KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is expected to elevate its capital expenditure (capex) spending in the second half (H2) of 2021, Hong Leong Investment Bank Bhd (HLIB) said today.

HLIB said this would be in line with Petronas' significantly improved financial performance and benefit most oil and gas (O&G) services companies in Malaysia. 

HLIB said Petronas' H1 capex spending of RM12.6 billion was below expectations, constituting just 32 per cent of its forecast of RM40 billion in 2021.

"Nevertheless we still expect a higher capex spending in H2 2021 due to its good results in H1 2021 and higher oil prices.  

"We now moderate down 2021 capex to come in at RM35 billion," it said.

HLIB has maintained its Brent crude oil price per barrel forecast at US$70 and US$7575 for 2021 and 2022 as it believes that OPEC+ is committed to provide a good equilibrium for oil prices. 

"We view that the increasing demand of O&G from the reopening of economies globally would neutralise OPEC+'s easing of production cuts, providing a stable oil price of around US$70 per barrel in 2021," it said.

HLIB has maintained its "overweight" call on the O&G sector.

Its top picks are Bumi Armada Bhd and Dialog Group Bhd.

https://www.nst.com.my/business/2021/08/722596/petronas-expected-drive-capex-h2-says-hlib