KUALA LUMPUR (Oct 2): Petroliam Nasional Bhd’s (PETRONAS) capital allocation could come under pressure if the government seeks larger dividend contributions from the state-owned oil firm to offset higher fuel subsidy costs, according to BIMB Securities.

PETRONAS’ dividend to the government could rise to RM48 billion in 2026, while the fuel subsidy bill could reach RM50 billion, assuming Brent crude averages US$95 a barrel, BIMB Securities said in a Budget 2027 preview note on Friday.

In 2025, PETRONAS’ dividend to the government stood at RM32 billion, while the fuel subsidy bill came in at RM30 billion.

A higher dividend payout could raise questions over PETRONAS’ longer-term capital allocation, including spending on upstream activities, gas infrastructure and energy-transition initiatives, BIMB Securities said.

PETRONAS’ cash generation through its listed subsidiaries could also draw greater attention, it added.

Oil prices have remained elevated amid tensions in the Middle East. Brent, the global benchmark for crude oil, has averaged between US$94 and US$98 a barrel over the past three months and was trading at around US$102.30 on Friday.

BIMB Securities expects PETRONAS’ dividend payout to moderate to RM32 billion in 2027 and RM25 billion in 2028, as Brent crude is projected to ease to US$85 a barrel in 2027 and US$75 a barrel in 2028.

The research house also flagged that higher oil prices may provide only a limited boost to Malaysia’s fiscal position, as wider refining margins and resilient fuel demand push up the cost of fuel subsidies.

As oil prices rose, refining margins, or crack spreads, also climbed to more than US$60 a barrel, it said.

The divergence between crude and refined product prices means subsidy expenditure could rise faster than petroleum-related revenue, it added.

“This could potentially constrain [the government’s] efforts to accelerate fiscal consolidation,” BIMB Securities said.