Malaysia closer to opening up natural gas market

With the reorganisation, Petronas Gas has now been placed under the purview of Adif Zulkifli(pic) as the EVP and CEO of the gas and new energy business division.

KUALA LUMPUR: Malaysia is moving closer towards opening up its natural gas market to spur competition and demand.

Petroliam Nasional Bhd (Petronas) executive vice-president and CEO for gas and new energy Adif Zulkifli said Malaysia was just one price review away from achieving market-based gas pricing this year.

“If this happens, it would truly be a game-changer as our gas reforms move towards market liberalisation,” he said during his speech at the Malaysian Gas Symposium (MyGas) 2019 here, organised by the Malaysian Gas Association (MGA).

In the past few years, Malaysia’s gas market has been undergoing reforms, including a gradual subsidy elimination strategy by the government of RM1.50 per million British thermal units (MMBtu) for every six months.

The next tariff revision is next month, of which, according to the MGA, the local natural gas price is expected to match the global market price.

“The ongoing liberalisation of the natural gas market would ultimately result in a stronger and more sustainable oil and gas (O&G) industry, where prices would be determined on a willing buyer-willing seller basis.

“Moreover, with the ongoing implementation of the third party access (TPA) system, it would also encourage new parties to enter Malaysia’s gas market, thereby driving competition for the benefit of Malaysian gas users,” the MGA said yesterday.

Adif pointed out that the market liberalisation would promote healthier competition in the gas supply industry and eliminate inefficiency.

Adif said that Malaysia was targeting to increase it gas production by an additional one billion standard cubic meters per day or 12.5% by 2025 from the current eight billion per day.

“This is depending on the domestic gas market demand growth when we reach market parity. Gas contributes about 40% of the country’s primary energy supply mix,” he said.

According to the MGA, Malaysia’s O&G industry is the second-highest export earner, contributing RM46.8bil between January and April 2019.

Of this, liquefied natural gas (LNG) made up 4.9% of the country’s total exports, amounting to RM15.8bil. Malaysia is ranked as the world’s fourth-largest exporter of LNG.