December 4, 2011

Petronas to build a new LNG terminal in Lahad Datu, Sabah

As reported by The Borneo Post, Petronas Gas Bhd (Petronas Gas) president has officially announced the building of a liquefied natural gas (LNG) terminal in Lahad Datu to cater for the new Sabah east coast gas plant and new industries in that area. The announcement was the first from the company, following Sabah state officials’ talks about adorning Sabah with a LNG terminal.

“We understand that this terminal will have a rated capacity of one million tonnes per annum,” added OSK Research Sdn Bhd (OSK Research) in its research report.

The research house believed that its capacity could go up, pending assessment of demand prior to the commencement of construction. Petronas Gas was believed to be the big winner, being the operator of the first LNG terminal in Melaka, as well as the owner and operator of LNG terminals in Pengerang and Lahad Datu. The research report subsequently took a positive stance on the company’s chances of winning Lumut as well.

“This is the first time we have heard of the Lumut terminal, though it would certainly be no surprise if an LNG terminal emerges there,” the report added after noting the presence of the numerous gas-fired power plants and the existence of deep draft ports in the area.

There had been news of a floating LNG plant in Kanowit by 2015 and another in Sabah by 2016. These plants had been on the drawing board since 2007. OSK Research believed that its subsidiary, MISC Bhd would want to be the operator of these terminals.

To account for the potential earnings from Pengerang and Lahad Datu, the research house had bumped up its terminal growth rate for the company to 3.5 per cent as it pegged a fair value of RM15.52 per share, pending further details on the contract.

While no contract had been signed to confirm the other LNG import terminals in the country, the company remained OSK Research’s top utility pick. Its appeal was enhanced by its defensive business nature as well as its safe growth angle, seeing that gas shortage in the Peninsular was expected to be more acute in the coming years.

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