MALAYSIA'S LNG TRADING BUSINESS POISED TO GROW AS PETRONAS EXPANDS OVERSEAS INVESTMENTS

KUALA LUMPUR, July 19 (Bernama) -- Malaysia’s role in global liquefied natural gas (LNG) trading is poised for growth as Petronas expands investments in overseas LNG projects, driven by a long-term global demand growth outlook.

BMI, a Fitch Solutions Company, expects Malaysia’s LNG trading business to expand further as Petroliam Nasional Bhd (Petronas) seeks to raise its global LNG portfolio through investments in overseas LNG projects.

“Petronas has already invested in Australia’s Gladstone and LNG Canada projects. Petronas’ most recent foreign investment in an overseas LNG project was a 15 per cent equity participation in the Masela production and sharing contract (PSC), which includes the 9.5 million tonnes per annum (mtpa) Abadi LNG project in Indonesia.

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“The Indonesian government approved the Masela plan of development in December 2023, and Petronas and its partners have yet to make a final investment decision (on the Abadi LNG project,” it said in a note today.

In September 2022, Petronas signed a memorandum of understanding (MoU) with Argentina’s state-owned YPF to develop a 5.0 mtpa LNG project in Bahia Blanca in the first phase.

In September 2023, Malaysia’s private player, Bumi Armada, signed a deal with Pertamina’s natural gas trading subsidiary, PT Davenergy Mulia Perkasa, to jointly develop a floating LNG project utilising feed gas from the Madura and its surrounding fields in Indonesia.

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However, BMI said the investment plans are in the early stages of development and have yet to progress further.

According to BMI Petronas is also seeking to enter into China and other emerging markets, shifting its focus away from Japan because these markets have become increasingly important for Petronas to sustain LNG exports.

“China is now widely considered a fast-growing LNG market and still offers significant opportunities for LNG exports.

“At the end of April 2024, Malaysia had a limited market share in China’s LNG market, accounting for 11.5 per cent of China’s total LNG imports, which is significantly lower compared to its peers, Australia (32.5 per cent) and Qatar (25.9 per cent),” it said.

Petronas currently has only one long-term LNG sales and purchase agreement (SPA) with China National Offshore Oil Corporation (CNOOC) after its SPA with JOVO Energy expired in 2023.

Since 2021, Malaysia has been exporting LNG to China at 150-190 per cent higher than contracted volumes narrowing the gap with Japan.

“Besides China, Petronas has a 15-year long-term contract with Thailand’s PTT for 1.2 mtpa. LNG exports to Thailand could rise since Thailand’s appetite for LNG is growing, and PTT is expanding its LNG regasification capacities.

“Petronas is already exporting spot LNG to Taiwan (Mainland China), Bangladesh, Singapore and Pakistan. Petronas forayed into the Philippines in 2023, and Vietnam could emerge as the next target LNG market, allowing it to expand its footprint in the spot LNG market,” BMI added.

-- BERNAMA