O&G sector outlook in CY24 remains positive

The outlook for the O&G sector in CY24 remains positive, despite potential risks from OPEC+ production changes.

Locally, strong upstream activities are expected, benefiting OGSE companies in line with PETRONAS’s anticipated RM50-60 billion capex and stable Brent crude prices (USD 80-85 per barrel).

Additionally, higher demand for Jet A1 fuel is expected with an 11% increase in passengers to 94 million. However, uncertainties in the petrochemicals sector will persist due to competition, feedstock oversupply, and slower growth in specialty chemicals.

O&G sector Top Pick – MISC Bhd (BUY, TP:RM9.75)

We like MISC, given its well-established status as a maritime industry player for offshore services and diversified portfolio within the upstream and midstream businesses. It also has an international reach with its FPSOs and LNGCs, in addition to a consistent dividend payment and its initiatives in sustainable maritime solutions to achieve zero-net carbon emissions,” say analysts from MIDF.

This is driven by strong demand for offshore vessels and delayed start-ups in the upstream post-pandemic. “In the coming months, we are expecting a stronger demand for FPSOs and tankers in tandem with the growth in the upstream business.

“We opine that the stabilising oil prices, the increase in energy demand and long-term contracts for charter ships would continue to drive MISC’s performance. MISC’s involvement in dual-fuelled engines and LCO2C to feed the CCS value chain also added to its ESG score.”