KUALA LUMPUR, March 18 (Xinhua) -- Analysts have held positive views on Malaysia's oil and gas outlook, backed by the country's national energy firm Petronas' 50 billion to 60 billion ringgit (10.6 billion to 12.7 billion U.S. dollar) capital expenditure (CapEx) in 2024.
RHB Investment Bank said Monday in a note that it remained positive on Malaysia's upstream services players, as the sustained activities in this segment should be backed by the national oil company's CapEx allocation.
"Drilling activities should remain solid, similar to maintenance activities. Meanwhile, the outlook for the offshore service vessels (OSV) market is rosy, as there are still potential improvements in daily charter rates due to tight vessel supply," said the research house.
It said that oil prices may rise in the near term if geopolitical tensions continue to escalate.
Besides, it said the extension of a voluntary production cut of 2.2 million barrels per day by the Organization of the Petroleum Exporting Countries (OPEC) until the second quarter will continue to stabilize the oil market.
Hong Leong Investment Bank also said in a note that it stayed positive on Malaysia's oil and gas sector, premised on elevated oil price supported by continued production cuts from OPEC and heightened geopolitical tensions, as well as slowing output growth from Brazil and the United States.
The research house maintained its Brent Crude Oil forecast at 85 U.S. dollars per barrel for 2024 and 2025.
"We also view that rising upstream activities around the globe and Petronas' CapEx drive to sustain local production, will continue to benefit local oil and gas, services and equipment players," it said.
Kenanga Research expects Brent Crude Oil prices to average 84 dollars per barrel in 2024, a level that should enable Petronas to increase its upstream spending significantly to counteract potential long-term declines in natural production.
According to Kenanga Research, drilling activities have already shown signs of acceleration since early 2024. ■
