Oil & Gas Industry Outlook Amid Mixed Signals for 2025 and Beyond

Kenanga has revised its Brent crude oil price forecast for 2025 to USD77/bbl (down from USD80/bbl) and introduced a 2026 forecast of USD74/bbl. This adjustment reflects weaker demand expectations in the first half of 2025, aligning closely with the US Energy Information Administration’s (EIA) estimates. However, Kenanga maintains a relatively optimistic stance, suggesting that the market may have overestimated the impact of a crude production surplus while underestimating demand growth potential.

The EIA projects a global consumption increase of 1.3 million bbls/day for 2025, still below pre-pandemic growth levels. Despite this, anticipated financial easing measures in China and Europe—accounting for 25% of global crude demand—may spur positive surprises in crude consumption, offering potential for a more robust recovery.

Sarawak’s Gas Agreement with PETROS and Petronas

The conclusion of negotiations between PETROS and Petronas regarding gas distribution in Sarawak signals a key development in Malaysia’s energy sector. While details are still being refined, the potential annual capex cut for Petronas is estimated at RM10 billion, a manageable reduction from its RM60 billion projection. The agreement underscores Sarawak’s increasing autonomy while maintaining a collaborative approach with Petronas for mutual long-term benefits.

Upstream investments are expected to ramp up post-agreement, driven by shared goals to maximise LNG infrastructure utilisation and revenue growth.

Regional NOCs and Capex Expansion

Fitch Solutions forecasts a 29% YoY increase in Southeast Asia’s national oil companies’ (NOCs) combined capex to USD31 billion in 2025. This growth is attributed to greenfield and expansion projects, with companies like PTTEP, Petrovietnam, and Pertamina prioritising asset development. Petronas may join this expansion trend by 2H25 following the finalisation of the PETROS agreement.

Upstream Maintenance Contracts Boost Domestic Players

Malaysia’s Pan-Malaysia contracts, valued at up to RM10 billion over ten years, are revitalising the domestic upstream maintenance sector. Players like DAYANG and others have secured significant contracts, offering long-term visibility for maintenance operations. Short-term daily charter rates for accommodation workboats (AWBs) have soared to RM150,000/day, exceeding 2013–2014 levels, highlighting robust demand for brownfield maintenance jobs.

However, mid-sized anchor handling tug supply (AHTS) vessels remain below peak rates, indicating slower greenfield recovery until 2H25.

Outlook and Recommendations

The industry’s mixed signals reveal divergent opportunities and challenges:

1. Positive Catalysts: Financial easing in key markets (China, Europe), regional capex expansion, and stable maintenance demand.

2. Risks: Conservative demand projections, overhang from the PETROS-Petronas agreement, and subdued greenfield activity.

For investors, the focus should be on maintenance-driven players like KEYFIELD, which can capitalise on immediate daily charter rate hikes. Greenfield-driven segments could gain momentum as PETROS-Petronas uncertainties clear by late 2025.

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