Regional LNG: Malaysia LNG complex could up output by 20%: Report
Friday, September 23 2005 - 10:03 AM WIB
The liquefied natural gas (LNG) complex in Bintulu in Malaysia's eastern Sarawak state can compress natural gas drawn from under the ground or seabed and convert it into 23 million tons of super-cooled liquid gas a year for export.
But production at the facility, run by state oil and gas company Petronas, is almost completely sold out for the next 20 years, while global demand for LNG continues to grow.
The source said by overhauling the eight liquefaction trains, which turn gas to liquid, at the three plants in the complex, Petronas could squeeze out another 2 million tons of LNG, bringing the annual capacity at Bintulu to 25 million tons.
But for Malaysia to capture more LNG orders, such as the additional 4.5 million tons South Korea says it needs from 2010, Petronas may have to expand the complex, said the source, who is familiar with the company's thinking.
"There's space at Bintulu and looking at the phenomenal forecasts for energy demand and prices over the next few years, Petronas could add a few liquefaction trains or even build a new LNG plant there," the source told Reuters.
The new investment could be at least US$1.5 billion (RM5.65 billion), that is the typical cost for a train with a capacity of 3.6 million tons, he added.
The new train -- and the additional 2 million tons from the overhaul of existing facilities -- could take Bintulu's capacity to almost 29 million tons in five years.
"The timing is dependent on the market. Once a decision is made, it should take about two to three years for it to be operational," the source said, adding that Petronas was checking out possible supply contracts.
Officials at Petronas would not comment.
The source said new gas discoveries in deepwaters off eastern Sabah -- a state next to Sarawak on Borneo island -- could justify an expansion of Bintulu's plants, whose shareholders include units of Royal/Dutch Shell and Nippon Oil Corp
Shell and Murphy Oil Corp have announced major oil and gas finds off Sabah over the last two years in production-sharing contracts with Petronas.
"It's still early to say what those discoveries could yield in terms of gas," said the source. "But they could be significant enough to change the equation on reserves."
In order to raise LNG production, Petronas would have to weigh demand for exports against domestic gas needs and reserves.
"It will depend much on how the LNG market develops and how confident Petronas is about its reserves," said the source, involved with Malaysia's energy industry for about a decade.
A Petronas executive told Reuters in July the firm had committed almost all of the gas it produces from the three Bintulu plants to South Korean, Japanese and Taiwanese buyers for the next two decades. De-bottlenecking, or modification, was underway at one of the plants to boost capacity for clients needing spot LNG cargoes, the official said.
Petronas is one of few integrated LNG players in the world, involved in every part of the trade from liquefaction of the gas to its shipping, re-gasification and marketing.
It runs the world's largest fleet of LNG carriers through Malaysia International Shipping Corp and supplies 22 percent of Japan's gas needs, 21 percent of South Korea's LNG and 40 percent of Taiwan's gas market.
Petronas is also developing gas reserves in Turkmenistan and has a 50 percent stake in Egypt LNG's annual output of 7.2 million tons and 30 percent in UK-based Dragon LNG re-gasification terminal.
Its records show Malaysia's gas reserves at 14.2 billion barrels of oil equivalent (boe) as of March, slightly below the 14.5 billion boe estimated a year ago. At current annual output rates of 300-350 million boe, those reserves could last less than 35 years, Petronas told reporters last month.
But that estimate did not include new wells coming on stream in the next two to five years, the source said. (*)