Oil and gas stocks cool as investors shift into electricity, renewables and grid contractors

Oil and gas stocks cool as investors shift into electricity, renewables and grid contractors

Market participants say the initial rally in oil and gas names quickly lost momentum as investors reassessed supply risks and the sector's structural exposure.

A wind farm project of REE Corporation in Khánh Hòa Province. — Photo reecorp.com

Volatile crude prices driven by geopolitical tensions have cooled the recent speculative fervour around oil and gas stocks in Việt Nam, redirecting investor flows toward the power sector, energy infrastructure and alternative energy plays perceived as more stable and sustainable.

Market participants say the initial rally in oil and gas names quickly lost momentum as investors reassessed supply risks and the sector's structural exposure.

Listed Vietnamese oil and gas companies largely occupy supporting roles across the value chain: upstream service providers such as PetroVietnam Technical Services Corporation (PVS) and PV Drilling (PVD), midstream transport and coordination firms like PV Gas (GAS) and PetroVietnam Transportation Corporation (PVT) and downstream distributors and retailers including Petrolimex (PLX) and PV Oil (OIL).

That structure leaves the industry heavily reliant on imported crude, with a material share coming from Kuwait, which amplifies concerns over supply disruption when geopolitical risks flare in the Middle East.

As a result, speculative money has retreated and many hydrocarbon stocks have reverted to an accumulation phase.

Energy consumption in Việt Nam currently comprises roughly 30 per cent electricity, more than 37 per cent gasoline and about 26 per cent coal, Đỗ Minh Trang, head of the Research Department at ACB Securities, told tinnhanhchungkhoan.vn.

She noted that when fuel prices surge and supply becomes uncertain, policymakers are compelled to accelerate alternative measures to safeguard energy security, positioning the power sector at the centre of those efforts.

State authorities and Vietnam Electricity (EVN) have reportedly acted to ensure reliable operations at thermal plants while addressing legal bottlenecks for renewable projects, notably floating solar and nearshore wind, steps that support the electricity sector over the medium to long term.

Within the power mix, coal‑fired thermal plants are seen as relatively stable because much of their output is secured under long‑term power purchase agreements, allowing fuel costs to be largely passed through into tariffs.

Yet capacity growth for coal‑fired generation is limited since many plants are already running near maximum output.

Hydropower, despite its low operating cost and dispatch priority, remains vulnerable to hydrological cycles. A return of El Niño could depress hydro output and create further demand for alternative generation.

Renewable energy owners such as Refrigeration Electrical Engineering Corporation (REE), Hadoco (HDG), Gia Lai Electricity (GEG) and PC1 Group (PC1) are identified as likely beneficiaries between 2026 and 2030 as new projects enter service.

Power‑grid and construction contractors are also drawing investor attention.

Rising needs for transmission upgrades, grid reinforcement and new plant construction have boosted the backlog for companies such as PC1, Power Engineering Consulting JSC 1 (TV1) and Power Engineering Consulting JSC 2 (TV2) and even created demand opportunities for firms traditionally focused on oil and gas services like PVS. That backlog is expected to translate into early‑stage revenue growth as projects ramp up from 2026.

Outlook for the electricity sector in 2026 remains very positive, with consumption growth potentially reaching 12–14 per cent, said Trần Tuấn Dương, CFA, senior analyst for construction, energy and securities at Bao Viet Securities.

He attributed growth drivers to extreme weather associated with a strong El Niño, accelerated adoption of electric vehicles in response to high fuel prices and rising electricity demand from data centres, a global trend gaining momentum.

Dương cautioned that gas‑fired thermal plants face a more complex outlook due to LNG price volatility; elevated input costs could curtail their dispatch and reduce realised output despite operational flexibility.

Industry leaders likewise flagged the broad repercussions of geopolitical shocks.

Nguyễn Thị Mai Thanh, chairwoman of Refrigeration Electrical Engineering Corporation (REE), told shareholders at REE's 2026 annual general meeting that Middle East tensions have delivered a significant shock to global energy markets with ripple effects across transport, logistics and fertiliser sectors.

She said Vietnamese power plants under REE's portfolio have been run near full capacity in recent months and that for fossil fuel units, operational discipline is critical, while hydropower and renewables are prioritised where possible.

Valuation disparities are guiding the reallocation of capital.

Coal stocks trade at a price-to-earnings (P/E) of just over 9x, roughly 35 per cent above their five‑year average, indicating much of the upside may already be priced in. By contrast, power stocks have a P/E of about 11.1x, approximately 20 per cent below their five‑year mean, leaving room for rerating where growth and project readiness are clear.

The flow does not mean money is leaving the energy complex entirely. It is reallocating into segments with greater stability, lower geopolitical exposure and more sustainable cash generation, Dương said.

Liquidity patterns underscore the shift. Trading volumes in coal, thermal power, renewables and electrical construction have risen markedly in recent weeks, signalling active capital rotation into these segments.

However, analysts warn that coal and coal‑fired power securities can suffer from historically low liquidity: prices may spike quickly but can also fall back into illiquid trading ranges, complicating execution for investors.

Capital demand for Việt Nam's power sector is substantial, as investment needs for 2026–2030 are estimated at VNĐ4.9–5.5 quadrillion, creating long‑term growth opportunities for engineering, procurement and construction contractors as well as advisory firms engaged in power projects. 

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