Higher Fuel Subsidy Costs Weigh on Petronas Capital Allocation

Petronas' capital allocation may face pressure if the government increases its dividend contributions from the state-owned oil firm to offset higher fuel subsidy costs, according to BIMB Securities.

The research house projects Petronas' dividend payout to rise to RM48 billion in 2026, while the fuel subsidy bill could reach RM50 billion, assuming Brent crude averages US$95 a barrel.

This could raise questions over Petronas' longer-term capital allocation, including spending on upstream activities, gas infrastructure, and energy-transition initiatives, BIMB Securities said.