LNG plant another landmark for Petronas


  • Business
  • Monday, 28 Apr 2003

BY HANIM ADNAN in Bintulu

PETROLIAM Nasional Bhd's (Pe- tronas) integrated liquefied natural gas (LNG) complex in Bintulu, Sarawak, to be officially opened by Prime Minister Datuk Seri Dr Mahathir Mohamad next Thursday, marks another remarkable achievement by the national oil company. 

Dubbed as the world's largest LNG production facility at a single location, the complex covers 276ha in Tanjong Kidurong (equivalent to 402 football fields) and has three LNG plants with a total combined production capacity of about 23 million tonnes per annum. 

To date, Petronas has about 20 years' experience in handling the LNG business, starting with its maiden plant, Malaysia LNG Sdn Bhd (MLNG), which started operation in 1983.  

This was followed by Malaysia LNG Dua Sdn Bhd in 1995, and Malaysia LNG Tiga Sdn Bhd that began its operation last month.  

The integrated Petronas LNG complex is divided into three areas: processing, utilities and storage and terminal.

The idea of Malaysia's LNG project was first mooted in 1968 when substantial natural gas reserves were discovered in central Luconia, located between 125km and 275km offshore Bintulu.  

Petronas president and chief executive officer Tan Sri Mohd Hassan Marican said: “When Petronas was incorporated in 1974 to exercise Malaysia's sovereign right of the national petroleum resources, detailed feasibility studies were carried out to implement the LNG project in Sarawak.” 

This led to the formation of the joint-venture company MLNG in 1978, with an authorised capital of RM700mil and involved Petronas, Shell Gas B.V., Mitsubishi Corp and the Sarawak state government, to utilise the non-associated gas from offshore Sarawak for export. 

The first MLNG plant is among the world's largest, producing 7.6 million tonnes of LNG per annum.  

Hassan said further discoveries of gas in central Luconia, coupled with the escalating demand for LNG, led the partners to form another joint venture MLNG Dua in 1992 to undertake the second LNG project.  

Three years later, the third LNG plant MLNG Tiga was incorporated to utilise newly discovered gas reserves offshore Sarawak.  

The commissioning of the two-train MLNG Tiga plant led to the first train starting operation last month. The second train is scheduled to come on stream in December.  

Hassan said at the media familiarisation visit to the integrated LNG complex in Bintulu last week that “the LNG projects have enabled us to monetise the country's gas re- sources.”  

Of the country's total natural gas reserves of 87.48 trillion cu ft (TCF), Sarawak holds the largest reserves at 45.99 TCF or 53%, followed by peninsular Malaysia at 33.44 TCF or 38% and Sabah at 8.05 TCF or 9%. 

Over the past 20 years, Hassan said, Petronas' total investment in its LNG operation, including upstream gas production facilities, downstream gas liquefaction facilities and LNG transport and port facilities, amounted to RM37.5bil. 

“Of this total, some RM25bil are foreign direct investments,” he said. 

Hassan pointed out that LNG was a fully integrated business. 

The industry was developed to provide a connection between “natural gas reserves” and “natural gas markets”, he added.  

For example, countries such as Algeria, Indonesia and Malaysia have large deposits of natural gas but relatively small domestic consumption. 

He said that on the other hand, Japan, South Korea and Taiwan and other industrialised countries required gas for heating, power generation and industrial uses, but possessed very little gas of their own and were not in a geographical position to import natural gas by pipeline. 

In the case of Europe and the United States, LNG supplements domestic reserves and pipeline imports. Currently, according to Hassan, only 10 countries have the facilities to import LNG.  

“Japan, for example, imports around half of the total, followed by South Korea, France, Spain, the US, Taiwan, Italy, Turkey, Belgium and Greece,” he said, adding that China and India were now in the midst of building their respective facilities. 

At present, LNG accounts for only about 5% of the total natural gas demand but its share percentages are much higher in Japan and South Korea (about 95%), Taiwan (90%) and Spain (50%). 

Malaysia is now the world's third largest LNG exporter, ac- counting for 13% or 15 million tonnes a year of global exports (2002), after Indonesia and Algeria. Last year, LNG earned RM12.4bil, making up 5.6% of the country's gross national product. 

According to Hassan, Petronas will need to find new ways to adapt itself to the fast-changing landscape in the global LNG business resulting from technological advances, emergence of new players and prospects of new markets. 

“We believe that the Bintulu LNG complex is well prepared to take up these new challenges coupled with exploration for new gas fields to cater for the increasing demand in LNG in the near future,” he said. 

For 2005, global demand for LNG is expected to increase to 121 million tonnes per annum from last year's 111 million tonnes, while supply would rise to 151 million tonnes per year from 121 million tonnes last year.  

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