Direct hit seen for oil and gas companies

Dateline 2020-03-10, The Star:

The negative sentiment on oil prices, stemming from the Covid-19 outbreak and Opec+’s failure to cut oil production, is expected to cause a direct fundamental impact on domestic oil and gas companies, just as some of these companies are starting to see an improvement in their earnings.

UOB Kay Hian said that the combination of Covid-19 and Opec+’s failure may force Petronas to take action, potentially reducing activities if the national oil and gas company’s cash flow in the first half of the year is severely impacted.

“Covid-19 will be a triple whammy to Petronas in the form of oil prices (upstream income), petrochemical demand (downstream income) and disruptions or force majeures on long-term liquefied natural gas (LNG) exports (gas and new energy income), ” it said.

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