December 19, 2013

Malaysia To Be LNG Import-Free Country By 2016

Malaysia will be a liquefied natural gas (LNG) import-free country by 2016 once the Bintulu Floating Liquefied Natural Gas Plant is operational at full capacity, a Petronas senior official said. Ezhar Yazid Jaafar, General Manager (Petronas gas and power business, Malaysia gas management), said the 3.6 million tonnes per annum-capacity plant will be able to accommodate Melaka's Sungai Udang LNG Regassification Terminal storing capacity of 3.8 million tonnes per annum, which currently came from overseas.
 The RM3 billion regassification terminal is the country's only facility importing LNG.
 "Currently, we are importing gas from Brunei, Qatar, Nigeria and Norway on a short-term contract.
 "Once the Bintulu plant is operational, we can use the capacity from the plant to replace imported LNG," he told reporterss who were visiting the regassification terminal.
 Ezhar Yazid said that over 90 per cent of the gas supplied by the regassification terminal will be channelled to energy generation. He said currently Petronas is supplying over 50 per cent of the domestic gas-based energy generation and is expected to rise to 57 per cent next year, totalling between 1,250 and 1,300 million standard cubic feet per day (mmscfd).
 Of the total capacity, he said, the national oil company supplied 1,000 mmscfd of LNG at regulated price of RM15.20 per million british thermal unit (mmbtu), while the rest which comes from Sungai Udang Regassification Terminal is priced at the open market rate of RM41.68 per mmbtu. Ezhar Yazid said the country's non-dependency on imported LNG would reduce the risk of global LNG price volatility which is currently hovering between RM50 mmscfd.
 Apart from that, he said the regassification plant in Sungai Udang is paving the way for Malaysia to implement open market pricing mechanism for LNG by 2017. He said the benefit of the open market pricing is that it would reduce Petronas' subsidy burden in LNG business and increase its competitiveness.
 Under the mechanism, the regulated LNG price will be reviewed every six months and was suggested by the Energy Commission to increase by RM3 per mmbtu every review until the price meet market level.
 He said since 1997, Petronas had to bear about RM200 billion in revenue lost to accommodate various subsidy including gas. Ezhar Yazid said Petronas is also aiming to maintain Malaysia's position as the world's top three LNG player by 2020.
 Currently, Malaysia is in the second spot after gas-rich Qatar. He said open market pricing would enable the government to roll out targeted subsidy as compared to the extensive subsidy implemented currently, which is also enjoyed by those who are not supposed to.
 For this year, Petronas is subsidising almost RM25 billion for oil and gas, of which, more than RM11 billion is for gas alone.
Source: Bernama