Operations in Oman and the UAE, which contribute about 8% of Sembcorp (SGX:U96)'s net profit, are so far unaffected; no disruption to gas supply is expected, with no LNG cargoes scheduled from the Middle East over the next few months.
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Beneficiary of higher gas prices and volatility.
About 50% of Singapore’s natural gas consumption is imported via piped gas (PNG) from Indonesia and Malaysia, while the remaining from sea-transported Liquefied natural gas (LNG). Qatar, which accounts for 20% of global LNG supply, is estimated to be Singapore’s largest LNG source at over 40% of LNG imports (i.e., about 20% of Singapore’s total gas supply). However, Sembcorp has no scheduled LNG cargoes from Qatar over the next four to five months, so its supply should not be disrupted.
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Sembcorp does, however, have water and power operations in Oman (Salalah) and the UAE (Fujairah) that contribute about 8% of net profit; these operations remain unaffected so far.
In fact, historically, Sembcorp tends to see a net positive impact from higher gas prices and volatility, via positive fair value gains on gas hedges and potentially higher gas trading volumes and margins for its gas trading arm. In a prolonged disruption lasting weeks to months, we previously observed a S$30–100m earnings impact.
Growth path to resume from 2027.
Read more at SGinvestors.io.
Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
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