O&G sector to have better work orders in FY18 — analysts
KUALA LUMPUR: The oil and gas (O&G) sector would likely have better work orders in financial year 2018 (FY18) while the refinery and petrochemical integrated development (RAPID) project is expected to receive the final investment allocation before the slated commencement in 2019, analysts observed.
According to Kenanga Investment Bank Bhd (Kenanga Research), despite oil prices recovering 17 per cent in the third quarter of 2017 (3Q17), the local O&G stocks only inched up by 1.4 per cent.
Kenanga Research attributed such weak correlation to the relatively disappointing 2Q17 results which was dragged by
Having said that, following the stabilisation of oil prices above US$50 per level in 3Q17, oil majors are gradually reviewing projects in hand which may potentially lead to better contract flows in the next six to 12 months. Kenanga Research
lower-thanexpected work orders and delay of contract award by oil majors.
“Having said that, following the stabilisation of oil prices above US$50 per level in 3Q17, oil majors are gradually reviewing projects in hand which may potentially lead to better contract flows in the next six to 12 months,” the research arm said.
Within the local scene, despite the upstream space not given much attention, Kenanga Research opined that the rollout of different operating expenditure (opex)-related contracts such as the widely reported RM6 billion maintenance, construction and modification (MCM) contracts and potential RM4 billion ILC contracts will help to provide order-book replenishment opportunities for selected services contractors.