KUCHING: Petronas Gas Bhd (Petronas Gas) will likely get to generate more revenue from operating the liquefied natural gas (LNG) regassification terminal in Pengerang, Johore as well as from transporting more imported gas.
To recap, Petroliam Nasional Bhd (Petronas) confirmed that it would be proceeding with a 3.8 million-tonne per annum LNG terminal for the importation and regasification of LNG in Pengerang, Johore as part of its US$20 billion Refinery and Petrochemical Integrated Development (Rapid) project.
“The terminal, which will be completed by 2016, is likely to be located onshore, unlike its Melaka counterpart. Separately, the company also said it will soon announce a gas field development offshore Peninsular Malaysia with gas lasting 10 to 15 years,” said OSK Research Sdn Bhd (OSK Research), head of research Chris Eng in a research note yesterday.
Eng pointed out that this was good news for Petronas Gas as the company would likely get to own the Pengerang LNG terminal, similar to what it is doing with the Melaka LNG terminal.
“With both having the same capacity, we expect 500mmscfd (million standard cubic feet per day) of gas to flow through Pengerang. As the financial terms of operating the Melaka terminal have yet to be finalised, it is difficult to forecast for now the full impact from the Pengerang terminal to Petronas Gas’ bottomline although it would definitely be positive.
“We also note that with the start of the reduction in gas subsidy, Petronas seems to be more willing to restart gas field development given that it no longer has to bear an unnecessary social burden,” the head of research highlighted.
He stated that even without incorporating the Pengerang terminal or the new revenue stream from operating the Melaka terminal, he could see transportation revenue becoming increasingly important for Petronas Gas as its capacity to process gas was being constrained by bottlenecks at its gas processing plants (GPPs).
“We see gas transportation revenue (based on volume of gas transported via its pipeline) rising from 32 per cent in FY12 (financial year 2012) to 36 per cent by FY16. The addition of another gas import point and having more offshore gas fields would mean more gas will be made available,” Eng affirmed.
As the financial terms for operating the Melaka LNG terminal would only be available prior to its going live in mid-2012, he believed the market had not fully appreciated the revenue potential.
“Add to this the additional gas volume and revenue from Pengerang, and we will likely see a decent upgrade to our earnings,” Eng said.
OSK Research pegged Petronas Gas’ shares with a fair value of RM13.82 per share.