The recent explosion and fire at the Pengerang Integrated Complex in Malaysia on March 15 is expected to have a minimal impact on oil and gas players, according to a statement by AmInvestment Bank Research.

Home to the Petronas Refinery and Petrochemical Integrated Development, the Pengerang complex has insurance coverage for any damage or losses from this incident, which explains why the research house expects a minimal FY20 earning impact on the group.

But the Petronas-Saudi Aramco joint venture that runs the operation said extensive investigations will need to take place before the Refinery and Petrochemical Integrated Development (Rapid) can fully begin operations.

At the moment, AmInvestment said it expects Dialog to see minimal impact for FY20 given the strong growth from the maiden contribution from 1.3 million m3 storage facilities in Pengerang Phase 2, which has been recently completed together with 120,000m capacity from Tanjung Langsat 3.

Although Dialog Group Bhd has Pengerang Deepwater Terminals, Am-Research understands that the incident occurred beyond the terminals’ boundary.

“We had projected minimal earnings contributions from Petronas Chemicals Group Bhd’s (PetChem) 50 per cent-equity stake in the petrochemical operations of Rapid as management had guided for 2H20 EBITDA breakeven amid a low polyethylene-naphtha spread,” it said in a report.

It added: “While Pengerang Terminal 2 and LNG 2 cater exclusively to Petronas, the storage facilities are on a take-or-pay terms. Even if Petronas may not require the storage facilities due to any potential postponement in the Rapid commencement, Dialog’s earnings from these terminals will continue as projected.”

On the whole, the research house does not expect the Pengerang incident to significantly affect the earnings prospects of the stocks under its coverage.

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19th March 2020