity, with the balance funded through project financing or sukuk issuance.

To help cover some of the storage facility cost, KNM will also try to arrange a sukuk issuance of up to RM1.5 billion to cover project financing during construction, KNM said.

Apart from the KNM-Zecon announcement, Daya Materials Bhd said it had secured two supply and delivery agreements worth RM27.42 million from Petronas Methanol (Labuan) Sdn Bhd.

Elsewhere, China's largest petroleum refiner Sinopec Petroleum Services Corp (Sinopec) is reportedly poised to take a major stake in a planned RM2.06 billion venture to help develop a Petronas marginal oil field located off Te-rengganu.

The announcement comes merely weeks after SapuraCres.(Business Times)