Genting set for an energy booster

Genting president Datuk Seri Tan Kong Han said the potential returns on investments on these new projects are forecast to be in the double-digits

KUALA LUMPUR: Genting Bhd, via its various subsidiaries, will be involved in the energy sector in a bigger way.

The group yesterday announced it had acquired a 49% equity stake to own and develop two units of 745 megawatts (MW) gas-fired power plants located at ZhouShan, Greater Shanghai Area in the Zhejiang province in China.

Its equity stakes will be in SDIC Jineng (ZhouShan) Gas Power Generation Co Ltd, which it had acquired for about US$14mil.

State-owned SDIC Power Holdings Co Ltd is the 51% majority shareholder in the gas power plants.

Separately, Genting also announced it had entered into a US$962.8mil engineering, procurement, construction, installation and commissioning contract (EPCIC) with China-based Wison New Energies Co Ltd for the latter to build a floating liquefied natural gas (FLNG) facility.

Wison will construct the FLNG facility at their shipyards in China and after passing the yard performance test, it will then be towed to its final destination at Teluk Bintuni, West Papua, Indonesia, where the final commissioning test will be carried out.

The project duration is estimated to be 27 months from the execution of the EPCIC contract, it said in a statement.

The target sail away date from the shipyard in China will be in the second quarter of 2026, the group explained.

The feed gas for the FLNG facility is supplied from the Asap, Merah and Kido structures within the concession area of the Kasuri Block in West Papua, Indonesia, that was earlier awarded to Genting’s 95% indirect subsidiary Genting Oil Kasuri Pte Ltd.

At a press conference to announce these developments, Genting’s president, executive director and chief operating officer Datuk Seri Tan Kong Han said the potential returns on investments on these new projects are forecast to be in the double-digits.

“The energy segment of the group, which was already present before this since 1989, is poised to be a much bigger contributor moving forward,” Tan said yesterday.

“Based on our annual report, the leisure and hospitality segment contributes about US$4.9bil in revenue whereas the power and oil and gas division had contributed some US$365.7mil at the end of last year. This is a small fraction to our overall group.”

Based on the current gas prices and looking at the ability of how much cargo the group can ship, Tan said this new venture could bring in US$1.3bil revenue annually.

“This is a big number and we are very excited about the prospects here,” he said.

Tan said the timeline for the group is to deliver commercial gas in the second half of 2026 from the FLNG plant.

“These are likely to be long term contracts on a free-on-board basis.

“We are in discussions with potential buyers for the gas produce,” he said, noting that the group owns a 100% stake in the FLNG project.

Based on projections, Tan said the power plant in China is forecast to gain total revenue per year of US$8.5bil to US$8.6bil over a span of 25 years.

“This works out to something like US$343mil to US$346mil of average revenue per year for the entire project, of which we have a 49% stake in it,” he said.

Genting, through its indirect subsidiary, had also signed a heads of agreement with SDIC Power for the joint cooperation after the power plant acquisition.

Genting said a further pro rata equity investment of up to approximately US$46mil will be required once the plant commences commercial operations in 2025.

The purchase price and equity investments in the power plant totals some US$60mil that will be fully funded by internally generated funds, it said.

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