Petronas' Upstream Capex To Recover In FY2027 Amid Rising Energy Security Investments -- HLIB

KUALA LUMPUR, Sept 1 (Bernama) -- Petroliam Nasional Bhd’s (Petronas) upstream capital expenditure (capex) will recover in the financial year ending Dec 31, 2027, alongside rising energy security investments across the region, said Hong Leong Investment Bank (HLIB) today.

The investment bank said the oil and gas sector remained supported by a recovery in upstream earnings, improving oil and gas services and equipment order flows, and longer-term demand for storage, pipeline, and broader energy infrastructure.

HLIB said Petronas’ upstream capex allocation fell sharply to 21 per cent of total capex in the first half of the financial year 2026 (1H FY2026) versus 43 per cent-52 per cent in financial year 2019-2025, as spending was heavily skewed towards downstream following the PRefChem investment.

“While absolute upstream capex remained broadly stable at RM9.0 billion versus RM8.6 billion in 1H FY2025, the softer domestic activity mix, lower crude production and slower work-order issuance limited the earnings conversion for Malaysian upstream service players, contributing to weaker rig and vessel utilisation, as well as subdued maintenance, construction, and modification activities,” HLIB said in a note today.

It noted that this translated into slower activities as seen on upstream players in 1H FY2026, including Dayang Enterprise, Perdana Petroleum, Keyfield, Velesto and Deleum.

It said that for 1H FY2026,  Petronas paid RM8 billion in dividends, representing a partial payment of the RM20 billion dividend declared on Feb 26, 2026.

“Historically, dividend payouts have ranged between RM16 billion and RM54 billion over the past decade, with elevated contributions during years of stronger earnings in 2019 and 2021-2022,” said HLIB.

According to earlier reports, for the 1H of the financial year ended June 30, 2026, Petronas’ net profit stood at RM27.2 billion, a modest increase of RM1 billion, or four per cent, in line with higher earnings before interest, tax, depreciation and amortisation of RM56.8 billion.

Its revenue increased to RM152.4 billion, up RM19.8 billion, or 15 per cent, from RM132.6 billion in the same period last year, primarily supported by higher domestic production and higher sales volumes of liquefied natural gas and processed gas, further reinforced by favourable average realised prices across major products, but partially offset by unfavourable foreign exchange impact.

-- BERNAMA