KUALA LUMPUR: Petroliam Nasional Bhd's (Petronas) Activity Outlook for 2023 is a mixed bag, according to Affin Hwang Capital, which expects a more solid recovery but does not discount the possibility of higher activities than currently planned.

Hook-up (HUC) and maintenance, construction and modification (MCM) providers, jack-up rigs and hydraulic workover units (HWU) operators, offshore fabricators and pipe suppliers/coaters were among the key beneficiaries, Affin Hwang said today.

"HUC activities are expected to rise by 50 per cent year-on-year (y-o-y) from 3.4 million to 5.0 million–5.2 million manhours, with MCM increasing by 37 per cent y-o-y from 8.7 million to 11.9 million manhours in 2023.

"The recovery partly reflects the jobs that had to be deferred due to Covid-19 and manpower limitations," Affin Hwang said, adding that potential beneficiaries from higher offshore activities included Dayang Enterprise Holdings Bhd, Petra Energy Bhd, Carimin Petroleum Bhd and Deleum Bhd.

The firm said the positive outlook for drilling rigs and HWU would benefit operators such as Velesto Energy Bhd and Uzma Bhd, driving higher asset utilisation rates in 2023.

"Jack up rig demand met expectation with nine operating units in 2022. This is projected to rise to 12 units in 2023, followed by 14 and 12 units in 2024–25. Actual operating HWU exceeded budget with six units, higher than the original five units planned with demand expected to rise to 8/7/6 units across 2023-2025."

Affin Hwang said it had seen the revival of more offshore fabrication projects with six wellhead platforms (WHP) and one Central Processing Platform (CPP) awarded in 2022, both of which exceeded forecasts.

The number of WHPs to roll out is expected to increase to eight units and one CPP is expected in 2023. This will likely benefit fabricators (Malaysia Marine & Heavy Engineering Holdings Bhd, Sapura Energy Bhd, KKB Engineering Bhd and Muhibbah Engineering (M) Bhd).

Carbon steel pipes are also expected to see higher demand.

Affin Hwang said in 2022, actual pipe demand was 41 per cent higher than expected (301km) and would remain robust with a total of 245–325km needed in 2023, benefiting Pantech Group Holdings Bhd (supplier) and Wah Seong Corp Bhd (pipe coater).

Affin Hwang sees no major excitement for the rest of the oil and gas supply chains.

"Despite overall higher drilling rigs demand next year (26 units versus 20 units in 2022), OSV demand is projected to grow by a mediocre four per cent y-o-y.

Meanwhile, the number of wells and plants to be decommissioned and turnaround are expected to fall, which will be a disadvantage to Uzma Bhd and Dialog Group Bhd.

"We believe that the Brent oil price (in-house forecast at US$90 per barrel) should remain supportive of a recovery in sector activities in 2023," it said.