Thursday, January 27

No particular strong winners from Petronas Activity Outlook 2022-2024

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Accelerated agenda for energy transition will pose further challenges to the oil market, and hence, Petronas also emphasised its point on remaining cost-competitive to ensure projects remaining feasible under uncertainties.

KUCHING (December 29): In Petronas Activity Outlook 2022-2024, the national oil company cites that recovery outlook could be fragile and uncertain as the oil market adjusts to both short and long-term landscapes.

Accelerated agenda for energy transition will pose further challenges to the oil market, and hence, Petronas also emphasised its point on remaining cost-competitive to ensure projects remaining feasible under uncertainties.

“Going into 2022, we feel that the activity level outlook from Petronas is rather mixed,” commented analysts from Kenanga Investment Bank Bhd (Kenanga Research) in its sectoral outlook yesterday.

“While some sub-segments are expected to see improved activities as compared to 2021, others are expected see flattish activities or just marginal bump ups.

“That said, as compared to last year’s activity outlook report, Petronas had raised its 2022 activity forecasts for most of the sub-segments – although this could just be a reflection of the delayed jobs in 2021, as most sub-segments saw actual activities failing to meet last year’s forecasts.”

Looking at the different subsegments of the O&G sector, Kenanga Research said the total number of drilling rigs is expected to rise to 22 in 2022 – up from 2021 actual of 16 and also increased from last year’s forecast of 18.

“That said, this could be a reflection of delayed jobs in 2021, as it failed to meet the initial planned target of 22 rigs,” it commented.

“More specifically, demand for jack-up rigs (JUR) is expected to stay flat in 2022, versus nine in 2021 – signalling continued struggles for Velesto Energy Bhd unless the group successfully secures contracts regionally.”

As for offshore fixed structures fabrication, 2022 will see a decrease to five structures from six in 2021.

Kenanga Research said this could translate to continued limited opportunities for local fabricators such as Sapura Energy Bhd (Sapura Energy) and Malaysia Marine and Heavy Engineering Holdings Bhd (MHB).

Meanwhile, hook-up and commissioning (HUC) are expected to see a strong 2022, with number of man-hours to rise to 6.3 million (base case) from 4.7 million in 2021. This will benefit players such as Dayang Enterprise Holdings Bhd, Sapura Energy, Petra Energy Bhd (Petra Energy) and Carimin Petroleum Bhd (Carimin).

Wells decommissioning work is expected to see huge increase in the coming three years.

“Offshore maintenance, construction and modification (MCM) are expected to see a modest improvement in 2022, from 2021 level at 11.5 million man-hours versus 8.5 million, benefitting players such as Dayang, Sapura Energy, Petra Energy, and Carimin.

In terms of plant turnaround, Kenanga Research saw that 2022 levels largely remaining flat versus 2021. As such, players in this space — Dialog Group Bhd, Serba Dinamik Holdings Bhd, and MHB — should expect to see stable work orders.

As for supporting vessels, 2022 remained largely flattish from 2021 levels. Offshore support vesselsplayers in this space include Alam Maritim Bhd, Icon Offshore Bhd, and Perdana Petroleum Bhd.

“While no particularly strong winners emerged from this round of activity outlooks, we do highlight HUC and MCM players as partial winners given the expected increase in work orders going into 2022,” it concluded.