ROVworld Subsea Information

Alam Maritim to go big in underwater services
Date: Friday, November 27, 2009 @ 11:00:00 EST

Alam Maritim to go big in underwater servicesAlam Maritim Resources Bhd plans to invest RM250mil in the next eight to 10 months to expand its oil and gas (O&G) underwater services due to increasing demand according to The Star Online. Managing director Azmi Ahmad said the amount would be spent on new underwater equipment - remotely-operated vehicles (ROVs), sat dives and pipelay barges.

"We will expand our underwater services as Malaysia's O&G exploration works shift to deep waters. Where it is risky or impossible for divers to go, we will be ready with our robotic equipment for deep-sea diving," he told StarBiz.

Azmi said that in its early years, Alam Maritim's participation in underwater services was limited to equipment renting that led to modest revenue contribution of 0.1% to 3% in 2003 and 2004 respectively.

"However, after the delivery of a ROV in 2006, revenue contribution from underwater services jumped to around 10% and it is expected to be about 20% in the near future." he added. Alam Maritim now has four ROVs.

This positive underwater services development, coupled with its offshore fleet expansion, is expected to boost the company's growth momentum in the second half of its current financial year ending Dec 31.

Alam Maritim's net profit swelled by 70.5% to RM52mil in the first six months ended June 30 against the previous corresponding period. Revenue for the period increased 20% to RM152mil from a year ago.

"Based on the group's current assets and long-term contracts, Alam Maritim foresees that the same momentum achieved in the first half can be sustained in the second half," he said.

Currently, Alam Maritim owns 30 offshore support vessels (OSVs). It received a new FSO (floating, storage and offloading) support vessel valued at RM27.8mil in July and is scheduled to receive three more OSVs in the current quarter at a total value of RM189.9mil.

On speculation that the industry will experience an oversupply of vessels in the second half of this year, Azmi said oil majors in Malaysia usually gave preference to local contractors and this was a competitive advantage.

"Currently, it is estimated that the local OSV market is controlled equally by local and foreign players.

"There is a lot of old tonnage due for replacement and new requirements have been identified in tandem with heightened exploration and production activities," he said.

On charter rates, Azmi said Alam Maritim had adopted a cautious approach by signing only long-term charters (more than a year) which had lower rates but provided more stable income.

"Internally, we don't see any major downtrend in daily charter rates. More importantly, we look at our cost of investment as our benchmark for the daily charter rates instead of the market rates.

"But in general, we see 10% to 20% decline in daily charter rates from last year's peak," he said.

Azmi said the key drivers that should keep the charter at a stable position would be high demand and high charter rates for drilling rigs, development of new fields and the number of ageing platforms available for maintenance.

"Despite weaker energy prices year-on-year, we expect Petronas to continue with its exploration and production programmes, given its reserve replacement concerns and ample balance sheet."

Additionally, Azmi said, crude oil price had stabilised at above US$60 per barrel and signs of recovery in the global economy would support the growth of the industry.

"We believe more new O&G vessel contracts will make their way back into the market and Alam Maritim would be one of the main beneficiaries, given its fleet of young and Malaysian-flagged vessels," he said.

This article comes from ROVworld Subsea Information

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