Group is exploring opportunities to further develop its investment in PDT

By NG MIN SHEN / Graphic By TMR

Dialog Group Bhd, an integrated technical services provider to the oil and gas (O&G) industry, is considering venturing into the petrochemical business.

Its director of corporate services Chew Eng Kar said the group is exploring opportunities to further develop its investment in the Pengerang Deepwater Terminal (PDT), a storage facility developed and owned partly by Dialog.

“We have enough land, so there are opportunities where we can move on to the petrochemical industry. We are discussing with partners and are exploring these opportunities, but have yet to make any firm decision,” he told reporters after the company’s AGM in Kuala Lumpur yesterday.

“If we go in, we will only be taking a minority stake. It will be domestic, mostly on our investment in Pengerang — the Pengerang industrial land that we have.”

According to its website, Dialog’s core assets and operations include storage terminals for petroleum, petrochemicals and liquefied natural gas, offshore supply base, and marginal and mature O&G fields.

The group has a 46% stake in Phase 1 of the PDT and a 25% stake in Phase 2, while Phase 3 is currently being developed by a joint venture between Dialog and the state government of Johor at an initial cost of RM2.5 billion.

“We’re also looking for new partners and new customers for Phase 3. There are many companies that we’re talking to — mostly multinational players,” Chew said.

Phase 1 of the PDT commenced operations in 2014, while Phase 2 is partially completed and operational, with full completion scheduled for early 2019.

Land reclamation works for Phase 3 began in April this year and will take 22 months to complete.

Meanwhile, the group has allocated between RM500 million and RM1 billion for capital expenditure (capex) in the financial year ending June 30, 2019 (FY19). Its capex for FY18 amounted to RM500 million.

Dialog group CFO Zainab Mohd Salleh said about RM500 million of FY19 capex will be allocated for the firm’s downstream business, RM200 million will be utilised for the upstream business and about RM150 million will go to internal capital investment.

On the recent volatility in global crude oil prices, Chew said the group will not be negatively affected as its bottomline is equally balanced across its upstream, downstream and midstream (storage) businesses.

“Each segment contributes about one third to our bottom line. If oil prices rise, our upstream business benefits because it involves oil production. If oil prices drop, downstream will benefit because there will be more downstream activities kicking in to take advantage of the low prices. Midstream, or our storage business, will do well regardless of oil prices,” he stated.

Shares of Dialog closed 13 sen or 3.98% lower at RM3.14, valuing the company at RM17.65 billion with 33.96 million units done.