Stronger outlook for Bintulu Port’s 2H on Jerun, Kasawari gas projects

KUCHING (Sept 4): Bintulu Port Holdings Bhd (Bintulu Port) expects stable liquefied natural gas (LNG) supply in the second half of financial year 2024 (2HFY24) upon commissioning of the Jerun gas field and Kasawari gas development project.

The Sarawakian port operator guided for a much stronger 2HFY24 after the recent weak 2Q results which were due to the unplanned MLNG power failure shutdown (10 days) in May 2024 on top of already scheduled maintenance services shutdown (30 to 45 days).

“Furthermore, it expects a stronger contribution from the base support facilities segment revenue from Jerun gas field and Rosmari-Marjoram’s onshore plant.

“Upon commissioning of the Jerun gas field and Kasawari gas development project, it expects a stable LNG gas supply to cater for the strong demand during winter season,” commented analysts with Kenanga Investment Bank Bhd (Kenanga Research).

The operator appeared more upbeat on the prospects of Bintulu Port’s tariff hikes.

This comes as the setting up of the new Bintulu Port Authority Sarawak (BPA), which is under the purview of the Sarawak government, is on track to be completed by year-end.

“This will pave the way for a new concession in January 2025, and a 10 per cent hike in Bintulu Port’s tariffs by FY25, based on our prediction,” Kenanga Research said.

Recall, there has not been any revision to Bintulu Port’s tariffs since 1993 and its tariff is 38 per cent lower than that of Samalaju Industrial Port.

It currently charges RM207.50 per twenty-foot equivalent unit (TEU) for local containers, versus RM335 per TEU charged by Samalaju Industrial Port.

Bintulu Port has set a target of 10 per cent of total revenue coming from the handling of green energy by 2028, with the balance from LNG (40 per cent) and non-LNG (50 per cent).

At present, its revenue mix is 50:50 LNG and non-LNG.

“Sarawak state’s investment in two large-scale hydrogen plants in Bintulu, namely, H2biscus and H2ornbill, pursuant to its hydrogen economy agenda, will produce green energy cargoes to Bintulu PortT such as green hydrocarbon, ammonia and methanol as well as blue ammonia.

“In addition, Bintulu Port will also handle biomass fuels produced in the hinterland. In the meantime, it will benefit from the handling of construction materials for the hydrogen plants.

The LNG cargo throughput at Bintulu Port will remain stable with sustained demand from Japan and South Korea and signs of green shoots of recovery from China.

Meanwhile, there has been a pick-up in inbound and outbound cargo volumes at Samalaju Industrial Port from its key customers, Press Metal Holdings Bhd and OMH Holdings Ltd.

Kenanga Research believes its key customers have an edge over their peers in the international market as their products have low-carbon footprint given the hydro power input.

“Also, as it stands today, Western countries still imposed outstanding sanctions on Russian aluminium (that makes up circa six per cent of world aluminium production) and hence will have to look for alternative sources of aluminium supply.

“On the other hand, Bintulu Port will commence the handling of marine services for Sarawak Petchem’s methanol division from the 2HFY24.”

Concurrently, Bintulu Port is under an interim lease agreement until December 2024 pending the completion of the handover of BPA control.

The Bintulu Port (Dissolution) Bill 2024 has been passed by both House of Representatives and House of Senate before notification in Gazette.

At the same time, the new Port Operation Agreement is being drafted. The operations of Bintulu Port will not be disrupted during the process of the Sarawak government’s port authority takeover from the federal government.