05  Jun 2019

Source: New Straits Times


Promising Prospects Set To SPUR LNG Output

Upstream investments needed to ensure steady gas supply, says MGA president

LIQUEFIED natural gas (LNG) pro duction in Malaysia is expected to ris e, backed by promising international demand that is forecast to reach 400 tonnes per year over the next four years.

Malaysian Gas Association (MGA) president Hazli Sham Kassim said natural gas is expected to continue being a key contributor to the country’s trade.

“As the third-largest exp o r t e r of LNG, M alaysia’s prosp ects look promising in the next four years.

“As such, there is a need to attract and encourag e upstream investments to ensure a steady supply of natural gas for dome stic and international market s,” he told the New Straits Times re - cently.

The LNG sector makes up about 5.2 per cent of the country’s total exports

In 2016, the natural gas industry contributed 14.5 per cent of gross domestic product. In 2017, investments in the natural gas extraction sector amounted to RM11.7 billion via 32 projects.

On the impact of the new gas tariff on the consumers, Hazli said Malaysia’s market liberalisation efforts will see gas prices increase on a semi-annual basis by RM1.50 per one million British Thermal Units to align domestic gas prices with global market prices.

“We are encouraged by the gove r nm e n t’s commitment to stay the course with Malaysia’s market liberalisation efforts.”

He said the rationalisation process promotes a cost-efficient tariff structure for consumers and is in line with the g overnment’s overall agenda of liberalising industries and increasing comp etition.

“Ultimately, by creating a level playing field that is reflective of the global markets, end users and customers will benefit in the long term .”

Hazli said the implementation of the third-party access (TPA) system is on track with the Energy Commission prescribing the incentive-based regulation framework for a pilot regulatory period from January to December.

This is to set the base tariffs for regasification terminals ( RGT ) in Sungai Udang, Melaka and the RGT Pengerang tran smis sion pipeline, as well as Peninsular Gas Utilis ation and Gas Malaysia Bhd’s distribution pipeline.

“MGA is confident that in the long run, the TPA system will encourage new parties to participate in the domestic gas industry, thus creating a dynamic, versatile and thriving sector.

“We understand that there are already several parties which have acquired licences from the Energy Commission to participate in the TPA system.”

Hazli said MGA believes that a natural gas roadmap is needed to realise the full potential of the natural gas industry, spur a lowcarbon economy, support the g overnment’s market liberalisation efforts and drive the nation’s socioeconomic progress.

The roadmap will also ensure the sustainability of the gas industry and players in the value chain.