It is envisaged that the gas utilisation drivers will continue to play the same role well into the future through the Peninsular Gas Utilisation (PGU) network in Peninsular Malaysia by the power sector, industrial and commercial users, and export to Singapore.

The strategic thrusts of the Malaysian oil and gas industry were explicitly mentioned in the Ninth Malaysia Plan (9MP), a comprehensive blueprint prepared by Malaysia's Economic Planning Unit of the Prime Minister's Department and the Finance Ministry on the national budget allocation from the years 2006 to 2010.  In relation to gas, the following were highlighted in the 9MP:

  Intensify the development of domestic resources and secure overseas resources to sustain long-term supply of natural gas.
  Additional 54 NGV stations to be constructed including development of dedicated NGV stations.
  Review further incentives to encourage NGV conversions.
  Review energy (including gas) prices so as to ensure more market-reflective prices.
  Undertake review to gradually reduce subsidies.
  Reconsider other energy sources for power generation
  Support ASEAN efforts in energy cooperation.

Enhancing security and sustainability of gas supply

Production of gas from indigenous sources is expected to decline in a decade, based on current reserves.  To sustain long term energy supplies, more reserves will be developed in phases to replace gas volume from the depleted fields.  Future gas development from domestic reserves will be more challenging.  The future reserve fields have the following characteristics:
  High CO2 content ranging from 12% to 40%.
  Smaller fields and fields that are scattered far from existing developed fields.
  High cost of development.

To meet demand, Malaysia also imports gas from the neighbouring countries - West Natuna B (Indonesia) and JDA.  to date about 20% of Peninsular Malaysia's gas demand is met by import sources.  This is expected to increase when the volume from West Natuna B and JDA increases to 250 mmscfd and 390 mmscfd respectively.

PETRONAS also plans to introduce various measures such as capping the demand (in the short term), assessing potential import sources and doubling efforts to monetise gas from high CO2 and small gas fields.


The expansion of reticulation system

As the reticulation system is targeted for expansion, a significant effort would be needed to ensure more efficient integration of the PGU network and the distribution system (GMSB) to provide more efficient services to customers.

This will support a more robust growth in gas utilisation by the non-power sector, including GMSB's current aspiration to increase the number of its industrial customers.


Natural Gas for Vehicle (NGV)

Supporting the government's vision for the NGV project, PETRONAS will continue to develop the NGV station network.  To ensure the success of NGV, PETRONAS will continue to focus on building a critical mass in strategic locations.  New stations will have higher compression capacity and hoses while existing facilities will be upgraded.  In continuing efforts to develop its NGV station network, PETRONAS plans to bring another 200 stations into operation by 2010 which will have the capacity to supply for 67,000 vehicles per day.


Energy prices

In relation to the energy prices, the Malaysian government has recently introduced a new gas price structure with reduced subsidies.  This would lead to positive developments in terms of enhancing cost competitiveness, improving economic efficiency, promoting price transparency and attracting new investments.  Under the new structure, the industrial and power sectors are getting a 80% discount on the market price of gas starting from July 2008 and the discount will be gradually reduced until the gas price reflects the actual market value.


Fuel Mix for Electricity Generation

In line with the government's move to encourage the consideration of other energy sources for power generation, it is expected that the gas share in power generation will reduce to give way to the increase in the share of coal.

  2002 2010 2020 2030
      Coal 6 36 45 50
      Oil 9 1 1 0
      Gas 74 56 48 45
      Hydro 11 7 6 4
      Other   1 1 1
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