SINGAPORE, April 13 — Petroliam Nasional Berhad aims to restart a gas pipeline currently under force majeure by the first quarter of 2024, a senior company executive said on Wednesday (April 12).
“Our plan is to complete the work by Q1 2024,” said Shamsairi Ibrahim, vice president of LNG marketing and trading at the company, known as Petronas. The facility’s restart is subject to approval from local authorities, he said.
In October, Petronas declared a force majeure on gas supply to Malaysia LNG Dua due to a pipeline leak caused by soil movement at its Sabah – Sarawak Gas Pipeline.
The company aims to complete an investigation into the gas supply disruption by mid-2023.
The disruption had fuelled fears of a supply shortage to customers, including Japanese utilities, but Petronas has said it would continue efforts to provide alternative supplies.
Target Market
In an interview with Reuters, Shamsairi also reiterated Petronas’ wish to extend its long-term contracts with its Japanese customers, adding that discussions are ongoing.
Petronas has long-term supply contracts with Japanese gas distributors such as Tokyo Gas and Osaka Gas, some of which are due to expire this year and next.
Japan, Malaysia’s top client, imported 12 million tonnes of LNG in 2022, up 19 per cent from 2021, according to Japan’s trade data.
“Not only (supplies from) Bintulu, but it is our aspiration to get a bit more (supplies) from Canada to Japan,” he said, referring to the LNG Canada project in Kitimat, British Columbia, in which Petronas has a 25 per cent equity stake.
The first phase of the project, set to be Canada’s first LNG export terminal, is expected to begin shipments around 2025.
On its project in Argentina with state firm YPF, LNG supplies from there could go to markets like Europe and Asia if the project is realized, he added.
The companies expect to make a final decision next year on whether to invest in the first phase of the US$60 billion (RM264.2 billion) project.
“Europe is one of the markets we cannot ignore. Other than that, we potentially can bring it back to Asia Pacific. Asean also will be good, if it is economical to do that,” Shamsairi said. ”
LNG Outlook
The vice president expects Asian spot LNG prices to remain at current levels or trend lower towards the third quarter, excluding the risk of an unusually warm summer, as major buyers China and Japan reduced consumption after prices spiked to record levels last year.
“If we have a mild summer, then there could be pressure on the LNG market.
“But nevertheless, (there will still be) the practice of Europe continuing to consume LNG due to its cessation away from Russian gas… Demand loss due to high prices will come back. This will be the balancing factor on price levels in the market,” said Shamsairi.
Global gas prices surged last year after Russia cut supplies to Europe, forcing the bloc to import record amounts of LNG.
Asian LNG prices, however, have since fallen over 55 per cent so far this year, easing to US$12.50 per million British thermal units (mmBtu) last week on muted demand and high inventories. [LNG/]
China’s energy demand is also expected to increase after the world’s second-largest economy emerged from strict Covid lockdowns last year, added Shamsairi, but the growth of LNG demand may not be as aggressive as expected as the country diversifies its energy mix.
“LNG demand will continue to increase but the magnitude (of the demand growth) might be a bit lower than what we have experienced previously,” he said.
— Reuters
