RIS­ING OP­TI­MISM IN O&G SEC­TOR

May­bank IB be­lieves the worst is over

New Straits Times - - Business / News -

FARAH ADILLA

KUALA LUMPUR bt@me­di­aprima.com.my

ASIA’S oil and gas (O&G) sec­tor out­look ap­peared to be of im­proved op­ti­mism, as play­ers adapted to the low-price en­vi­ron­ment, said May­bank In­vest­ment Bank (May­bank IB).

It said its key take­away from speak­ers and ex­hibitors at the re­cent Asia Oil & Gas Con­fer­ence was a sense that the worst was over for the sec­tor.

In his ad­dress, Saudi Ara­bia’s En­ergy, In­dus­try and Min­eral Re­sources Min­is­ter Khalid al-Falih an­tic­i­pated the mar­ket to re­bal­ance soon, said May­bank IB.

Global oil in­ven­tory is on the de­cline, while world oil de­mand is not ex­pected to peak any­time soon, with China and In­dia driv­ing long-term growth.

Khalid, ac­cord­ing to the bank, said the mar­ket was un­der­es­ti­mat­ing the im­pact of de­cline in global oil out­put at ex­ist­ing large basins, which could fall by up to 20 mil­lion bar­rels per day, or one-fifth of global sup­ply, over the next five years.

Uneco­nom­i­cal and high-cost projects will re­main on hold, with up to US$1 tril­lion (RM4.34 tril­lion) worth of projects al­ready can­celled or de­ferred since late 2014.

There is also a high like­li­hood that the Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries (Opec) would ex­tend its 1.2 mil­lion bar­rel per day pro­duc­tion cut in the sec­ond half of this year.

Turn­ing to other key speak­ers, May­bank IB said Mubadala Pe­tro­leum chief ex­ec­u­tive of­fi­cer (CEO) Bakheet Al Katheeri said be­ing fit at US$50 per bar­rel was cru­cially a new prac­tice for in­dus­try play­ers.

It said Sa­pura En­ergy Bhd pres­i­dent and group chief ex­ec­u­tive of­fi­cer Tan Sri Shahril Sham­sud­din cau­tioned that op­er­at­ing at sub-US$40 per bar­rel would be a chal­lenge.

Col­lab­o­ra­tion and con­sol­i­da­tion were the two key words con­veyed by Petro­liam Na­sional Bhd pres­i­dent and CEO Datuk Wan Zulk­i­flee Wan Arif­fin. Cono­coPhillips, mean­while, was pos­i­tive on the United States shale rev­o­lu­tion.

On the other hand, May­bank IB said, FACTS Global En­ergy chair­man Dr Ferei­dun Fe­sharaki be­lieved the global oil mar­ket still ap­peared shaky with down­side bias on the price.

May­bank IB said its key “buys” wereSa­pura En­ergy, Yin­son Hold­ings Bhd and Wah Seong Corp Bhd.

Khalid al-Falih

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