Petronas’ shift away from the Pacific NorthWest (PNW) is unlikely to boost domestic upstream capex. With contracts involving >20% of its LNG output (to Japan) expiring in 2018, Petronas recognises it cannot remain a global LNG producer reliant on longterm contracts. Petronas’ diversification outside of the matured local industry will continue and it will focus on projects with economics that reflect a new LNG order. O&G players with an international track record in LNG services could benefit in the long term. Maintain MARKET WEIGHT on the sector.

Source: UOB Kay Hian Research - 4 Aug 2017