KUALA LUMPUR (December 12): Oil and gas (O&G) counters SapuraKencana Petroleum Bhd and KNM Group Bhd were actively traded in the morning session, following news that Petroliam Nasional Bhd would review existing projects, as oil prices hit five-year lows of below US$60 per barrel.
As at noon break, SapuraKencana fell 9 sen to RM2.28 on a volume of 26.7 million, while KNM fell 0.5 sen to 41.5 sen with some 13.27 million shares done.
Both counters were among the top actives on the exchange.
An analyst said sentiment on O&G stocks had been affected by tumbling oil prices, and news that Petronas would review its existing projects to cut costs.
Since SapuraKencana is involved in the upstream O&G segment and also has contracts with Petronas, he said the share price decline could be due to a combination of the two factors.
On the other hand, although KNM has little exposure to oil prices, it is exposed to the Petronas’ Refinery and Petrochemical Integrated Development (RAPID), the analyst said.
News reports on Petronas cutting costs may have affected sentiment on the stock,” he added.
The Edge Financial Daily reported that the Petronas' move was in anticipation of a prolonged period of much cheaper oil prices.
“We are going to review all the projects that we have. Each division will have to start looking at its portfolios to see what projects make sense because there are projects that don’t make sense at this price level,” Petronas senior vice-president for upstream Malaysia, Datuk Mohd Anuar Taib, told The Edge Financial Daily.
This came after president and chief executive officer Tan Sri Shamsul Azhar Abbas said Petronas was looking at cutting 15% to 20% of its RM60 billion capital expenditure for new projects next year.
Meanwhile, Reuters reported that US crude oil prices dropped below US$60 per barrel on Thursday for the first time in five years, which triggered fresh selling as traders see no reason for a rebound any time soon.