Petronas capex boost, firm oil prices signal OGSE upside
KUALA LUMPUR: A potential increase in Petroliam Nasional Bhd’s (Petronas) capital expenditure (capex) by 2027 could provide a fresh boost to Malaysia’s oil and gas services and equipment (OGSE) sector, supported by elevated Brent crude oil prices and rising energy security investments across the region.
In a research note, Hong Leong Investment Bank Bhd (HLIB) said Petronas’ capex has historically exhibited a 51 per cent correlation with Brent crude prices, typically with a one-year lag due to project lead times and disciplined capital allocation.
The firm noted that during the 2012-2014 period, when Brent crude averaged about US$107 per barrel, Petronas maintained annual capex of between RM57 billion and RM65 billion.
More recently, Brent prices averaging around US$100 per barrel in 2022 supported a recovery in Petronas’ capex to RM53 billion and RM54 billion in 2023 and 2024, respectively.
“Should this historical relationship hold, sustained high Brent crude prices in 2026, which we project to average US$90 per barrel, could potentially translate into a new capex upcycle by 2027,” it said.
HLIB said a capex recovery would likely benefit domestic OGSE players, although earnings gains would materialise progressively rather than immediately due to project award cycles and execution timelines.
Among its preferred stocks, the firm highlighted Dayang Enterprise Holdings Bhd for its exposure to maintenance, construction and modification (MCM) activities, while Velesto Energy Bhd is expected to benefit from stronger demand for and utilisation of jack-up drilling rigs.
It also highlighted Keyfield International Bhd and Perdana Petroleum Bhd as companies to watch, as higher offshore activity could lift vessel utilisation and charter rates.
Beyond upstream activities, HLIB expects growing concerns over energy security to create opportunities for storage, logistics and pipeline-related players.
The firm noted that the effective closure of the Strait of Hormuz since February 2026 has prompted countries across the Indo-Pacific to reassess their energy supply chains, given Asia’s heavy reliance on Middle Eastern crude.
As countries seek to diversify supply routes and reduce dependence on a single energy chokepoint, HLIB said the Strait of Malacca is becoming increasingly strategic.
Against this backdrop, the firm believes Pengerang is well positioned to strengthen its role as a regional energy storage and logistics hub.
It added that countries are increasingly looking to build regional storage buffers, reinforcing demand for storage infrastructure and enhancing Pengerang’s strategic importance.
HLIB said Dialogue Group Bhd could be a key beneficiary due to its tank terminal operations and approximately 660 acres of available buffer land in Pengerang, which could potentially support an additional four million to five million cubic metres of storage capacity.
The firm also expects Wasco Bhd to benefit from rising demand for pipeline coating and engineering services as governments invest in new pipeline infrastructure, alternative supply routes and broader energy security projects.
It said Wasco’s presence in Qatar and Pengerang, coupled with its expertise in coated steel pipes and engineering services, positions the company to capture opportunities arising from cross-border pipeline developments and wider energy infrastructure expansion.
Overall, HLIB maintained its Brent crude price assumptions of US$90 per barrel for 2026 and US$75 per barrel for 2027, while reiterating its “Overweight” call on the oil and gas sector.
The firm named Dialogue and Wasco as its top sector picks, citing their exposure to long-term energy infrastructure investments, storage expansion opportunities and potential benefits from a global capex upcycle.
However, it said risks include a slower-than-expected increase in Petronas’ capex, uncertainties surrounding the Petronas-Petros dispute, a faster resolution of geopolitical tensions that could weigh on oil prices, and delayed earnings translation for OGSE companies due to cost inflation.
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المصدر: New Straits Times