PETALING JAYA: BTM Resources Bhd is partnering with Markmore Energy (Labuan) Ltd (MELL) for the proposed production of liquefied petroleum gas (LPG) from natural gas supplied from the Rakushechnoye oil and gas field. The move is aimed at diversifying and expanding its source of income.
A head of agreement (HoA) was inked between the two parties to set out essential terms and conditions for the participation.
Under the agreement, a LPG production plant and gas processing facility with a capacity of 100 million standard cu ft per day will be constructed. BTM agrees to bear the cost and expenses relating to the engineering, design, procurement, construction and commissioning of the LPG plant.
BTM will be entitled to up to 116 metric tons per day of LPG and 3,700 barrels per day of condensate produced at the plant which is expected to result in a minimum return of 12% per annum for the project.
MELL will undertake to exclusively supply natural gas from the Rakushechnoye oil and gas Field for processing at the LPG plant.
BTM, which is involved in wood-based industry, has been hit by higher production cost and lower profit margin of wood products.
“The board believes that the proposed LPG production would contribute positively to its future earnings and improve the financial position of the group. The additional revenue from the proposed LPG production is expected to enhance the company’s profitability and returns on shareholders’ funds.”
In order to maximise BTM’s payback period for its investment in the deal, MELL will procure gas supply at a preferential rate of US$1.00 (RM4.15) per MMBTU to the LPG plant together with a profit guarantee.
