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| Investment Bank | MBSB RESEARCH |
|---|---|
| TP (Target Price) | RM19.25 |
| Last Traded | RM18.46 |
| Recommendation | NEUTRAL |
PETRONAS, through its subsidiary PETRONAS LNG Ltd (PLL), has formalized a 15-year Sales and Purchase Agreement (SPA) with Australia’s Woodside Energy for the supply of 1 million tonnes per annum (mTpa) of Liquefied Natural Gas (LNG) to Malaysia, commencing in 2028. This significant agreement, converting an earlier non-binding Heads of Agreement, is set to bolster the nation’s energy security and support its sustainability objectives.
Strategic Implications for Malaysia’s Energy Landscape
MBSB Research highlights the long-term contribution of this SPA to Peninsular Malaysia’s energy security. The incoming LNG supply is crucial for meeting the rising demand from the power and industrial sectors, driven by factors such as data centre growth, wider adoption of AI technologies, and the ongoing transition away from coal-fired generation. Furthermore, the initiative is expected to enhance PETRONAS’s sustainability goals by ensuring consistent access to cleaner-burning LNG. The deal also signals potential future LNG demand growth across global markets, aligning with the rising support for LNG as a long-term hybrid solution for energy balance and sustainability.
Impact on Petronas Gas Berhad (PTG)
While the development is viewed positively for its broader implications on national energy security, MBSB Research notes that the direct impact on Petronas Gas Berhad (PTG) under its coverage is expected to be limited. PTG, as PETRONAS’s arm in gas transportation, distribution, and regasification, stands as a potential beneficiary, albeit with the project’s commencement slated for 2028. The long-term nature of the project means immediate financial impacts are minimal.
Future Outlook and Analyst’s View
Downside risks associated with the project include market volatility, potential hurdles in regulations, logistics, and infrastructure, as well as increasing competition from renewables and other green fuels. Considering the project’s long-term horizon and the factors discussed, MBSB Research maintains its NEUTRAL call on Petronas Gas Berhad, with an unchanged target price of RM19.25.
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