National Energy Policy to guide nation amid low carbon transition

Malaysia will remain committed to promoting and preserving an attractive investment climate, says minister

by LYDIA NATHAN / pic by TMR FILE

THE Economic Planning Unit is currently in its final stages of formulating the country’s National Energy Policy, expected to be launched in the second half of the year.

Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed (picture) said the document, with its specific action plans, will guide the planning and development of the country’s energy sector, as it transitions towards a low-carbon future.

“The oil and gas (O&G) sector is still a vital component of Malaysia’s economic wealth as 20% of the nation’s revenue was derived from the sector between 2015 and 2020. With that, Malaysia will remain committed to promoting and preserving an attractive investment climate in our upstream sector as we welcome investments, strategic collaboration and partnerships to further unlock value potential within the industry,” he said at the virtual 13th International Petroleum Technology Conference yesterday.

Marking the first time the conference themed, “Progressive Collaboration and Innovative Solutions: Shaping the Future of Energy” was held virtually, it was hosted by Petroliam Nasional Bhd (Petronas) and co-hosted by Mubadala Petroleum and Schlumberger Ltd.

According to Mustapa, the emergence of the Covid-19 pandemic affected various industries across the globe and the O&G sector was not spared from it as well.

“In 2020, global oil demand declined by about 9% to 91 million barrels per day, compared to 100 million barrels the year before. Oil prices plunged to below US$20 (RM82.40) per barrel in April 2020, with West Texas Intermediate tumbling into negative territory for the first time in history. Despite the recent strengthening in oil prices and improving demand, we are not out of the woods yet,” he said.

He added that the pandemic accelerated energy transition, which will create pathways for economies and industry players to focus on clean and sustainable energy sources.

“With countries and players committing themselves to a net-zero carbon future, we expect to see the rapid growth of non-traditional sources of energy, including hydrogen and nature-based solutions. There is mounting pressure for the O&G industry to be more environmentally sustainable, by reducing emissions across the value chain,” Mustapa added.

Meanwhile, he said O&G will continue to remain the most important source of energy for the foreseeable future.

“O&G will continue to make up close to 50% of the energy mix, which is similar to the levels we see today, while natural gas will play an even more critical role, in facilitating energy transition. On the other hand, coal, albeit considerably more economical will not be a viable option in the future, due to its detrimental environmental effects.”

“Given all the challenges, the big question is — how can players remain resilient and ensure competitiveness in the long term. Technology and innovation are keys to answering this question, as it will lead the way in pushing the O&G industry to becoming more environmentally sustainable,” he said further.

Other than policymaking, the industry is in need of a complete support ecosystem including market-based energy pricing, fit-for-purpose policies and attractive fiscal terms.

“Ultimately, the stability of the upstream sector investment climate must be preserved,” Mustapa said.

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