KUALA LUMPUR: Malaysian governments’ plan to postpone increase in gas prices for industrial sector is unlikely to reduce LNG imports to the Malaysian peninsula. Instead, imports of the fuel could exceed expectations – as long as low prices and tepid demand for spot cargoes in Asia persist.
Malaysian Prime Minister Najib Razak outlined a revised national budget for 2015 on Tuesday that included delaying the price increases. The measure was introduced as part of an initiative to scale back subsidies for gas to encourage further investment in new supplies and promote greater efficiency.
Raising the gas prices for industrial buyers would also help pass through the higher price of LNG, which Malaysia started importing on a spot and short-term basis in 2013, when it received 1.5 mt at the Malacca terminal.
LNG is projected to account for a growing share of gas consumption in peninsular Malaysia as demand increases and output from ageing fields declines.
Malaysia’s state-run Petronas is expected to begin receiving LNG from the Santos-operated Gladstone LNG (GLNG) plant in Australia after it starts up in H2 2015. Petronas has a 27.5% stake in GLNG and a contract for 3.5 mtpa over 20 years – some of which it plans to import into Malaysia while selling the rest to buyers in other countries (see GLNG commissioning cargoes on sale as startup nears, 27 November 2014).
