SUNGAI UDANG, MELAKA: Several third parties, including Malaysians, have approached Petronas Gas Bhd (PetGas) for the use of the country’s first regasification terminal, which was completed recently, to import liquefied natural gas (LNG).

However, PetGas CEO Samsudin Miskon said the interested parties have yet to finalise any details, such as the import source and customers.

“We encourage third-party access to our regasification terminal, although Petronas [Petroliam Nasional Bhd] has underwritten all the capacity,” he told the media during a familiarisation trip to the terminal.

Samsudin said Petronas is willing to reduce the capacity that it had promised to take up. He added that the regasification terminal, which enables the import of LNG, would remedy the country’s gas shortage and  liberalise gas supply by allowing third parties to import and supply gas to end users. Petronas is presently the sole importer of LNG.

The regasification terminal in Melaka is the first in Malaysia. It has the capacity to receive, store and vapourise up to 530 mmscfd (million standard cu ft per day) of LNG — more than a quarter of the current local supply of 2,030 mmscfd from off Terengganu.

After the regasification process, the imported natural gas will be piped to the existing Peninsular Gas Utilisation (PGU) pipeline network that runs along the coastline and is linked to Singapore. PetGas will charge on the usage of the regasificaition terminal and the PGU pipeline.

To ensure sufficient supply of natural gas, Samsudin said PetGas would also build regasification terminals in Lahad Datu, Sabah, and in Pengerang, southern Johor, which forms part of the refinery and petrochemical integrated development (Rapid) project.

PetGas was tasked with building the regasification terminal in Melaka two years ago. The group was told to fast track the project so that the facility could help address the acute shortage of gas in the country.

PetGas was able to complete the task in two years, while others in the region have taken much longer. Furthermore, the project costs have come in “substantially lower” than the budgeted amount of RM3 billion.

The facility is the first of its kind in the world, with the regasification unit located on an island jetty that is connected to the mainland by a subsea pipeline. Samsudin explained that the adoption of the floating storage units concept has enabled the project team to save two years in construction time, compared with building land-based regasification and storage facilities.

The terminal is expected to receive its first shipment in August. Nonetheless, the state-of-art facility will only solve part of the gas shortage.

Gas is heavily subsidised by the government. Local subsidised gas prices are less than half of international prices. It is apparent that there is no incentive for end users to consume expensive imported natural gas when the fuel is available at a subsidised price.

Slashing the gas subsidy is a political hot potato for the government, especially when a general election is just around the corner.

In an interview with The Edge weekly in March, Petronas executive vice-president Datuk Anuar Ahmad, who is in charge of the gas and power division, pointed out that with the regasification terminal, the gas supply source would no longer be an issue, but “pricing will”.

The national oil company has submitted a proposal on the gas pricing mechanism to the Energy Commission, according to Anuar.

Prime Minister Datuk Seri Najib Razak will open the new facility on Monday.

This article appeared in The Edge Financial Daily, June 1, 2012.