1. INTRODUCTION
The Board of Directors of Dialog Group Berhad (“DIALOG”) wishes to announce that its wholly owned subsidiary, namely Dialog Pengerang Sdn Bhd (“DPSB”) has on 21 November 2013 entered into a Memorandum of Understanding (“MOU”) with Concord Energy Pte. Ltd. (“Concord Energy”) to carry out a feasibility study for the proposed development of a dedicated crude oil and petroleum product storage terminal at Pengerang, State of Johor. Concord Energy is one of Singapore and South East Asia’s leading crude oil and refined products trading companies.
The proposed development under the MOU is a new phase of the Pengerang Deepwater Petroleum Terminal project at Pengerang, State of Johor where DIALOG has been granted the land rights and development rights under a Development Cum Joint Venture Agreement.
The Pengerang Deepwater Petroleum Terminal is being developed on contiguous onshore and seabed land located between Tanjung Ayam and Tanjung Kapal, Pengerang, State of Johor, with deepwater jetty facility with water depth of 24 meters capable of handling Very Large Crude Carriers. Upon completion, the Pengerang Deepwater Petroleum Terminal will be able to handle the storage, blending and distribution of crude oil, gas and petroleum products. The Pengerang Deepwater Petroleum Terminal has the potential to become a regional oil, gas and petrochemical hub owing to its strategic location close to one of the busiest international shipping lanes.
Phase 1 of the Pengerang Deepwater Petroleum Terminal project which is owned by Pengerang Independent Terminals Sdn Bhd, a joint venture between DIALOG, Royal Vopak and State Secretary, Johor (Incorporated), is at an advance stage of development. Phase 1 involves the construction of an initial storage capacity of approximately 1.3 million cubic metres (m³) together with six berths at a cost of RM2.0 billion. With the capability to handle the storage, blending and distribution of crude oil and petroleum products, Phase 1 is expected to be operational in 2014.
2. RATIONALE
The MOU will pave the way for DIALOG and Concord Energy for a possible cooperation to be strategic business partners in the proposed development of a dedicated crude oil and petroleum product storage terminal at Pengerang, State of Johor.
By leveraging on both parties’ expertise and recognising the synergies of their respective strength, mutual benefit is expected to be achieved from the proposed development of a dedicated crude oil and petroleum product storage terminal at Pengerang, State of Johor.
The proposed development of this dedicated crude oil and petroleum product storage terminal will be in addition to the ongoing Pengerang Deepwater Petroleum Terminal project at Pengerang, State of Johor.
3. DETAILS OF THE MOU
The MOU records the common understanding to serve as a basis for further negotiations in good faith and common exchange of information in furtherance of the development of a proposed dedicated crude oil and petroleum product storage terminal at Pengerang by DIALOG and Concord Energy in conjunction with a strategic investor to be introduced by Concord Energy. DIALOG and Concord Energy are expected to go into negotiations in relation to the form and structure of the joint venture to be established and the services and facilities which are expected to be provided or received by the respective parties.
4. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSON CONNECTED WITH THEM
None of the Directors and/or major shareholders of DIALOG and/or persons connected with them have any interest, direct or indirect, in the MOU.
5. FINANCIAL EFFECTS
The MOU will not have any effect on the share capital or substantial shareholders’ shareholdings and is not expected to have any material effect on the earnings per share, net asset per share and gearing of DIALOG for the financial year ending 30 June 2014.
6. APPROVAL REQUIRED
The MOU is not subject to the approval of the shareholders of the Company or any relevant authority.
7. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors of DIALOG, having considered all aspect of the MOU, is of the opinion that the terms of the MOU are fair and reasonable and also in the best interest of DIALOG.
This announcement is dated 21 November 2013 and a copy of the joint news release is attached herewith.
