Skip to main content

Is Malaysia the new Qatar of LNG?

Hydrocarbon Engineering,

According to Wood Mackenzie, by 2020 Malaysia has the potential to be the largest supplier of flexible LNG to the global market.

The supply capacity of Malaysia’s PETRONAS is growing through new capacity additions in eastern Malaysia as well as Canada, offtake agreements with other suppliers and projects such as GLNG in Australia. It’s supply potential could grow by over 55% from 27 million tpy in 2013 to 42 million tpy in 2022. Some of this new capacity is committed to buyers, but some is not. In addition, some of its existing commitment to buyers will expire in the next 10 years.

Wood Mackenzie analysis suggests that PETRONAS’ flexible LNG volume will grow from 2.5 million tpy in 2013 to 26 million tpy in 2022. By contrast, Qatar’s flexible LNG volumes in 2013 were 20 million tpy. Whether Qatar or Malaysis will have the biggest flexible volume in 2022 will depend on its contracting strategy in the interim.

Wood Mackenzie’s Asia gas research analysis, Ching Zhi Xin, said: “In addition to challenging Qatar, Malaysis’s growing volume of uncontracted LNG will provide strong supply competition for new LNG projects, such as from the US, Canada and East Africa”.

“Should other new supply struggle to get developed, a long LNG portfolio would position PETRONAS well for a tight global gas market. Also, flexible supply from its existing portfolio could be used to support marketing of PETRONAS’ Pacific North West (PNW) LNG project in Canada, prior to production start-up. This will differentiate PETRONAS’ project from other greenfield projects with uncertain start-up times. It also removes pressure on delivery and provides customers with a diversity of supply sources. In addition, PETRONAS has the opportunity to supply LNG to Peninsular Malaysia when legacy offshore gas supply inevitably declines”.

PETRONAS could face challenges with its flexible LNG portfolio should we see a market oversupply. However, Wood Mackenzie has indicated that it recognizes the unique advantage domestic markets offer PETRONAS. Zhi Xin said: “As a reliable LNG supplier, PETRONAS will likely secure contract renewals for a proportion of the volume under contract that expires. Also, PETRONAS has the ability to find a market for LNG domestically, an option not available to its competitors”.

According to Wood Mackenzie’s analysis approximately 4 million tpy of LNG is necessary to balance the Peninsular Malaysia market by 2022. However, PETRONAS’ management of indigenous pipe gas, both new supply and existing contracts, could enable some piped gas to be backed out in favour of LNG. This would enable PETRONAS to increase Peninsular Malaysis LNG imports to as much as 8 million tpy by 2022. Zhi Xin concluded: “Therefore, Peninsular Malaysis could be PETRONAS’ hidden trump card to accommodate ‘excess’ LNG”.

Adapted from a press release by Emma McAleavey.

Read the article online at:


Embed article link: (copy the HTML code below):