Tanjung Offshore on diversification mode

AMPANG: Oil and gas service provider Tanjung Offshore Bhd is putting in place a diversification strategy that will eventually see less reliance on its core oil and gas business, whereby its revenue contribution to the group is expected to reduce to 70% in the next five years.
The balance 30%, on the other hand, will come from the proposed new venture into property construction, aerospace, transport and education businesses.
Speaking at a press conference after Tanjung Offshore’s AGM here last Friday, CEO Rahmandin Shamsudin said the company is in talks for partnerships in the aerospace and education segments, including with UMW Holdings Bhd, but nothing has been firmed up yet. Worth noting is that Tanjung Offshore chairman Datuk Nik Norzrul Thani Nik Hassan is also a board member of UMW.
“We focus on servicing and processing potential in the aerospace industry, that is one sector that the government is pushing for. We’re looking for synergy with the current business,” he noted.
For the oil and gas business, Tanjung Offshore, which sits on a cash hoard of about RM70 million, is looking to acquire cheap oilfield and onshore assets in Thailand, Indonesia and Myanmar.
“With zero gearing now, it gives us opportunities to explore the overseas market ... In fact, we’re talking to a few parties now,” he noted.
Tanjung Offshore, which has an order book of RM400 million, is bidding for jobs worth RM1 billion, of which 80% is Refinery and Petrochemicals Integrated Development (Rapid) projects.
“It will be good if we can achieve a success rate of 20% to 30%,” Rahmandin said.
Last year, the company said it was planning to re-enter the offshore support vessel (OSV) market, but the current oil price rout could have put a pause on the plan.
“We’ve been approached by a few companies to look into the possibility of going back into OSV, but it is not easy. We have to establish our ship management group,” he said.
In 2015, Tanjung Offshore incurred a net loss of RM76.26 million against a net profit of RM1.06 million in 2014.
“Hopefully by next year, with some of our diversification plans in place, then I think our income will be better,” Rahmandin replied when asked about the company’s financial prospects.