RISING OPTIMISM IN O&G SECTOR
Maybank IB believes the worst is over
KUALA LUMPUR firstname.lastname@example.org
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.