Call for more reforms in gas industry

KUALA LUMPUR: The Malaysian Gas Association (MGA) hopes to see more reforms undertaken by the new government in terms of energy mix and market pricing policy for the gas industry, says president Hazli Sham Kassim.

He said the policy was in place but there was a need for more clarity, moving forward, in order to encourage more investment into the industry.

“Government intervention is needed to set a clear energy mix and pricing policy or else it would result in one energy source displacing the other.

“The right energy mix was also needed for Malaysia’s energy security.

“Natural gas is a fundamental component in the nation’s energy mix, hence this needs due consideration,” he told a press conference here.

Hazli Sham said natural gas contributed 4.2% to Malaysia’s Gross Domestic Product in 2015, with cumulative domestic sales revenue from 1997 to 2015 totalling US$53.55bil.

As of 2016, Peninsular Malaysia's generation of energy mix comprised of coal (53%), natural gas (41%), hydro (5%) and others (2%).

However, he said the generation of energy mix for natural gas was estimated to decline by 2026 with natural gas contributing about 37%, coal (56%), hydro ( 5%), others (2%) and renewable energy (4%).

As for pricing, he said the association also lauded the government’s market liberalisation efforts, including deregulation of gas price, to achieve market-based pricing but this required a clearer picture, moving forward, as the next price increase was expected in January 2019.

The Energy Commission recently approved a RM1.02 increase in the natural gas base tariff for Peninsular Malaysia to RM31.92 per million British Thermal Unit for the period beginning July 1, 2018 until Dec 31, 2018.

The gas industry is highly regulated with the pricing tier varying from consumer to energy producer.

Hazli Sham added that the most prominent fact was to allow third parties to sell gas and liquefied natural gas in Malaysia which was previously dominated by Petronas and Gas Malaysia.

The third party access in 2017, created a more competitive and dynamic environment, which saw the domestic price adjusting more to the international market and promoted efficient resource allocation and utilisation while ensuring Malaysia’s energy security, he added.

The MGA, founded in 1986, is the nation's lead advocate for the natural gas industry and has about 148 corporate members.— Bernama