According to Business Monitor International (BMI), Malaysia looks set to compete with Singapore as a trans-shipment hub for LNG in the region. National oil company (NOC) Petronas listed gas arm Patronas Gas will be collaborating with Dialog Group for the development of a regasification terminal, located in Pengerang. The project is to cost MYR 2.7 billion (US$ 806 million), with a send out capacity of 3.5 million tpy at its start up – or approximately 4.8 billion m3/y – and two 200 000 m3 LNG storage tanks. An investment vehicle PLNG-2 has been set up for the project, which Petronas Gas holds a 65% stake in. Dialog has a 25% interest in the vehicle, while the state government of Johor holds the remaining 10%.
The project will be managed by the NOC’s technical arm, Petronas Technical Services Sdn Bhd, while the engineering, procurement, construction and commission (EPCC) of the terminal has been awarded to a consortium consisting of Samsung C&T, Whessoe Engineering and Science Tech Solutions. Work on the facility to commence in Q2 2015 and completed by Q4 2017.
Despite being a net exporter of gas, the concentration of gas production in East Malaysia and consumption in Peninsular Malaysia creates difficulty in transporting surplus gas around the country via pipeline. To meet the country’s gas consumption, particularly in the Peninsular Malaysia, Petronas constructed its first LNG import and regasification facility in Sungai Undang, Melaka, which came online in 2013. The Pengerang LNG project will be Malaysia’s second LNG regasification terminal.
BMI expects gas imported via the terminal to support the Pengerang Integrated Petroleum Complex (PIPC), a key project in Malaysia’s Economic Transformation Programme.
Some of this gas will help supply the 1220 MW Pengerange Cogeneration Plant (PCP) that will power facilities within PIPC, which will include Petronas’ RAPID refinery, petrochemical plants and a naphtha cracker.
According to the Malaysia Petroleum Resource Corporation (MPRC), the remaining gas that is not in storage will be piped into the Peninsular Gas Utilisation (PGU) pipeline system, which will supply this gas to Johor and the rest of peninsular Malaysia. A proposed 1000 – 1400 MW power project in Pasir Gudang, which Tenaga Nasional Bhd (TNB) and SIPP Energy have signed a Heads of Agreement (HoA) to jointly work on, will benefit from the additional gas made available by the Pengerang LNG terminal.
At their peak, both new power projects could demand up to 2 billion m3 of gas feedstocks to operate – or approximately 42% of Pengerang LNG’s total initial capacity.
Upside risk to utilisation rates
BMI expects the plant to be underutilized at its start up, having forecast a utilisation rate of approximately 50% from 2018 through to the end of the forecast period in 2023. However, Business Monitor notes the following as likely upside risks to its forecast:
Use of gas a petrochemical feedstock: At the time of writing, investors in the petrochemical plants within PIPC have yet to be chosen. Lower gas to oil prices may prompt future investors to invest in gas fed petrochemical plants, which supply Pengerang LNG will help provide.
LNG trans-shipment: This is a highly likely option. While PLNG-2 is only providing regasification services for now, Petronas Gas stated that the joint venture could also offer such services to ‘other potential third party customers’. This follows the model adopted by the Singapore LNG terminal, which appears to be prepping for LNG trans-shipment by allowing for third party access.
The use of the Pengerang terminal as a LNG trans-shipment hub will pit Malaysia directly against Singapore in the competition to be regional hub for LNG trade. Nonetheless, BMI notes that trans-shipment of LNG could be limited at the initial stages of the plant’s operations: Petronas is likely to direct supplies towards domestic consumption, while Singapore’s larger capacity and better financial infrastructure would make it a preferred centre for LNG trade.
Adapted from a report by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/26112014/malaysia-boosting-domestic-gas-1691/