Malaysia confident of resolving issue of natural gas tax at JDA border

BANGKOK: Malaysia is confident that Thailand’s intention to impose tax on natural gas produced by Petronas at the border of the Joint Development Area (JDA) fields in the Gulf of Thailand can be resolved.

Minister in the Prime Minister’s Department Datuk Abdul Rahman Dahlan said the natural gas produced by Petronas outside the JDA should not be taxed as it was not being used in Thailand even though it was sent for processing in Songkla before being transported to Bukit Kayu Hitam.

He said the natural gas produced was only “on transit” in Songkla as it was channelled through the same pipeline, and 100% of it was sent to Malaysia.

“I can see a solution (to the issue). Insyallah, in terms of definition and there is a strong possibility that the Thai government will give tax exemption,” he told Bernama in Bangkok on Thursday.

Abdul Rahman, who met Thai Energy Minister Gen Anantaporn Kanjanarat on the sidelines of 7th Asian Ministerial Energy Roundtable (AMER7) here earlier, said the natural gas produced by Petronas could not be considered a taxable item and Anantaporn would brief the Thai Cabinet on the results of the discussion.

The natural gas produced in the JDA is not taxable, but the issue cropped up when Petronas explored gas fields at the border of the JDA, Abdul Rahman said, adding that the issue was earlier discussed between oil companies from both countries, but when it remained unresolved it was brought to the ministerial level.

He said if the issue still could not be resolved, it would be thrashed out at the prime minister’s level.

On AMER7’s meeting, he said Malaysia, as one of the world’s biggest natural gas producers, highlighted the demand security issue to enable investment in gas production to be carried out continuously as it was not just about supply security.

He said through demand security, gas consuming countries needed to implement efforts to raise their gas consumption so that gas producers like Malaysia could continue to plan production increase.

Abdul Rahman said the meeting also deliberated on oil price increase expectations by 2020 and beyond due to lack of investment in oil production off late.

Due to plunging oil prices, oil companies have cut down oil explorations, which were costly, causing declining oil production.

However, he said, the meeting noted that oil demand was still strong due to positive development in the petrochemical, transport and aviation sectors.

The meeting was officiated by Thai Deputy Prime Minister Prajin Juntong.

The current world oil price (Brent) is at US$60 a barrel. - Bernama