Approximately 40% of Malaysia’s electricity is generated from natural gas, and it continues to play a long-term role in providing energy security to the country, while contributing towards sustainability goals.
In a series of Money Matters episodes aired on TV3, experts chimed in on the important role that natural gas plays in contributing to the development of the nation, the state of Malaysia’s natural gas industry and the factors that are important to ensure the sustainable progress of the industry.
According to Malaysian Gas Association secretary general Rosman Hamzah, the rise of natural gas in the country dates back to the 1970s energy crisis. The petroleum shortage and price hike eventually led to the Four-Fuel Diversification Strategy policy, which spurred the growth of natural gas.
“[Right now], we are fortunate to have an extensive value chain, from businesses upstream to [end-consumers] downstream,” he said.
Additionally, Hamzah said that the natural gas industry brings in more than RM135 billion per annum and provides around 80,000 jobs to the wider economy.
In fact, he explained that other emerging countries with indigenous gas supplies are looking to Malaysia for references on how to use natural gas to propel social and economic development.
Aside from the socioeconomic impacts, one benefit of natural gas is that it is more sustainable than its fossil fuel counterparts, explained Rystad Energy senior analyst Kaushal Ramesh.
“Not only is natural gas cleaner than coal, the industry is also taking steps to make it even cleaner,” said the analyst.
Within Asia, coal is still the primary source for power generation, which means that there is room for growth in terms of natural gas demand.
However, Ramesh noted that the big challenge for many Asian countries is gaining access to natural gas at a competitive price, especially when dominant markets experience price hikes due to factors like the Ukraine-Russia war.
The good news is that Malaysia is well positioned and equipped to support the natural gas demand in the region.
“Today, Malaysia is a net exporter of natural gas, where we export gas in two forms, in a pipeline in gaseous form across Malaysia and to Thailand and Singapore, as well as liquified natural gas (LNG) through LNG carriers to the world,” said Hamzah.
In fact, Malaysia is the fifth largest LNG exporter in the world, after Qatar, the US, Australia and Russia.
Locally, businesses like Continental Tyre AS Malaysia Sdn Bhd are also making the switch to LNG.
As one of the most progressive tyre manufacturers in terms of environmental and social responsibilities, Continental Tyre AS Malaysia aims to be carbon neutral by 2040, according to Alor Setar plant manager Noor Izwan Ismail.
The manufacturer has taken the first step towards this goal by partnering with PETRONAS to use cleaner energy sources, like replacing medium fuel oil with LNG in their operations.
“LNG has very clear benefits to the environment, and has reduced 28% of our carbon emission footprint,” said Ismail.
In regard to natural gas prices in Malaysia, market liberalisation has played a part in attracting third-party players and investors, explained Hamzah.
“For the longest time, gas has been subsidised. It was not sold at market price, but at a subsidised rate. So, in order for us to attract third parties and make the market more vibrant, we need to bring the gas price to where the market parity is,” he said.
The good news is that as of January 1, 2022, the price of gas for the non-power sector has been liberalised.
Although, since the power sector is one the biggest users of the gas industry, the only goal that remains is achieving full liberalisation to ensure market prices for the industry.
Ultimately, this would provide opportunities and benefits for both suppliers and buyers, as well as ensure the nation’s long-term energy supply security.