Petronas Carigali Sdn Bhd has excluded THHE Fabricators Sdn Bhd (TFSB), a subsidiary of Lembaga Tabung Haji’s 29.8%-owned TH Heavy Engineering Bhd, from participating in its future tenders for two years.
TH Heavy Engineering told Bursa Malaysia on Monday that this was due to “performance-related issues” pertaining to the execution of a contract awarded in January 2014 to TFSB, a 70%-owned subsidiary, to build a topside (upper half of an offshore oil platform) for PCSB’s project offshore Sabah (Kinabalu project).
“The company is currently seeking clarification from Petronas Carigali and will be taking appropriate measures to mitigate the matter, including appealing to Petronas Carigali as the present Kinabalu project has achieved an onshore construction completion of approximately 91%,” it said.
Under the contract, TFSB was to undertake the procurement, construction and commissioning (PCC) of KNPG-B Topside PH II, located at Kinabalu Deep & East production sharing contract, 55km off Labuan.
In its announcement to Bursa Malaysia on Feb 5, 2014, TH Heavy Engineering said the scheduled completion date for the contract would be about 18 months.
In the latest statement, TH Heavy Engineering appears to play down any possible impact, saying TFSB "is not anticipating participation in Petronas Carigali tenders in the present year."
“Due to the recent cutback in capex (capital expenditure) by oil majors, TFSB anticipates slower project tenders pipeline in the near future,” it said.
TH Heavy Engineeering said it did not expect the exclusion of TFSB from participating in future Petronas Carigali’s tender to have any material impact on its full year 2016 financial results.
“In addition, any impact is further mitigated by diversification by TFSB into onshore fabrication, fabrication of specialised equipment and offshore fabrication opportunities regionally,” it added.
