Petroliam Nasional Bhd., Malaysia’s state oil and gas company, plans to invest 15 billion ($5 billion) with partners to develop natural gas fields off the country’s eastern coast in a move to help replenish the Southeast Asian nation’s shrinking energy reserves.
The so-called North Malay Basin project aims to extract gas with high carbon dioxide content from nine discovered fields to help meet rising demand on Peninsular Malaysia, according to a statement today from Petronas, as the company is known. A 200 kilometre-pipeline (124 miles) will be laid to transport the fuel to Kerteh, in Terengganu state, it said.
“The development of the North Malay basin project follows recently introduced incentives by the government, particularly for the development of marginal fields,” Petronas said. “The gradual revision of gas prices to domestic customers, as recently announced by the government, also makes the project more economically feasible for industry players.”
The state utility has traditionally sold gas at a discount to power distributor Tenaga Nasional Bhd to help keep business and consumer costs low in Malaysia. On May 30, the government allowed it to reduce that subsidy, acknowledging that this had limited Petronas’s ability to reinvest and pay dividends.
“These subsidized gas prices have resulted in minimal investments in the exploration of gas projects by oil and gas players, constraining growth in supply capacity,” Petronas said in today’s statement. “In recent years, demand for gas has increased by more than 30 percent, buoyed by the introduction of regulated prices in 1997 that has lagged concomitant increases in market prices.”
The nation’s crude and natural gas production has fallen for two straight years, declining to the equivalent of 1.63 million barrels of oil a day in the year ended March 31 from 1.66 million a day a year earlier, according to Petronas’s annual report.
It didn’t name its production-sharing partners for the North Malay Basin project. The gas fields are located within Blocks PM301 and PM302 in the Bergading contract area, about 300 kilometres off the country’s peninsula, it said.
The investment will be undertaken on an “accelerated” basis, with the first delivery of 100 million cubic feet of gas per day expected by early 2013, rising to 250 million by 2015, according to the e-mailed statement.
