Bumi Armada’s Indonesian venture a long-term positive

KUALA LUMPUR: Bumi Armada Bhd’s proposed venture with two Indonesian firms to develop floating liquefied natural gas (LNG) and carriers while engineering a carbon capture injection system for a gas field in Indonesia is positive and could generate a new source of income for the company.

However, contribution from the first LNG shipment would take several years to kick in, according to Hong Leong Investment Bank (HLIB) Research.

On Wednesday, the offshore energy facilities provider said it had entered into a non-binding agreement with PT Pertamina International Shipping (PPIS), a shipping and marine logistics subholding of Indonesia’s state-owned energy company, and natural gas trading firm PT Davenergy Mulia Perkasa (DMP) to develop and commercialise LNG from the Madura gas field and its surrounding fields, off Java.

Bumi Armada and PPIS will jointly design, engineer, construct, install, commission, hook up and operate a floating liquefied natural gas storage facility, alongside an LNG carrier to transport the LNG.

“We reckon it would take several years for the potential consortium to conduct explorations works and feasibility studies to reach a final investment decision and subsequently another three years for development works before contribution from the first LNG shipment starts kicking in,” said HLIB Research, which maintains a “buy” rating on the stock, but has slightly lowered its target price to 69 sen from 71 sen previously.

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