Positive outlook for Malaysian oil, gas

KUALA LUMPUR: Analysts have maintained their positive views on Malaysia’s oil and gas sector as its activities are expected to pick up in the second quarter.

MIDF Research said in its recent report that the outlook for Malaysia’s oil and gas sector in the second quarter remains cautiously optimistic given the risks emitted from geopolitical tensions.

“We reiterate our optimism on the upstream division due to its long-term contractual operations and the increased capital anticipated by the Malaysian national oil and gas firm Petronas in 2024,” said the research house.

In the midstream segment, it anticipated continued strength in the pipeline and storage subdivisions, although marine transportation may encounter challenges, such as supply chain disruptions and fluctuating charter rates tied to crude oil and liquefied natural gas (LNG) prices, as well as the ongoing Red Sea blockade. For the downstream sector, it expects sustained demand for industrial, commercial and residential fuel, despite energy transition initiatives by the government and oil and gas players.

However, it said the lower demand for petrochemical products will persist in the second quarter.

Kenanga Research sees a rosy outlook for offshore supply vessel (OSV) owners due to a supply crunch on a surge in demand leading to strong charter rates.

It also holds positive views on floating production storage and offloading (FPSO) players, given the current upcycle in the FPSO sector, and the storage segment that has shown recovery signs.

RHB Research also said in its recent report that it remained positive on the sector’s upstream services players, as the sustained activities in this segment should be backed by Petronas’s capital expenditure.

The research house’s 20242025 crude oil price estimates also remain unchanged, from $85 to $80 per barrel.