Business

Monday July 16, 2012

Plan to float NGC Energy

By CHOONG EN HAN
han@thestar.com.my


Omani firm intends to do this in 3-4 years

KUALA LUMPUR: While it is still in the midst of acquiring Shell's Malaysian liquefied petroleum gas (LPG) business, Oman-based Natural Gas Co SAOG (NGC) is already making plans to take its local unit, NGC Energy Sdn Bhd, to the next level.

NGC chairman Sheikh Abdulla Suleiman Hamed Al-Harthy, who was in the country last week, told StarBiz that the group aimed to transform NGC Energy into a public listed company in three to four years.

“We could use the operation in Malaysia as a hub to grow into the region. It could be either industrial or domestic as penetration like in Vietnam and Indonesia are still very low and there's a lot of potential to grow the market,” he said.

Though the Shell LPG business might be its largest foray into Malaysia so far, Sheikh Abdulla expects NGC Energy to maintain the Shell LPG business, with growth being churned from the niche technologies that the company have.

Sheikh Abdulla (right) and Goutam Sen at the briefing.

NGC already has a presence in Malaysia with the sale of its metal cutting gas, branded as NC+, via a local agent.

NC+ is a highly efficient hydrocarbon-based cutting solution compared with the conventional solution of cutting metal sheets using an oxy-acetylene mixture.

NGC also offered synthetic natural gas (SNG), which is used to compliment industrial demand that are not reachable by a supply of natural gas.

Sheikh Abdulla said with the Government's emphasis on industrialisation, NGC could capitalise on the opportunity to provide SNG to factories that were still not covered by the local natural gas grid operated by Gas Malaysia Bhd.

He said that in general, the company could differentiate itself in the industrial segment with the technologies that it had.

“With the LPG business, it definitely opened doors for us to other areas. And we are already looking at another business that have some synergy to what we have acquired, but we can't talk about it right now,” he said.

“We are committed to develop the business in Malaysia, to add value to the market and ensure that the good work Shell has done will not be lost. What we would do will only add value in the future.”

The LPG business acquisition still hinges on two licenses that NGC needs to obtain before the deal materialises.

“We expect the licenses to be awarded this month, and we must have the licenses to bottle the LPG into cylinders and claim the subsidies back from the Government,” said Sheikh Abdulla.

Prior to the acquisition, the Shell LPG business is the second-largest player in the market and operates from four locations in the country. It has a monthly volume of 22,000 tonnes per month, commanding about 25% of the market, with 80% of its business derived from the consumer segment while the remainder from industrial clients.

Meanwhile, NGC chief executive officer Goutam Sen hinted that the LPG business would have a complete rebrand, starting with the change of its name.

“The name will be discussed in our first board meeting coming up in these few days,” he said.

Last month, Kumpulan Perangsang Selangor Bhd (KPS) emerged as the bumiputra partner for NGC after acquiring a 40% stake in NGC Energy Sdn Bhd for RM40mil cash.

“We spoke to a couple of people and KPS shared the same aspirations as ours and we found them to be like minded, with their interest to diversify into the oil and gas sector,” he said. Three directors in NGC Energy represent the interest of NGC, while two directors represent KPS.

“As a partner, investments in the future will be made jointly. We are happy that the top management of Shell LPG had migrated to NGC Energy, which ensures a continuity of business,” said Goutam.

Driven by evaporating margins and stagnant growth in its LPG business in Oman, NGC has embarked on an aggressive overseas expansion since 2006, starting with ventures in Gulf Cooperation Council countries.

For its financial year ended Dec 31, 2011, NGC recorded a net profit of 1.29 million Omani rials (RM10.7mil) from a revenue of 18.8 million Omani rials (RM155.5mil), of which 70% is derived from overseas operations.

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