Analysts have foreseen Malaysia's oil and gas sector to remain resilient in the second half of 2023, underpinned by steady oil prices.

MIDF Research said in its recent report that Malaysia's oil and gas upstream operations are expected to remain strong until the end of 2023, supported by stable crude oil and natural gas prices and the growing demand for petroleum products.

"In our local front, we are expecting the petroleum product trade to remain resilient, as the sector continues to recover in its upstream and downstream segments," said the research house.

However, it remained cautious about Malaysia's oil and gas downstream due to lower demand for certain petrochemicals caused by higher costs, volatile feedstock prices, and the El Nino climate.

MIDF is still bullish on crude oil prices in the long term, as globally, crude oil will still grow in demand amid the energy transition movement and inflationary pressures, as well as under the fundamentals of a tight crude oil supply and slower growth in inventory replenishment.

In the near term, it foresees crude oil prices to hover between 75 U.S. dollars to 82 U.S. dollars per barrel and expects stabilization until the end of the year.

"As such, we revise our average Brent crude price to 80 U.S. dollars per barrel by the end of 2023, with an average of 79 U.S. dollars per barrel in the second half," it said.

PublicInvest Research sees OPEC+ supply controls continuing to support Brent crude at above 70 U.S. dollars per barrel based on its current fiscal and political objectives. This will provide assurances for other major oil producers to continue their capex plans, though with some prudence.

However, it expects the oil price upside to be capped by weaker global demand amid macroeconomic challenges.

Even if the oil demand grows more than expected, it opined that OPEC+ has ample spare capacity and the ability to reverse its previous voluntary production cuts if they see further significant imbalances in the supply deficit.

Hong Leong Investment Bank in its report said that Malaysia's state-owned oil and gas firm Petroliam Nasional Berhad (Petronas) has a domestic and total capex guidance of 113 billion ringgit and 300 billion ringgit for 2023-2027, which translates into an average annual domestic spending of 22.6 billion ringgit and total annual capex of 60 billion ringgit respectively.

It is now projecting a capex of 55 billion ringgit from Petronas for 2023, as compared to 50 billion ringgit previously. (1 ringgit equals 0.21 U.S. dollar)