KUALA LUMPUR: TH Heavy Engineering Bhd’s (THHE) international oil company partner is bidding for a risk service contract (RSC) valued at US$500mil (RM1.55bil), and the results of the bidding process should be made known sometime in July, said chairman Datuk Azizan Abd Rahman.
While declining to reveal the name of the partner, Rahman said that if it was successful in garnering the RSC, THHE’s role would be in providing services, and not exploration works. The structure between the partner and THHE have yet to be finalised.
Managing director and CEO Nor Badli Mohd Alias added that THHE currently had a floating production storage and offloading (FPSO) vessel, which could also be used as one of the solutions for the RSC if its partner was successful in the bid.
“Right now, our FPSO is not contracted for work, and we have a few options on how to deal with this. We could either deploy it out under a normal contract, or we can also sell it if the price is right.
“Thirdly, we could also provide the FPSO as a solution for the RSC, if the bid is successful,” Nor Badli said after the company’s EGM.
During the EGM, shareholders approved THHE’s proposed joint venture with McDermott International Inc, where affiliates of both companies signed a joint-venture agreement to provide a broad spectrum of marine construction services, including full engineering, procurement, construction, installation, commissioning (EPCIC) solutions, to the offshore oil and gas industry.
Under the joint-venture agreement, THHE will purchase 30% stake in McDermott’s local unit, Berlian McDermott Sdn Bhd, while McDermott will acquire 30% in THHE’s unit, THHE Fabricators Sdn Bhd. Both stakes are worth US$25.47mil (RM78.96mil).
“With McDermott as our partners, we can now bid for more complex jobs. Petronas presently has a new contracting model where they award out full EPCIC projects.
“With McDermott as our partners, we can provide full EPCIC works. where previously we could not and hence did not have control. Only MISC Bhd and their partner Technip, and SapuraKencana Petroleum Bhd can provide full EPCIC works. We will be the third player with this capability,” said Nor Badli.
THHE is now bidding for RM2bil worth of jobs, with RM1bil together with McDermott while the remaining RM1bil is on its own bid.
On Tan Sri Quek Leng Chan’s involvement in THHE via a 10% private placement, Badli said Quek’s presence would create value for the company through his international networking and financial resources.
“If there comes a time when we would need to raise funding, then it should not be a problem,” said Azizan.
In May, Quek, via GuoLine Capital Ltd (GCL), bought 10% or 92.79 million shares in THHE via a private placement for RM41.8mil. Part of that was directly through his youngest son Quek Kon Sean, who will subscribe to 27.8 million shares. GCL is a unit of Quek’s flagship Hong Leong Co (M) Bhd.