PETRONAS Gas: Resilient Utility Despite Turnaround Drag, Pivots to Data Center Growth
Lower volumes from a planned regulatory turnaround pressured revenue, but EBITDA rose as the group funds new projects like fiber and LNG storage.
6033.KL · Earnings Call · 2026-08-26
PETRONAS Gas: Resilient Utility Despite Turnaround Drag, Pivots to Data Center Growth
Quarter in Review
PETRONAS Gas Berhad (PGB) delivered a "healthy performance" in Q2 2026, according to CEO Abdul Aziz Othman, but the numbers tell a slightly more nuanced story. Group revenue fell 3.1% to MYR 3.086 billion, pressured by lower Utilities segment revenue tied to turnaround activities at the Kerteh complex and reduced product prices. The Utilities segment was the main drag, with segment revenue down 28.6% due to the planned regulatory turnaround of the ASU2 unit. Yet despite the drag, the group's EBITDA rose 3.1% to MYR 1.5 billion, and profit declined only 0.7% to MYR 476 million for the quarter. Management attributed this resilience to "high asset availability and throughput levels" and disciplined cost management. The non-recurrence of last year's repair costs related to the fire incident also helped.Growth Projects: The Data Center Angle
The most forward-looking development is PGB's pivot toward digital infrastructure. The PG LinkaranFibre project has now reached 85% completion, with 750 of 880 kilometers installed. CEO Aziz noted the project is "well positioned to capitalize on emerging opportunities driven by growing demand for digital infrastructure, particularly from the data center development across the region." This is a direct echo of the global theme of AI data centers, which has been one of the strongest movers in the market over the past year. Management also updated progress on RGT-3, the FID for which was announced last quarter. Engineering works are underway, and the project is targeted for operation in Q2 2029 under the IBR framework. The LNG storage services at Pengerang, which began in August 2025, contributed positively, supporting the Regasification segment revenue growth of 6.9% year-over-year.Financial Discipline and Outlook
PGB is funding these investments through a deliberate increase in gearing, which rose from 9% at end-2025 to approximately 15% as of June 2026. CFO Shahrul Azham Sukaiman emphasized this is "driven by planned investment in growth projects rather than any deterioration in the group's underlying financial position." The company expects the new projects—Kimanis Power, Sipitang, and the fiber network—to contribute 5% to 6% of total profitability in 2027. The regulatory environment remains favorable, with the RP3 tariff supporting higher revenue in Gas Transportation, which saw segment results jump 32.2% year-over-year. The RP3 tariff is expected to persist through 2028, providing a stable baseline.What's Next
As CEO Aziz outlined, PGB's focus moving forward is on five priorities: executing the internal reorganization, disciplined capital allocation, unlocking asset value, reinforcing operational excellence, and pursuing selective growth in adjacent infrastructure. The rebound from the turnaround should be visible in Q3, as "the second quarter is where the turnaround happened. So you should see a normal volume back in the new quarter."The market will be watching whether the fiber business can deliver above the guided 5-6% contribution, as management hinted there is upside if take-up rates accelerate. Meanwhile, the company's stability—with reliability levels above 99.8%—remains its core value proposition. “Despite a moderation in the Malaysian reference price, gas price during quarter 2 2026, the ongoing geopolitical tensions in West Asia continued to pose an upside risk to the global energy prices.” — Abdul Bin Othman, CEO or Senior Executive (Presenter) · 2026-08-26 “We maintained reliability levels of 99.8% to 99.9% across all of our business segments, reflecting the strength of our assets and disciplined maintaining practices.” — Shahrul Bin Sukaiman, CFO · 2026-08-26 “Right. I mean just to understand this better, RP3 was already kicked in and reflected in the previous quarter in the first quarter. The reason why it's mainly reflected more this quarter because the cost is lower in terms of...” — Hazmy Hazin, Analyst · 2026-08-26Together, these priorities will position PGB to navigate the current challenges while, of course, creating long-term value for our shareholders.