Malaysia must embrace market liberalisation to ensure a reliable source of energy supply to meet the nation’s socioeconomic objectives.
Since 2014, Malaysia has turned into a net importer of crude oil and petroleum products. Energy, Green Technology and Water Minister Datuk Seri Panglima Dr Maximus Ongkili (pic) says Malaysia must embrace market liberalisation to ensure a reliable source of energy supply to meet the nation’s socioeconomic objectives.
Despite crude oil prices nearing six-year lows (it’s currently hovering at US$65) the national key economic area (NKEA) 2014 report for oil, gas and energy points to the two-pronged strategy of diversifying the portfolio of energy sources and promoting energy efficiency.
To reduce consumption, the government, on January 1, 2014, raised the electricity tariff as part of moves to phase out energy subsidies. The surcharge on electricity bills was raised from 1% to 1.6% for the peninsula and, for the first time, Sabah users will pay a surcharge to support the feed-in-tariff (FiT) scheme.
The government also announced plans to build more power plants, such as a US$3.3 billion coal-fired power plant in Jimah, Negri Sembilan, which will be operational in 2018, and an H class power plant (gas-fired) in Pengerang, Johor.
PETRONAS, as the national oil and gas company, is tasked with maximising fuel resources set out as entry point projects (EPP).
At the top of the EPP list is rejuvenation of existing fields through enhanced oil recovery (EOR). The Tapis field offshore Terengganu is the largest offshore EOR project in Southeast Asia whose field life is set to be extended 25 years, thereby producing up to 35,000 barrels of oil per day (bpd) from the current 3,000-4,00 bpd. It also appointed two firms for the Tanjong Baram field, 6km offshore Sarawak, to develop marginal fields.
The search for new oilfields is pushing PETRONAS to intensify its exploration and production (E+P) activities, too. Among its activities are seismic data acquisition and basin studies, and exploration in deeper waters and zones. It has also invested in an extensive subsea oil and gas pipeline to enable fields in more diverse locations to be monetised.
Johor Petroleum Development Corporation (JPDC) is another key energy player. JPDC runs Pengerang Independent Terminals Sdn Bhd, which aims to make Johor a regional oil and gas hub. The first 25 storage tanks with a capacity of 432,000 cubic metres were completed in March 2014.
As of December 2014, 93 ships have called at the terminal. Phase 1B added 25 tanks and 432,000 cubic metres storage capacity. With the completion of Phase 1C in the first quarter of 2015, 1.3 million cubic metres of storage will be available at the terminal.
Initiatives to meet higher gas demand
On the natural gas front, PETRONAS’ LNG Regasification Terminal (RGT) in Sungai Udang, Malacca, is to address the natural gas shortage in the peninsula and meet higher gas demand.
The natural gas sector will also be liberalised with the proposed amendments to the Gas Supply Act 1993 by the Energy Commission. Liberalisation includes granting third party access (TPA) and allowing the entry of new industry players to spur competition.
A liberalised market will lead to greater efficiency, market certainty and better pricing for end users. To facilitate new entrants, the government is also removing red tape and reducing subsidies to encourage more prudent use of resources.
Market reforms include implementing a two-tier gas pricing mechanism to bring about full market-based pricing of gas in the country.
Another agency, Malaysia Petroleum Resources Corporation, has been tasked with raising Malaysia’s profile globally. It helps domestic oil and gas service providers and manufacturers to explore opportunities beyond Malaysia.
Other sources of energy include solar power, such as Amcorp’s 10.25MW power plant in Negri Sembilan. The RM87 million solar power plant is capable of producing 41,000 kWh of electricity a day or 1.2 million kWh a month to fulfil peak-hour demand.
Finally, the Pengerang Integrated Complex (PIC) in Johor comprising the Refinery and Petrochemical Integrated Development (RAPID) and other associated facilities will house a 300,000 bpd-capacity crude oil refinery and a petrochemical complex.