This article first appeared in The Edge Financial Daily, on July 29, 2016.
KUALA LUMPUR: SapuraKencana Petroleum Bhd is venturing into Europe. It has secured a US$125.9 million (RM509.9 million) contract for works related to the Trans Anatolian Natural Gas Pipeline (Tanap), fresh off the heels of winning a US$113 million contract in Mexico.
According to a statement from the group yesterday, the contract was awarded to SapuraKencana TL Offshore Sdn Bhd, a wholly-owned subsidiary of the group, by Tanap Dogalgaz Iletim AS.
“This contract win demonstrates that our transformation and strategies are continuing to enhance our competitiveness globally.
“Our cost-reduction efforts and increased operational effectiveness have driven this enhanced competitiveness that has helped us secure our latest wins in Mexico and Tanap, both totalling just under RM1 billion.
“These wins will contribute positively to the group’s performance,” said SapuraKencana president and group chief executive officer Tan Sri Shahril Shamsuddin.
The contract entails the engineering, procurement, construction and installation of offshore pipelines and fibre-optic cables for Tanap, with works to commence in the third quarter of 2016 (3Q16) and completed in 3Q18.
The works include all temporary and permanent works for the installation of two 36in (91cm) offshore pipelines of approximately 35km in length, two 48-core and two 192-core offshore fibre-optic cables running parallel to the offshore pipelines, it said.
Tanap is a natural gas pipeline linking Europe and Asia, located offshore at the Dardanelles Strait in the Sea of Marmara.
The pipeline is 58% owned by the State Oil Company of Azerbaijan Republic, 30% owned by the state-owned Turkish BOTAS Petroleum Pipeline Corp and 12% owned by British Petroleum plc.
With the latest win, SapuraKencana said, it has secured a total of RM3.1 billion of new contract wins in the current financial year.
The group had recently secured another contract worth US$113 million, bagged by its wholly-owned subsidiary SapuraKencana Mexicana SAPI de CV, for the procurement and construction of a 36in by 18km sour gas pipeline in Ciudad del Carmen, Campeche, Mexico, awarded by Pemex Exploracion y Producion.
For the first quarter ended April 30, 2016 (1QFY17), SapuraKencana reported a 58% drop in net profit to RM110.31 million, from RM260.69 million in 1QFY16. Revenue for the quarter fell 14% to RM1.94 billion, from RM2.26 billion.
The group’s performance for the quarter was dragged by dampened results from its drilling, energy, engineering and construction segments.
Year to date, SapuraKencana’s share price has depreciated 29.7%, underperforming the FBM KLCI, which fell 2.01% during the same period. The stock closed two sen or 1.39% lower at RM1.42 yesterday, with a market capitalisation of RM8.51 billion.