KUALA LUMPUR (July 9): Malaysia’s liquefied natural gas (LNG) output and exports are poised for incremental growth, thanks to feed supply growth from new projects, according to BMI.

Projections indicate that Malaysia’s annual LNG production could rise to 32.5 million tonnes in 2024 from 31.3 million tonnes in 2023, the research unit of Fitch Solutions said in a statement. A key driver of the growth is the availability of feed gas for the Petroliam Nasional Bhd (Petronas) liquefaction plant in Bintulu, BMI noted.

“Malaysia may encounter significant upside risks to feed gas supplies due to three major gas projects slated to come online between 2024 and 2027,” BMI said.

The Pegaga gas field, which achieved its first gas in 2022, is expected to reach peak production of 550 million standard cubic feet per day (mmscfd) in early 2025. The Kasawari field, meanwhile, may hit an estimated 900 mmscfd in 2025, while the Rosmari & Marjoram projects could add 900 million mmscfd in 2026.

Meanwhile, the Lang Lebah field, earmarked for development to supply gas for LNG production at the Bintulu plant, could produce as much as 1,000 mmscfd when it starts up in 2027.

All in all, the annual output of Malaysia, Asia’s biggest natural gas exporter, could hit 34 million tonnes by 2027, with existing and new projects coming online, BMI said.

“A potential increase in LNG production from the Bintulu plant could enable Petronas to renew expiring long-term LNG contracts with Japanese customers,” BMI said, noting that six long-term agreements with a combined volume of 3.27 million tonnes per year are set to expire between 2024 and 2025.

However, the cost of LNG supply in Malaysia is expected to rise, in line with increased feed gas production costs, BMI flagged. Petronas’ decision to advance high-carbon-dioxide (CO2) projects underscores its strategic objective to develop stranded domestic gas assets, the research house said.

Natural gas with high CO2 and other contaminants, known as “sour gas” in the industry, are relatively expensive and difficult to process due to their toxicity and damages to equipment, while causing environmental harm.

However, Malaysia’s dwindling reserves and conflict-hit projects in far-flung places like Iraq have prompted Petronas to ramp up spending, to tap increasingly difficult-to-extract resources back home and abroad.

“Nonetheless, Malaysia has incentives to monetize capital-intensive and high-CO2 gas reserves for domestic consumption,” BMI added.