An equally exciting year in 2020 for O&G

Fabricators, MVPs and OMPs are among the biggest beneficiaries from the PAO 2020-2022, says researcher


THE oil and gas (O&G) market outlook next year is expected to match 2019, if not better, as the cyclical upward trend will continue, a boost to the sector which is already on the path of a healthy recovery.

Maybank Investment Bank Bhd (Maybank IB) said the offshore market is set for a resurgence with global sanctioning of projects are expected to register a rapid rise.

The investment bank in its “Malaysia 2020 Outlook & Lookouts” report maintained a ‘Positive’ call on the sector with an estimated US$369 billion (RM1.53 trillion) worth of offshore exploration and production investments expected over 2019-2021E versus US$155 billion in the previous three years (2016-2018).

“We see a healthy bid funnel and increasing prospects worldwide. We remain positive on the services segment.

“The floating production storage and offloading market will continue to remain robust, with 10 to 12 awards in 2020. The drilling and offshore service vessel (OSV) segments will benefit from stronger-day rates and utilisation, as offshore activities rise,” the investment bank said.

The global crude oil price is also expected to maintain at between US$60 and US$65 per bbl next year, a level the bank said would continue to “instil confidence such as capital expenditure and sentiment”.

Kenanga Investment Bank Bhd (Kenanga Research) said it is positive on the recent Petronas Activity Outlook (PAO) 2020-2022 and the upstream activities will continue to stay elevated from the surge in 2019.

Fabricators, marine vessel providers (MVPs) and offshore maintenance players (OMPs) are among the biggest beneficiaries from the PAO 2020-2022, the research firm said.

Local fabricators such as Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) and Sapura Energy Bhd are expected to benefit from the surge in the numbers of wellhead platform (WHPs).

MVP companies such as Perdana Petroleum Bhd, Alam Maritim Resources Bhd, Icon Offshore Bhd and Coastal Contracts Bhd are expected to capitalise from the huge rise in OSVs.

Kenanga Research added that OMP companies such as Dayang Enterprise Holdings Bhd and Carimin Petroleum Bhd will continue to enjoy increased maintenance, construction and modification work orders.

The research house has maintained its ‘Neutral’ stance on the O&G sector, citing Velesto Energy Bhd — whose rig fleet is currently fully chartered out — is expected to continue to enjoy high utilisation rates.

Kenanga Research said most of the upstream value chains are expected to maintain activity levels as in 2019, with several of them anticipated to see a surge.

“More specifically, we identified that the biggest rise in activities will come from offshore fabrication, especially for WHP, which saw almost a doubling in the number of projects.

“Marine vessels are expected to see a rise in demand for anchor handling tug and supply, platform supply vessels, straight supply vessels and other forms of support vessels.

“And, the maintenance, construction and modification segment is expected to see a peak in man-hours for 2020 despite a strong year in 2019,” the firm said.