PETALING JAYA: Petronas Gas Bhd
(PetGas) is poised for growth with its involvement in Malaysia’s first air separation unit (ASU) powered by liquefied natural gas (LNG) in Pengerang, Johor.
The project, undertaken through its wholly owned subsidiary, Regas Terminal Pengerang (RGTP), reflects PetGas’ strategic focus on sustainable energy solutions.
An air separation unit separates atmospheric air into its primary components, typically nitrogen and oxygen, and sometimes also argon and other rare inert gases.
RGTP has finalised a share subscription agreement with Dialog Group Bhd’s wholly owned subsidiary, Dialog Equity Three.
The agreement will see the issued and paid-up share capital of RGTP increase to RM36.8mil, marking a 38% rise.
PetGas will hold a 72% stake in RGTP, while the total awarded engineering, procurement, construction, and commissioning cost to Dialog amounts to RM368mil. The ASU project is expected to achieve commercial operation by November 2026.
MIDF Research maintained a positive outlook on PetGas, highlighting anticipated improvements in the LNG market amid the energy transition and advocacy for energy security within local and regional markets.
“We think that PetGas will benefit from the cost-effectiveness of the LNG-driven ASU, signalling the group as one of the leading providers of sustainable-energy solutions within the sector,” the research house said.
The project will adopt a design, build, and lease model, where the ASU will be leased to a qualified industrial gas market operator for a 25-year period.
“In return, RGTP will generate a consistent revenue stream through fixed monthly facility charges paid by the operator,” MIDF Research said.
Additionally, the project’s financing for Dialog will be supported by internally generated funds, external borrowings, and sukuk issuances.
The LNG-driven ASU is expected to yield significant environmental benefits, reducing electricity consumption by approximately 25% and cutting carbon emissions by 15,000 tonnes annually compared with traditional ASU plants.
“We believe this project is in alignment with both PetGas and Dialog’s environmental, social and governance agenda, while ensuring long-term sustainability of ASU operations by utilising LNG – one of the cleaner fuels in the energy market,” MIDF Research said.
The research house has maintained a “buy” recommendation with a target price of RM19.23 for PetGas.
