Malaysia's LNG feedgas shortage: who will feed the plants? Report

Insight 09 May 2019

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Report summary

The Malaysia LNG complex (MLNG) in Sarawak is short of feedgas. Upstream supply only met 85% of the 4.3 Bcfd of demand in 2018. We expect gas supply this year will only fulfil 86% of total demand. Without the development of new resources, the MLNG facility will remain short of feedgas, with the demand-supply gap widening to 2 Bcfd by 2030. In the mid term, cleaner gas discoveries will be prioritized to relieve the gas shortage. The more commercially compelling projects have formed a queue. In the longer term, unless more cleaner gas is found, contaminated gas will need to be developed. But to develop dirty gas fields, the operator needs to overcome high development cost, infrastructure bottlenecks and environmental policy. Unless these hurdles are resolved, we do not believe that the gap will be filled. As a result, PETRONAS would increasingly need to look to overseas investments to maintain its LNG portfolio.

Executive Summary
- Ongoing Sabah-Sarawak pipeline troubles causing shortage
- Legacy producers pushed to produce above planned rate – what are the implications?
The future of MLNG feedgas supply
- MLNG will be short until 2025
- Medium term: sufficient feedgas supply from 2026 to 2030
- Longer term: opportunities open up from 2030, but only for the most competitive
- 1. Economic constraints
- 2. Facility constraints
- 3. Environmental constraints
- Where will long-term feedgas come from?
- Impact on PETRONAS LNG position