This article first appeared in The Edge Malaysia Weekly on March 28, 2022 - April 3, 2022
It came as a relief when national oil company Petroliam Nasional Bhd (Petronas) denied reports and market speculation that it was in talks with the government on a proposal to take a significant stake in financially troubled oil and gas outfit Sapura Energy Bhd. It would have involved buying over a stake from 40% shareholder Permodalan Nasional Bhd (PNB) to revive the ailing company.
After all, why should taxpayers — via Petronas — fund the bailout of a failed corporation that is not a national asset? And why should Petronas bear the brunt of taking over Sapura Energy after having already done so much for the company?
Other than regularly awarding contracts to the likes of Sapura Energy, Petronas’ subsidiary Vestigo Petroleum Sdn Bhd took over the Berantai Risk Service Contract (RSC) from Sapura Energy and its partner Petrofac Ltd in July 2016, when oil prices fell and adversely affected the viability of the contract. This exercise of taking over the Berantai RSC itself cost Petronas a sizeable sum, as it involved buying assets such as the Berantai floating, production, storage and offloading (FPSO) vessel.
Sapura Energy has yet to bounce back, and is instead faltering, and looks likely to drag down a slew of vendors that have yet to be paid.
It is perplexing that, a couple of weeks ago, Sapura Energy announced a massive net loss of RM6.61 billion, from RM453.14 million in revenue for the fourth quarter of FY2022 ended January, and this loss comes at a time when oil prices have been at levels above US$60 per barrel for more than a year, and even surpassing US$130 per barrel earlier this month.
Perhaps PNB should come clean and disclose what the problems at Sapura Energy really are. PNB came in as its largest shareholder in January 2019 after forking out RM2.68 billion for unsubscribed rights shares.
So, was it poor management or mismanagement?
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