Petronas Upstream Investments Support Malaysia O&G Outlook - RHB IB
KUALA LUMPUR, Sept 24 (Bernama) -- RHB Investment Bank (RHB IB) has maintained its 'overweight' call on Malaysia’s oil and gas (O&G) sector, with Petroliam Nasional Bhd’s (Petronas) continued growth in upstream investments reinforcing its positive outlook.
The investment bank said Petronas’ upstream capital expenditure rose 19 per cent year-on-year (y-o-y) to RM8.7 billion in the first half of 2026 (1H2026), making it a more relevant indicator of O&G activity than its total capital investments during the period.
Petronas’ total capital investments reached RM41.4 billion in 1H2026, although the headline figure was skewed by the downstream subsector, which accounted for RM26 billion or 63 per cent of the total.
RHB said the skew was mainly driven by an additional capital injection into the Pengerang Refining Company Sdn Bhd and Pengerang Petrochemical Sdn Bhd joint venture as part of Petronas’ transaction to attain full ownership of the complex.
"Overall, we believe the growth in upstream investments remains the key positive takeaway for Malaysia's O&G sector," it said in its Malaysia Sector Update today.
It also said Petronas’ upstream segment remained the group’s key earnings pillar, with profit after tax (PAT) surging 70 per cent y-o-y to RM28.1 billion in 1H2026, supported by higher average realised prices.
Meanwhile, the gas and new energy segment recorded a 60 per cent increase in PAT to RM16.7 billion, driven by higher liquefied natural gas (LNG) and processed gas sales volumes, higher average realised LNG prices and stronger LNG product margins.
On the latest earnings season, RHB IB said results were highly polarised, with five of the nine companies that had reported results exceeding expectations and four falling short.
It said stronger-than-expected performances by key large-cap companies, including MISC Bhd, Dialog Group Bhd and Petronas Dagangan Bhd, outweighed the earnings misses, including that of Petronas Chemicals Group Bhd.
Looking ahead, RHB IB maintained its Brent crude oil price forecasts at US$89 per barrel for 2026 and US$72 per barrel for 2027, with geopolitical tensions expected to provide near-term support to oil prices, petrochemical prices and freight rates.
It also expects tanker rates to remain above last year’s levels, supported by higher crude exports, longer-haul trade flows and tight vessel supply.
However, weaker oil prices and demand, as well as lower spending by clients, are downside risks to the sector outlook.
-- BERNAMA