Currently, Sabah and Sarawak are producing almost all of Malaysia’s natural gas, the bulk of which is exported and the rest going to Malaya where West Malaysians get to enjoy lower electricity tariffs due to the RM19 billion gas subsidy for Independent Power Producer (IPP) companies.
The extent of the RM19 billion gas subsidy is mind boggling. With a population of 3.2 million, Sabah probably has only about 640,000 households based on a family of 5. Imagine if RM1.0 billion subsidy is given to Sabahans, all the 640,000 households in Sabah will enjoy free electricity of RM130.21 per month for a year.
“Imagine if the RM19 billion subsidy is divided into 3 portions and Sabah and Sarawak get RM6.33 billion each annually,” pondered Dr. Jeffrey.
Unfortunately, in reality, Sabahans and Sarawakians get nothing, a big fat 0, for all their natural gas resources.
Petronas reported recently that Malaysia’s gas reserves in Malaysia is about 100 trillion cubic feet (TCF) of which Petronas produces 2.0 TCF a year. At this rate, Malaysia’s natural gas reserves will last for another 50 years even without any new discoveries. It is closely kept information that almost all of the 100 TCF is located in Sabah and Sarawak.
However, given Sabah and Sarawak’s petroleum discoveries to-date, it is likely that the natural gas reserves would be several times more than 100 TCF. Even natural gas is now found on-shore in Tungku, Lahad Datu, where Petronas has started a re-gasification plant with funds from the National Budget.
If Petronas and the federal government continue to exploit Sabah and Sarawak’s natural gas reserves with the current conditions, it will mean that Malayans will continue to receive indirect subsidies for the next 50 years, assuming no new discoveries, and Sabahans and Sarawakians will not receive a single sen of benefit from its gas for the next 50 years.
“Is there any difference between Petronas and the federal government compared to daylight highway robbers or pirates of the high seas” asked Dr. Jeffrey. In fact, a cartoonist had described the federal government as “Pirates of the CarryBN” mocking the popular movie series ‘Pirates of the Carribean’.
Given what we now know, it is only right, legally and morally, for the Sabah and Sarawak governments to negotiate a separate fairer and more equitable deal for Sabah and Sarawak’s natural gas so that Sabahans and Sarawakians get a chance to benefit from the natural gas coming out from their territories.
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Petronas to stay focused on ‘cool and sexy’ LNG business
Published: 14 June 2015 10:36 AM
Petronas will remain focused on liquefied natural gas (LNG) business for the long-term and is committed to maintain its leadership in the global LNG arena despite the dramatic plunge in oil prices since the middle of last year. Petronas Executive Vice-President and Chief Executive Officer of Upstream, Datuk Wee Yeow Hin, described LNG as a "cool and sexy" industry with consistent demand.
"Demand for LNG will always be there and it is expected to triple by 2035, from 210 million tonnes in 2010 to 500 million tonnes in 2030 and reaching 600 million tonnes in 2035,” he said.
There are about 30 LNG supply projects globally and this was expected to double to 60 projects by 2030.
"This year there are about 36 countries importing LNG and by 2030 it is expected to grow to 50 countries.
"Japan, Korea and Taiwan will remain as large and important markets but the biggest volume growth would come from India, China and ASEAN,” said Wee.
LNG supply is a big portfolio in Petronas which has developed a track record of success across every aspect of the value chain, allowing the group to take a long-term view of the business over the short-term vagaries of the market.
Wee said Petronas would focus on supply capacity, diversity, flexibility of resource and pricing, and reliability, which lends the group its competitive edge.
"We have an end-to-end expertise from resource to marketing. We are also growing our diversity of supply geographically and resource types that would provide flexibility in pricing mechanism and contract volume where demand would be uncertain,” he said, adding capacity was vital if Petronas wants to remain as a long-term global player.
Currently, Petronas has a 26 million-tonne LNG capacity and this will grow to 40 million tonnes by 2020.
“We are quite lucky because our exploration programme in the last three to four years has resulted in a lot of gas discoveries in Malaysia. Our gas reserves in Malaysia is about 70 trillion cubic feet (TCF) and we produce 2.0 TCF a year. With all the discoveries, today we have 100 TCF,” he said.
Petronas also has eight LNG trains now operating and will have another train next year.
It also has two first-in-the-world floating liquefied natural gas facility (FLNG) with production of the first drop of on-specification LNG, expected in the first quarter of next year.
“Overseas, we have LNG in Australia and Canada, where we can dispatch to various parts of the world. We have both different types of resources, conventional and unconventional. In Australia, we have coal seam gas and in Canada we have shale gas,” he added.
Wee said Petronas has the diversity that provided the group the flexibility to price its LNG and the ability to meet the varying demands from different buyers, thus ensuring its reliability as a supplier.
“As a supplier to Korea, Japan and Taiwan, we’re seen as very reliable and that gives us the edge as the preferred supplier. We also have the proximity advantage which means cheaper shipping cost,” he said.
With security of supply from a variety of sources, a spread of pricing options and flexibility in contract duration, shipping and delivery, Petronas is set to maintain its position as a key long-term LNG global supplier.
Petronas last week displayed a milestone development in its LNG capabilities during the 26th World Gas Conference in Paris which featured interactive augmented reality scale models of both its FLNG units.
More than 100 countries and 600 organisations attended the industry’s most important gathering, with delegates representing technical, engineering, strategic and commercial disciplines, participated at the five-day conference. –Bernama, June 14, 2015.
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