Malaysia and fossil gas
Malaysia is the sixth largest economy in Southeast Asia according to the International Monetary Fund 2020. GDP growth was 4.3% in 2019 and is forecasted to remain slightly above 5% through 2025.
Malaysia has a long history of natural gas usage. LNG exports began in the 1980s, small pipeline exports to Singapore began in 1992, pipeline imports from Indonesia began in 2003, and LNG imports began in 2013.
In 2019, Malaysia was the 5th largest LNG exporter in the world.
Electricity consumption, which is primarily driven by industry use, has grown an average of 2-4% per year since 2010.
Petroliam Nasional Berhad (PETRONAS), established in 1974, is Malaysia's fully integrated oil and gas company. The state-owned company owns all upstream natural gas developments and also plays a major role in downstream activities.
Shell is the largest gas producer and developer of deepwater fields in Malaysia.
Additional companies that have large upstream investments in Malaysia's natural gas fields include Murphy Oil, ConocoPhillips, Nippon Oil, INPEX, and Mitsubishi.
Natural Gas Demand
Malaysia is second behind Thailand in gas consumption for Southeast Asia. Total natural gas consumption in 2019 was 42.3 bcm. Peninsular Malaysia accounts for 58% of total natural gas consumption in Malaysia, with the majority of demand in the power sector.
Key Demand Drivers
The use of natural gas as a feedstock in the petrochemicals industry is a key driver of demand growth.
The Pengerang Integrated Petroleum Complex (PIPC) will be a major driver of industrial gas demand as various projects are finished and come online. The PIPC is a major downstream project being developed by Petronas in Pengerang, Malaysia. It is being developed over four phases from 2012 to 2037. It includes oil refineries, naphtha crackers, petrochemical plants, a LNG import terminal, and a 3.5 million tonnes/yr regasification plant.
The Refinery and Petrochemical Integrated Development (RAPID), a key part of of PIPC, is a 300,000 barrels-per-day refinery and a petrochemical complex.
In Peninsular Malaysia, natural gas, supplied by the Peninsular Gas Utilization pipeline, is used for district cooling and transportation.
Projection of Demand Growth
According to a recent Wood McKenzie report, LNG demand will reach 7.2 mmtpa, or 9.9 bcm, by 2023 and 13.0 mmtpa, or 17.9 bcm, by 2030.
According to ICIS, power sector natural gas demand is projected to grow at 5% annually.
A recent May 2019 APEC Energy Outlook - 7th Edition report in the Business as Usual (BAU) scenario forecasts 13 bcm of natural gas demand in the power sector in 2030, 18 bcm in 2040, and 24 bcm in 2050. A 2 Degrees C (2DC) scenario forecasts natural gas demand of 28 bcm in 2030 compared to 17 bcm in 2017. The APEC report also shows industrial energy demand increasing from 7.2 bcm in 2017 to 8.5 bcm in 2050 in the Business as Usual scenario. The difference in gas demand between the BAU and 2DC scenarios largely depends on coal generation displacing gas in the power sector.
A 2018 report by ERIA and IEEJ shows natural gas demand doubling by 2030 from 2017 levels, driven by growth in the power sector.
Natural Gas Supply
As of 2019, Malaysia has 33.4 trillion cubic feet of gas reserves (33 years of current production), the second largest proved gas reserves in Southeast Asia behind Indonesia. Total gas production in Malayasia as of 2019, was 78.8 bcm, of which 35.1 bcm was exported as LNG (mainly to China, Japan, and South Korea). Pipeline imports in 2019 were 0.6 bcm from Indonesia. In 2019, there was 2.1 bcm of LNG imports from Australia and 1.0 bcm LNG imports from Brunei.
Malaysia has a pipeline export contract of 1.2 bcm/yr with Singapore which ends in 2023. The pipeline import contract with Indonesia ends in 2022. The long-term LNG import contract with Australia for 3.5 mtpa ends in 2034, the LNG import contract with Qatar for 1.5 mtpa ends in 2032, and the LNG import contract with Norway for 0.1 mtpa ends in 2031.
Gas produced in offshore Peninsular Malaysia is used for domestic consumption and the export market. Gas fields in offshore Sabah and Sarawak are used for domestic consumption and LNG export.
PETRONAS has been sourcing gas from the Malaysia-Vietnam Commercial Arrangement Area (CAA) since 2003. Since 2002, Malaysia has been importing gas via pipeline from Indonesia.
The Malaysia LNG complex, also known as Petronas Bintulu LNG Complex, located in Bintulu is one of the largest LNG complexes in the world. It has three LNG processing plants, including Satu Malaysia Terminal, Dua Malaysia LNG Terminal, and Tiga Malaysia LNG Terminal. The complex has a total liquefaction capacity of 30 mtpa.
Potential New Gas Sources
Malaysia-Thailand Joint Development Area (MTJDA) is located in the lower part of the Gulf of Thailand and the northern party of the Malay Bay. The MTJDA is divided into three blocks (A-18, B-17, and C-19), each with nine fields, and each country owns 50 percent of the resources. Block A-18 started production in 2005 and has 8 bcm/year of contracted natural gas. Blocks B-17 and C-19 came online in 2010 and are contracted for 2.6 bcm/year for the period 2020-2026. There continues to be exploration in the MTJDA for natural gas and hydrocarbons.
The Kawasari gas field, an offshore field being developed in the South China Sea, scheduled to come online in 2023, has an estimated recoverable gas resource of 3 tscf with an estimated 900 mcf/day of gas production. Petronas Carigalo is the developer and operator of the Kasawari gas field.
In 2019, one of the world's largest gas reserves the Lang Lebah-1RDR2 exploration well in offshore Sarawak, was discovered. Petronas estimates the size of the reserve at 5 trillion cubic feet.
The Pegaga gas field, operated by Mubadala Petroleum and located in offshore Sarawak, is expected to produce first gas in the 3rd quarter of 2021. Gas flow is estimated between 30-50 mmcfd.
Current Gas Supply Projects
The majority of gas production is concentrated in offshore Sarawak. Petronas and other oil companies have made new discoveries of natural gas reserves in Sarawak in the past decade.
The KBB cluster, consisting of Kebabangan, Kamunsu East and Kumunsu East Upthrown Canyon are three natural gas fields currently under development in northwestern Sabah. The KBB cluster is estimated to hold 4.7 trillion cubic feet of natural gas.
Proposed Gas Supply Projects
Table 1: Proposed LNG Export Terminals in Malaysia
|Project Name||Location||Capacity||Expected Commencement Date||Sponsor||Project Status||Main Users|
|Dua PFLNG-2||Block H, South China Sea, Sabah, Malaysia||1.5 mtpa||2021||Petronas||Ready for start up|
Table 2: Proposed Natural Gas Projects in Malaysia
|Project Name||Location||Capacity||Expected Commencement Date||Sponsor||Project Status||Notes|
|Kedah CC Power Station||Kedah||1150 MW||TBD||Ranhill Holdings Berhard/Treasure Specialty Co. Ltd.||Proposed||Will export all power generated to Thailand|
|Tuaran Power Station||Sabah||100 MW||TBD||Sabah Electricity Sdn Bhd||Proposed|
|Palau Indah Power Station||Klang||1200 MW||2024||Tadmax Indah Power Sdn Bhd, World Wide Corp., Korea Electric Power Corp.||Proposed||PPA signed with Tadmax Indah Power in August 2020|
Projection of Gas Production
Gas production in Peninsular Malaysia, as well as production from MTJDA, is forecasted to decline after 2021. Total gas production in Sarawak is forecasted to increase when additional offshore fields are developed. Gas production in Sabah is projected to decline until 2025.
In the 2020 Oxford Institute for Energy Studies, LNG imports are expected to rise starting in the mid-2020s as pipeline imports from Indonesia end and gas demand increases. Domestic gas production is forecasted to slowly decline to 60 bcm by 2040. Post 2030, LNG imports are forecasted to reach 20-25 bcm.
Articles and Resources
Related GEM.wiki articles
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