KUALA LUMPUR (Sept 5): Concerns have been raised by liquefied natural gas (LNG) buyers and upstream players, specifically on the security of fuel supply, following Petroleum Sarawak Bhd's (Petros) bid to take over the role of sole gas aggregator, said Tan Sri Tengku Muhammad Taufik.
The president of Petroliam Nasional Bhd (Petronas) pointed out while the Sarawak state government and Petros have assured that the supply of LNG will not be disrupted, he noted that they have been "inevitably scrutinised" to ensure that the supply of LNG will continue to flow to the respective buyers.
"We have seen ourselves become one of the primary partners of countries like Japan and [South] Korea — for Japan it's north of 16-18% of the LNG comes from Malaysia — and they want the assurance that this supply, if developed through an integrated model, will be able to be supplied reliably, cost competitively, and now more important than ever, sustainably with low emissions over a long term," he explained.
"I have extant contracts, I have discoveries that need to go into the funnel, I have buyers who are waiting to be able to renew, refresh and extend [contracts], and they want to know this," Taufik told the press conference in conjunction with the release of Petronas’ half-year financial result.
On the other hand, Taufik said that LNG upstream players require an arrangement that will ensure potential monetisation over their explorations and discoveries.
"Each of these production-sharing contracts [PSC] face very different technical challenges. They are expensive and risky, and if [the upstream companies] do develop it, they need to know that they can make returns.
"My job under PDA [Petroleum Development Act] 1974, this team's job, the board's obligation under the duty of trust prescribed by law, is to make sure those hydrocarbon resources are monetised," commented Taufik, who is currently in negotiations with Petros on the supervision of oil and gas (O&G) trading in Sarawak.
To recap, Sarawak state-owned O&G company Petroleum Sarawak Bhd (Petros) in July signed gas sale agreements (GSAs) with Sarawak Petchem Sdn Bhd and Sarawak Energy Bhd, marking a step forward for Petros to take over the role of the sole gas aggregator from Petronas to buy and sell all natural gas in the state.
However, negotiations are still ongoing between the federal government, Sarawak state government, Petros and Petronas to execute the details of the new arrangement.
It is worth noting that 90% of all Petronas' LNG cargoes in the country are sourced from or through Sarawak.
Petronas posts lower profit in 1HFY2024
Petronas' profit after tax (PAT) for the first half (1H) of the year ended June 30, 2024 (1HFY2024) fell 19.4% to RM32.4 billion from RM40.2 billion in the previous half year, dragged by its gas segment.
This was despite a slight increase in revenue of 1.6% to RM171.7 billion from RM169 million in 1HFY2023, mainly due to the impact from foreign exchange, partially offset by lower average realised prices, especially for liquefied natural gas (LNG) in tandem with declining benchmark prices.
Average LNG prices were noted to have been down by 45% during the period, due to weak demand.