Petronas expected to lead in better upstream spending versus in 2016 — UOB Kay Hian


Dateline 2017-04-17,  The Borneo Post:

Petroliam Nasional Bhd (Petronas) is expected to lead in better upstream spending compared with that in 2016, analysts say.

According to UOB Kay Hian Securities (M) Sdn Bhd (UOB Kay Hian), Petronas’ domestic upstream capital expenditure (capex) was reduced substantially to the research firm’s estimate of RM10 billion to RM12 billion in 2016, versus the past annual average of approximately RM20 billion.

“In a stable oil price environment, domestic capex may likely return to the normal average,” UOB Kay Hian said.

“Channel checks suggest about five or more new production projects were sanctioned in Malaysia, but these projects could be deferred if oil prices remain too low for too long.”

The research firm noted that despite a potential doubling of rig count in Malaysia from eight in 2016 to about 10 to 15, some of the drilling activities are short term.  It further noted that new local upstream activities will likely be concentrated in gas projects (to meet supply requirements for MLNG 9) and certain enhanced oil recovery (EOR) projects.

Hence, UOB Kay Hian expected Petronas to lead in better upstream spending versus that in 2016.

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