KUCHING: Given its strong contribution to the nation’s revenue, the oil and gas (O&G) segment continues to become the focus for Budget 2013 that was tabled by Prime Minsuter Datuk Seri Najib Tun Razak last Friday.
During the Budget 2013, two initiatives for the O&G segment were announced which were investment tax allowance of 100 per cent for the period of 10 years for qualified companies that invest in refinery activities on petroleum products.
And the second initiative is the enhancement of the Global Incentive for Trading (GIFT) programme with a 100 per cent tax exemption on statutory income for the first three ears of operations for liquified Natural Gas (LNG) trading companies.
According to analyst from the research arm of Kenanga Investment Bank Bhd (Kenanga Research), for the initiatives, the three immediate O&G beneficiaries would be Dialog Group Bhd (Dialog), Petronas Chemicals Group Bhd (PetChem) and Petronas Gas Bhd (PetGas).
The analyst said Dialog would be the top beneficiary for the Pengerang Integrated Petroleum Complex (PIPC) project in Johor and it is also one of the first five licensed GIFT trader.
Being the first mover in the PIPC project, Dialog would gain access to RM5 billion Pengerang CTF for the oil storage facilities and the planned RM4 billion LNG storage facilities and RGT.
Meanwhile PetChem would also enjoy this allowance given its involvement in the US$1.5 billion Sabah Ammonia-Urea (Samur) project located in Sipitang that would be ready by end 2014, whereas PetGas would benefit as it is the operator and owner of Melaka regasification terminal (RGT).
The research firm noted that besides the three main beneficiaries for the incentives, there are many other onshore construction, engineering and process equipment fixture players who would be the secondary beneficiaries.
Among them are SapuraKencana Petroleum Bhd, Muhibbah Engineering (M) Bhd, MMC Corporation Bhd, Naim Holdings Bhd, KNM Group Bhd, Pantech Group Holdings Bhd and WCT Bhd, to name a few.
“In our view, the main aim of both the initiatives is to ensure the viability of the PIPC and the Sipitang O&G Industrial Park (SOGIP) projects that are supported by the Economic Transformation Program (ETP),” added the analyst.
With such positive sentiments in the O&G industry moving forward, Kenanga Researched remain bullish with an overweight rating for the sector, reasoning that Budget 2013 initiatives for the sector was a clear sign that capex would continue streaming into the sector, be it upstream or downstream segments.