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Energy is an important factor in Malaysia’s economic growth. It accounts about 20% of Gross Domestic Product (GDP).

This sector’s contribution to the Gross National Income (GNI) is expected to rise from RM110 billion in 2009 to RM241 billion in 2020.

The Oil, Gas and Energy (OGE) are expected to contribute 5% annual growth from 2010 to 2020.

OGE is also part of National Key Economic Area (NKEA) which focusing on four key thrusts: sustaining oil and gas production, enhancing downstream growth, making Malaysia the number one Asian hub for oil field services and building a sustainable energy platform for growth.

The OGE NKEA Lab in 2010 identified 12 Entry Point Projects (EPPs) as well as two business opportunity thrusts.

A significant proportion of these jobs will be highly-skilled, with an estimated 21,000 (40 per cent) for qualified professionals such as engineers and geologists.

The OGE NKEA also focusing on growing the downstream area of the sector, providing insulation against price shocks in the global commodity market.

In 2011, the Petroleum Income Tax Act (PITA) Amendment Bill was approved. Major industry players such as Shell and Petronas have also made significant investments into the sector.

The Malaysia Petroleum Resources Corp (MPRC) was set up to streamline cooperation between the Government and private sectors.

As part of stimulating NKEA, the Entry Point Projects (EPP) in Malaysian OGE sector aim is to rejuvenate existing fields through enhanced oil recovery (EOR).

EOR uses methods to increase the amount of oil recovered from the underground reservoirs from a range of 20% to 35%, to 30% to 50%.

Petronas has a strategy to ensure EOR techniques are deployed to extract more oil from the nation’s oil fields.

It would review the Production Sharing Contract (PSC) terms and introduce new petroleum arrangements to incentivise the implementation of EOR techniques.

It would also attract companies with specialised EOR expertise to operate here and ensuring the most innovative methods and technologies are being disseminated and deployed to reduce capital and operating costs.

In January 2011, ExxonMobil committed to invest over RM10 billion in EOR techniques.

On 16 January, Shell and Petronas signed two and new PSCs for EOR projects offshore Sarawak and Sabah.

Shell has committed RM5.1 billion into projects to upgrade, expand and build its facilities across Malaysia.

As one of the EPP: Unlocking Latent Gas Demand is Malaysia’s first LNG regasification terminal off the Sungai Udang port in Melaka.

This facility is expected to commence operations this year and was built below the original budget of RM3 billion.

The rationale behind this EPP is because of the trend that shows the lack of gas supply in Peninsular Malaysia, driven by declining domestic gas production will resulted in limited additional investment from new industries, such as glass and plastics manufacturers and semiconductor wafer manufacturers, as well as preventing current industrial diesel and liquefied petroleum gas (LPG) users from switching to more competitively priced natural gas.

It is estimated that there would be more than 500 million standard cubic feet per day (mmscfd) of additional latent gas demand by 2020.

To meet this growing latent gas demand, a liquefied natural gas (LNG) regasification terminal will be built to treat imported LNG. To make gas imports economically feasible, the gas will be sold at a liberalised and unsubsidised price.

This regasification terminal is expected to contributing of the increase in Malaysia GNI as it will supply gas to companies that previously did not invest in Malaysia due to lack of gas supply would.

It would provide RM8 billion GNI increase and will create 27,000 new jobs.

The operation of the terminal and transmission pipelines will generate an additional RM0.6 billion in GNI to Malaysia.

Source: Pemandu; ETP ANNUAL REPORT 2011; PETRONAS; PetGas LNG regasification terminal draws interest – The company is in talks with several parties, says CEO, The Star, 1 June 2012

-SNASH-

(this article written for 1BINA.my)