TH Heavy Engineering Berhad (THHE) reported Monday that its 70-percent owned unit THHE Fabricators Sdn. Bhd. (TFSB) had received a letter from PETRONAS Carigali Sdn Bhd in connection to TFSB’s ongoing contract for the procurement, construction and commissioning (PCC) of KNPG-B Topside PH II for the Kinabalu Non-Associated Gas (NAG) Development Project (Kinabalu Project) offshore Malaysia that was awarded Jan. 28, 2014.
PETRONAS Carigali stated in the letter that "due to performance related issues pertaining to the execution of the Kinabalu Project, TFSB will be excluded from participating in future PETRONAS Carigali’s tender for a duration of 2 years," TTHE said in a filing with local stock exchange Bursa Malaysia.
THHB is currently seeking clarification from PETRONAS Carigali, the upstream arm of Malaysia's national oil company Petroliam Nasional Berhad (PETRONAS), and will take "appropriate measures to mitigate the matter including appealing to PETRONAS Carigali as the present Kinabalu Project has achieved an onshore construction completion of approximately 91 percent."
The contractor said that the recent reduction in capital spending by oil majors is likely to result in slower project tenders pipeline in the near future and so TFSB is not anticipating participation in PETRONAS Carigali tenders this year.
"The aforesaid exclusion of TFSB from participating in future PETRONAS Carigali’s tender is not expected to have any material impact on the full year 2016 financial results of the Company. In addition, any impact is further mitigated by diversification by TFSB into onshore fabrication, fabrication of specialized equipment and offshore fabrication opportunities regionally," THHE added.
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