Monday May 25, 2009
Tanjung Offshore diversifies support vessel services
By YEOW POOI LING


KUALA LUMPUR: Tanjung Offshore Bhd has diversifed its range of support vessel services and moved up the value chain for its engineering equipment business, according to managing director Omar Khalid.

As oil prices trend upwards, the company foresees contract flow picking up and projects like deepwater exploration will become viable again.

On the back of the improving operating environment, it was anticipated to perform better than the financial year ended Dec 31 (FY08), Omar told StarBiz.

It has a current order book of some RM1.5bil, versus RM1.2bil a year ago. For FY08, net profit rose to RM31.9mil from RM23.1mil in FY07, while revenue improved to RM574.3mil against RM422.9mil previously.


Omar Khalid ... Having the testing done on the vessel is more cost effective for customers
Its newest offshore support vessel, MV Tanjung Gelang, has arrived in Songkhla, Thailand, to begin its well testing and intervention services for Carigali-PTTEPI Operating Co Sdn Bhd for the block B-17 at the Malaysia-Thailand Joint Authority area.

The one-year contract is worth RM30mil, with a possible extension of another year.

Tanjung Offshore is the first Malaysian company to own a vessel that provides well intervention services, which are usually implemented on rigs. Most of its other ships are chartered out for anchor handling tug and supply.

“Having the testing done on the vessel is more cost effective for customers. Demand is likely to catch up,” Omar said.

The global downturn had led to many cancellation of orders for new ships, limiting the supply of available vessels in the market and thus keeping charter rates firm, he said.

Tanjung Offshore currently has five vessels under construction, involving some RM200mil worth of capital expenditure, and expected to be delivered by the second quarter of 2010.

The growth of its engineering equipment division, meanwhile, would be spurred by two new subsidiaries that were acquired in the last nine months, Omar said.

Its British subsidiary specialises in waste heat recovery units (WHRUs), which helps to maximise efficiency in heat transfer, optimises cost savings and reduces weight and space requirements.

Omar said some WHRUs for customers in this region would be made in Malaysia to take advantage of the lower cost structure as well as to maximise profit margins.

This month, it completed the acquisition of Gas Generators (Malaysia) Sdn Bhd, which manufactures nitrogen gas generators for the Asean market.

Meanwhile, the size of the maintenance market for all types of engineering equipment is expected to increase as many platforms in the country are nearing maturity.

“It’s a snowball effect as when we sell engineering equipment, we will also get to offer maintenance services,” he said.

Omar said that with oil prices recently breaking the US$60 per barrel mark, more projects were likely to come on stream, particularly deepwater exploration, which was previously not viable.

“There were opportunities even when oil was below US$50 per barrel but now that it’s rising, the sector is expected to be more robust,” he added.