Periodic/Sector reports
Oil & Gas: Petronas 2025 Report: Stronger Energy Leader, But Not Without Near-Term Volatilities
Highlights
- Petronas to remain as a proactive energy leader... From studying Petronas’ latest Integrated Report, we believe that Petronas has emerged stronger after a period of polycrisis and, given its established size and integrated value chain, is well positioned to be not only a leading energy producer but a global corporation with leverage in energy security matters, especially in a new era where AI-driven growth can only be enabled by available energy with scale and reliability.
- …but not without volatility. We maintain MARKET WEIGHT on the sector, retaining our assumption pending a firm and positive resolution of the Petronas-Petros sectoral and constitutional issue, which is now at the hands of the Federal Court. As Petronas continues to restructure itself, they are not without near-term volatilities. 2H26 events related to Petronas include completion of the Petronas Gas reorganisation, developments of Searah Eni-Petronas JV (which may cause work orders disruption), and consolidation of PRefChem after the Aramco exit (the JV’s cumulative losses had ballooned to RM19b).
Analysis
- The future of energy security comes hand-in-hand with digital growth… An area of energy security that may become as important as national fuel security (in the face of a wide geopolitical-induced supply chain disruption), is that data centre investments, especially in Southeast Asia, have become an electricity problem before a capital problem. Against ambitious data centre energy demand growth projections (referenced in RHS appendices), Johor turned from being a primary recipient of ASEAN’s data centre investment, into a rationer of water, electricity and sustainability grounds. By Nov 24, 30% of new applications were rejected. As of Nov 25, Tier 1-2 facilities were no longer approved.
- …as long as AI requires power, not only at scale but also resilience (which is just as important). Although the elimination factor was water for the above cases, higher electricity repricing became the next constraint on data centre project economics. In the bigger picture, AI and electrification are inevitable technological advancements, but they are also converging with geopolitics. As history dictates energy as a key cause of human conflicts, oil majors are responding to this new era, putting greater emphasis on diversifying across energy sources and geographical supply chains while boosting AI investments. They understand their role not only as energy producers but also corporations with leverage as system enablers.
Highlights
- Petronas to remain as a proactive energy leader... From studying Petronas’ latest Integrated Report, we believe that Petronas has emerged stronger after a period of polycrisis and, given its established size and integrated value chain, is well positioned to be not only a leading energy producer but a global corporation with leverage in energy security matters, especially in a new era where AI-driven growth can only be enabled by available energy with scale and reliability.
- …but not without volatility. We maintain MARKET WEIGHT on the sector, retaining our assumption pending a firm and positive resolution of the Petronas-Petros sectoral and constitutional issue, which is now at the hands of the Federal Court. As Petronas continues to restructure itself, they are not without near-term volatilities. 2H26 events related to Petronas include completion of the Petronas Gas reorganisation, developments of Searah Eni-Petronas JV (which may cause work orders disruption), and consolidation of PRefChem after the Aramco exit (the JV’s cumulative losses had ballooned to RM19b).
Analysis
- The future of energy security comes hand-in-hand with digital growth… An area of energy security that may become as important as national fuel security (in the face of a wide geopolitical-induced supply chain disruption), is that data centre investments, especially in Southeast Asia, have become an electricity problem before a capital problem. Against ambitious data centre energy demand growth projections (referenced in RHS appendices), Johor turned from being a primary recipient of ASEAN’s data centre investment, into a rationer of water, electricity and sustainability grounds. By Nov 24, 30% of new applications were rejected. As of Nov 25, Tier 1-2 facilities were no longer approved.
- …as long as AI requires power, not only at scale but also resilience (which is just as important). Although the elimination factor was water for the above cases, higher electricity repricing became the next constraint on data centre project economics. In the bigger picture, AI and electrification are inevitable technological advancements, but they are also converging with geopolitics. As history dictates energy as a key cause of human conflicts, oil majors are responding to this new era, putting greater emphasis on diversifying across energy sources and geographical supply chains while boosting AI investments. They understand their role not only as energy producers but also corporations with leverage as system enablers.
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