Petrol One unit bags job for long-stalled Asia Petroleum Hub project

PETALING JAYA: Practice Note 17 company Petrol One Resources Bhd’s (PetOne) support services agreement with China’s Dalian Jinzhou Heavy Machinery Co Ltd looks to be the first significant development towards the revival of the long-stalled Asia Petroleum Hub (APH) project which ran into financial difficulties in 2010.
The project initiated in 2007 was expected to cost RM1.7 billion and scheduled for completion in 2009.
News on its purported revival has been sporadic ever since one of its contractor’s Muhibbah Engineering (M) Bhd announced in October 2012 that Asia Petroleum Hub Sdn Bhd (APHSB) had been wound up by Q1-PMC Sdn Bhd, a creditor of APH.
In its 2012 annual report, Muhibbah Engineering made a full provision of RM245 million for the remaining net debt exposure of debts from APH. A plan by the group to recover outstanding claims of RM381 million from managing contractor of the APH project, ZAQ Construction Sdn Bhd also did not come to fruition, as no mention of the material litigation was made after Muhibbah Engineering’s 2013 annual report. ZAQ was wound up on Nov 19, 2013.
A check with Companies Commission Malaysia (SSM) shows no change in APHB’s status, which is stated as winding up. Its sole shareholder remains AQ Properties Sdn Bhd, an investment holding company owned by KIC Oil & Gas Sdn Bhd and Trek Perintis Sdn Bhd.
A news report in 2014 had counted on the entry of a consortium led by Dubai-based Emirates National Oil Co to revive the project.
PetOne told Bursa Malaysia in its filing yesterday that its unit Petrol One Offshore Sdn Bhd (POOSB) had entered into a two-year support services agreement with Dalian Jinzhou to provide supply base and marine support services to its oil storage terminal engineering procurement and construction works at Tanjung Bin, Johor, for the APH terminal facilities project.
Dalian Jinzhou, which is involved in the manufacturing of large chemical, petrochemical, petroleum refining and fertiliser process equipment, and environmental protection equipment, said that work is to start in the second half of year 2017.
The support services agreement is subject to the appointment of Dalian Jinzhou as the contractor for the oil storage terminal engineering procurement and construction works for the APH terminal facilities project.
POOSB agreed to provide the support services, such as provision of supply base with five acres of land adjacent to the Port of Tanjung Pelepas in Johor, and warehousing and logistics support, among others, to Dalian Jinzhou.
POOSB will be paid a fee for the support services at a rate of cost plus 5% and as agreed between the parties from time to time. Details of the cost are still being finalised.
The agreement is expected to contribute positively to the consolidated earnings per share of PetOne for the financial year ending June 30, 2018.
The support services agreement is not subject to the approval of shareholders of PetOne or any regulatory authorities. It is not conditional upon any other corporate exercise undertaken or to be undertaken by PetOne.
“The board is of the opinion that the support services agreement is in the best interest of PetOne and its subsidiaries,” said PetOne.