(Adds quotes, source comment on contracts)
By Yantoultra Ngui and Niluksi Koswanage
KUALA LUMPUR, July 31 Investors sold off shares
in Malaysian oil and gas services firms after Reuters reported
state-owned Petronas will start a planned $19 billion
petrochemicals complex in 2018, signalling a delay in awarding
work contracts for the massive project.
Malaysia's top ten oil and gas services firms by market
capitalisation have been popular with investors this year,
soaring an average 55 percent so far, well ahead of the local
bourse's 5.2 percent gain.
News of a further delay to the refinery and special
chemicals project took some wind out of the sector, which has
been expanding rapidly to capture regional deepwater exploration
and production jobs and benefit from Petronas' $93
billion capital spending in 2011-2015.
By 0733 GMT, Perisai Petroleum was trading down
3.9 percent, while Alam Maritim was off 3.2 percent,
outstripping a 1.1 percent fall in the local bourse.
SapuraKencana Petroleum and Wah Seong,
both widely tipped to win fabrication jobs from the Refinery and
Petrochemical Integrated Development (RAPID) project in southern
Johor, fell 3.5 percent and 2.1 percent respectively.
"The delay is not totally unexpected given the complications
of this massive project," said local investment bank Hwang-DBS
in a note to clients, citing the Reuters report.
"However, it is likely to have a negative impact on the
local O&G players as the project was expected to create massive
spill-over effects with the various jobs to be awarded."
RAPID aims to build a 300,000 barrel per day refinery, which
would supply naptha and liquid petroluem gas to specialty
chemical plants and produce gasoline and diesel.
Sources with knowledge of Petronas's plans said the oil firm
is expected to award about 20 construction job packages valued
at about 2-3 billion ringgit ($620 million-$930 million) each.
Shares in Dialog Group, currently the only firm
with exposure to RAPID as it is building a nearby deepwater
independent storage terminal, fell as much as 6.7 percent.
Hwang-DBS said it believed the second stage of Dialog's
terminal could be delayed as the tank capacity was dedicated for
RAPID. Maybank Investment downgraded Dialog to a "hold".
Contracts for the refinery in the RAPID complex are expected
to be awarded in November or December this year. An industry
source told Reuters many of the Malaysian oil and gas services
companies had tendered and pre-qualified for the jobs
"Some of the packages could be tendered out to pre-qualified
bidders in forth quarter of 2013 or first quarter of 2014," said
the source who declined to be named.
"It is believed the whole project will take four to five
years to be completed and commissioned in 2018."
Among other firms, Wah Seong told Reuters it was
not "greatly affected" by the delay as there were no immediate
signifcant projects in its pipeline, while Pantech
executive director Adrian Tan said the slowdown would have only
a "minimal" impact on on the company's trading division.
Wah Seong shares fell 2.1 pecent and Pantech 2.9 percent.
Shares in Petronas Chemicals, which will operate
RAPID, eased 0.6 percent. The project aims to grab a chunk of
the $400 billion global market for speciality chemicals used in
products from LCD TVs to high-performance tires.
($1 = 3.2255 Malaysian ringgit)
(Reporting by Yantoultra Ngui and Niluksi Koswanage; Editing by