Over the medium to longer term, offshore oil and gas projects in Brazil, Mexico, the Middle East and West Africa is expected to gain traction with Sapura Energy Bhd to be among companies bidding for Saudi Arabian Oil Co’s long-term agreement programme.

This allows Sapura Energy to take part and bid for the kingdom’s massive offshore projects worth up to US$150bil (RM626bil) over the next decade.

Any upside to the outlook for the oil and gas sector is expected to be driven by fresh contract awards over the year.

The bearish fundamentals of the energy market favour oil and gas (O&G) sector companies with earnings visibility amid the spread of Covid-19 worldwide.

AmInvestment Bank Bhd in a sector update said Malaysia’s 2019 contract awards slid 6% year-on-year (YoY) to lower than expected RM11.5bil, following a lull in last year’s first quarter (1Q19) and a slower pace in 4Q19, which registered declines of 35% quarter-on-quarter and 46% YoY.

It views this as the remaining fallout from the 2015–2017 award cycle dislocation.

It noted while the impact of the Wuhan coronavirus outbreak is still uncertain at this stage, Brent crude oil prices have fallen almost 10% since the beginning of the year to just above US$52 per barrel currently.

source : linkedin azlan abu bakar