KUALA LUMPUR (Nov 1): Asia Bioenergy Technologies Bhd is venturing into the oil and gas (O&G) sector via its tie-up with a Petronas-licensed firm, which could see them collaborating to undertake a project valued at up to RM30 million.

Under the collaboration, Coral Alliance Sdn Bhd also agreed to appoint AsiaBio's subsidiary, AsiaBio Petroleum Sdn Bhd, as its preferred contractor if the project is awarded to Coral.

According to its bourse filing today, the business and technology incubator and strategic advisory group said AsiaBio Petroleum has inked a one-year collaboration agreement — which could be extended for a year — to effect the tie-up.

Under the contract, AsiaBio Petrolem shall provide mechanical maintenance services, supply of materials and consumables as well as manpower if Coral Alliance awards projects to the company.

Coral Alliance, incorporated in Malaysia, is principally involved in the provision of integrated brownfield services, project management, multidiscipline and engineering services to onshore and offshore O&G industries.

It is also a company licensed by Petronas or Petroliam Nasional Bhd to supply products and services to exploration and O&G companies. It has secured several engineering, maintenance and supply contracts with major O&G firms in Malaysia, with one of its notable clients being Petronas Carigali Sdn Bhd.

In a statement, AsiaBio Petroleum head of operation David Chuah said the O&G industry has played a crucial role in Malaysia’s economy and there is no better time than now for the company to venture into the segment.

"The last two years’ fluctuations in oil prices have created unprecedented uncertainties in the oil and gas industry. At its present levels, we view it as an opportunity to venture into the maintenance business of O&G, due to the rising need to ensure the upkeep of existing O&G production assets in a time of reduced new capital expenditure in the sector," he said.

Although the contract will not have any material impact on its current financial year ending March 31, 2017 (FY17), he said the contract would contribute positively to its earnings for the duration of the contract.

Meanwhile, AsiaBio executive director Tan Sik Eek said the collaboration demonstrates the group’s continued strategy in investing in growth-oriented incubatees.

"The collaboration is also expected to lead the AsiaBio Group into becoming a full-fledged Topside Structural Maintenance (TSM) and engineering company in the near future," he added.

“This collaboration adds to our competitive advantage and areas of expertise as a business and technology incubator for the combined strength of both companies augurs well for our entry into the industry. Our first collaboration is forecasted to contribute about RM30 million per year to our turnover,” he added.

Shares in AsiaBio closed unchanged at five sen today, giving it a market capitalisation of RM51.67 million.