Malaysia’s UMW Oil & Gas Corp climbed as much as 11 per cent in its market debut, as investors bank on the company’s close ties with state oil firm Petroliam Nasional Bhd (Petronas) to provide it with a steady stream of revenue for years to come.

The unit of the government-owned UMW Holdings conglomerate is currently a small player in the oil drilling industry, owning just four of the 48 jack-up rigs deployed in Southeast Asia where heavyweights like Noble Corp and Ensco dominate.

But this is set to change, albeit gradually, as Petronas pursues a policy of replacing foreign-owned rigs with locally owned ones when contracts expire, determined to spread more of its largesse to domestic firms.

Nor is there much doubt over Petronas’ ability to deliver on that promise – a formidable capital spending budget calls for it to spend some $19 billion annually in the five years to 2015. Much of the proceeds raised in UMW Oil & Gas $750 million offering are expected to be ploughed into new rig purchases. It announced in May it was buying a fifth rig, due to be delivered next year, and plans to pick up at least two more.

“Dependence on Petronas as their major customer is a good thing given that (Petronas) are still the leading player in the Southeast Asia’s market,” said Chris Eng, head of research at Etiqa Insurance & Takaful, which manages some $7.3 billion worth of assets.

Southeast Asia’s crude oil demand is expected to rise by over 50 per cent in the next 20 years, hitting 6.8 million barrels per day by 2035 according to the International Energy Agency’s energy outlook report released in mid-October.