PowerSeraya eyes expansion with YTL

SINGAPORE (Reuters) - Singapore's second-largest utility firm PowerSeraya Ltd, together with Malaysian parent YTL Power, is seeking to expand its operations, which could include selling utilities, fuel trading, and oil storage, in the region.

"We're looking for expansion opportunities in the utility arena, which could include power, electricity, water, tank management, fuel trading," Chief Executive Officer John Ng told the Reuters Energy Summit.

"If there are opportunities, we will certainly work together with our parent, YTL Power, within this region, and even outside this region," he said, adding there were no immediate plans or targets on the company's horizon at this time.

Malaysia's construction-to-power conglomerate YTL Corp (YTLS.KL), bought PowerSeraya from Singapore state investor Temasek Holdings in December 2008 for S$3.8 billion. ($2.3 billion)

YTL Power International Bhd's (YTLP.KL) businesses include power generation in Malaysia and Indonesia, power transmission in Australia and provision of water and sewage services in the UK.

PowerSeraya, which owns a 10,000 cubic-meter Seawater Reverse Osmosis Desalination Plant and a 3,100-megawatt power plant, is in the last stages of commissioning a new S$800 million 800 MW Co-Generation Combined Cycle Plant. The unit, which will come on line by end-June, will generate both electricity and steam.

It also operates a 20-tank oil storage farm with a total capacity of about 1 million metric tons, including two new blending tanks that were completed at the end of 2009 for S$20 million.

"The new tanks complement our fuel oil supply and trading business," Ng said.

PetroSeraya, the company's physical trading arm, employs a handful of fuel oil traders. It more than doubled its net profit to S$12.2 million for the year ended March 31, 2009, despite volatile oil prices. Total traded volumes were 900,000 metric tons, with sales of S$673.6 million.

When asked if the company planned to build more tanks, Ng said: "What we have right now is sufficient for our needs for the next couple of years. We're constantly looking at markets around Singapore, to see whether there's a need for us to invest further."

PowerSeraya, a market leader in the Singapore electricity generation market with a 28 percent share, uses piped natural gas to generate power, besides fuel oil and diesel.

It has committed to buy liquefied natural gas (LNG) from BG Group (BG.L) once the S$1.5 billion Singapore LNG Terminal is completed in 2013.

"From two feedstock options, we're moving into three," Ng said.

Asked if PowerSeraya would venture into gas trading, Ng said it was too premature to draw conclusions.

"Asia has no gas trading hub. Will Singapore develop into a gas trading hub? It's early days yet. If there is a market for gas trading, we will not rule out exploring this opportunity," he added.

"We are constantly exploring what we can do with the underlying commodity that we use."

For the financial year ended March 31, 2009, PowerSeraya reported a net profit of S$171.9 million, on revenues of S$3.58 billion. It had cash and cash equivalents of S$248.4 million at the end of the period. The company is moving to a new financial year that ends on June 30, 2010.

(Editing by Ramthan Hussain)