Securing a Sustainable Energy (Gas) Future for Malaysia

Transcription

1 Securing a Sustainable Energy (Gas) Future for Malaysia 3 rd Energy Forum 12 th July 2011 Ezhar Yazid Jaafar General Manager, Strategic Planning Gas and Power Business, PETRONAS 2011 PETROLIAM NASIONAL BERHAD (PETRONAS) All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.

2 Gas penetration South East Asia market is typically high compared to other regions Gas Penetration in Energy Mix by Regions Total 2010 Demand ~300 bcfd 40% 35% 30% 25% 20% 15% 10% 5% 0% China North America Europe ISC JKT SEA World ROW Source: Wood Mackenzie

3 Gas pricing is not standardised Asia Europe North America For LNG supply, prices are indexed to JCC For pipe-gas supply, prices are generally indexed to fuel oil Gas price for long-term supply is indexed to oil Spot price is based on supply and demand at various hubs. NBP in the UK is the most active trading hub Based on supply and demand. Not indexed to oil Prices are set at Henry Hub Source: PETRONAS

4 Available indigenous gas supply in the ASEAN region is insufficient to meet rising demands ASEAN region will face the stark reality of depleting available indigenous piped gas resources post-2012, with widening supply-demand gap ~10.7 bcfd in 2030 Indigenous piped gas supply versus demand in South East Asia Unit: mmscfd ~10.7 bscfd Source: Wood Mackenzie, PETRONAS

5 Faced with declining gas production, ASEAN countries are increasingly reliant on LNG 2011 PETROLIAM NASIONAL BERHAD (PETRONAS) ASEAN countries are building LNG import terminals; as much as ~33 mtpa of proposed regas capacity could be on-stream by 2020 Thailand Map Ta Phut, 2011 Vietnam South Vietnam, 2015? Planned Regas Terminal Capacity Unit: mtpa Philippines Bataan LNG, 2020?? Malaysia Melaka, 2012 RGT2 (under study) North Sumatra Medan, 2015? Singapore SLNG, 2013 (Expand to 6 mtpa 2014) Java Nusantara, 2012 East Java, 2013 Note: Singapore regas capacity includes expansion Source: Wood Mackenzie, PETRONAS

6 However, ASEAN is facing growing competition for LNG volume 2011 PETROLIAM NASIONAL BERHAD (PETRONAS) ASEAN will need as much as ~20 mtpa of LNG volume to meet its demand by 2020 Unit: mtpa Asia Pacific LNG Supply-Demand in 2020 ~20 mtpa ~100 mtpa ~21 mtpa Demand Supply Supply Gap Source: Wood Mackenzie, PETRONAS

7 and supply is expected to be tighter due to anticipated increase of LNG demand from China and traditional Far East LNG buyers Japan LNG demand is expected to increase by mtpa post nuclear backlash Japan LNG demand outlook Unit: mtpa China is expected to increase its LNG import to meet its growing demand for gas China LNG demand outlook Unit: mtpa Source: Wood Mackenzie, PETRONAS

8 Going forward, it is expected that new LNG projects serving Asia Pacific will require high cost to materialize New projects serving Asia Pacific require breakeven cost of USD 8/mmbtu or higher to be economically viable Delivered gas price in Japan USD 10/mmbtu USD 14/mmbtu at Crude Price USD 60/bbl USD 90/bbl Projects at risk Source: Wood Mackenzie, PETRONAS

9 Trans-Asean Gas Pipeline (TAGP) Initiative aspire to integrate SEA market but faced with significant structural challenges Source: PETRONAS Key Challenges: Lack of new significant supply Conflicting/ priority for individual country s need Pricing issues i.e. subsidised vs. market link Market openness or liberalisation

10 Malaysia s petroleum resources as at 1 st January 2011 Malaysia Crude Oil (including condensate) and Gas Discovered Resources Billion BOE Billion boe (90 TSCF) 5.86 (Billion bbl) Gas Oil Reserve Life Source: PETRONAS

11 Over the last 5 years, Malaysia oil and gas productions have relatively plateaued 2011 PETROLIAM NASIONAL BERHAD (PETRONAS) Source: PETRONAS

12 Malaysia may become a net oil products importer by 2013 Surplus Position Deficit Position Source: FGE Asia Pacific Petroleum Monthly June 2011 Exclude RAPID Project ~ under study ~

13 The Gas Supply Chain in Peninsular Malaysia (January May 2011) 2011 PETROLIAM NASIONAL BERHAD (PETRONAS) All units are in MMSCFD (million standard cubic feet per day) PETRONAS is the wholesaler of gas in Peninsular Malaysia. It buys from upstream producers and sells to various users. 28% of gas supply is from JDA and Indonesia. Main user of gas in Peninsular Malaysia is the power sector (51%) About 65% of the gas supplied to the power sector is to IPPs. Source: PETRONAS

14 A widening supply demand gap is expected and alternative source of supply will be critical JDA + CAA + WN-B Domestic (Kerteh) Future Requirement Production from domestic gas reserves declining. More gas fields are developed to sustain the gas production at current level Future domestic gas development will be technically and economically challenging due to: High CO2 Deep water Smaller size, scattered and remotely located Note : Escalation 4.9% based on National Energy Balance (NEB) Final Energy Used growth rate Source: PETRONAS

15 Prolonged regulated pricing causes market imbalance & inefficiencies therefore market reform is necessary From inefficiencies..to a sustainable & efficient market Regulated Pricing D/STREAM PRICE Market Gas Shortage Single NOC Wholesaler (PETRONAS) Partial Subsidized Lack of New Supply Subsidised Legacy Gas Supply Legacy Supply, Marginal Fields & LNG LNG, High CO 2 / Marginal Fields & Open Market SUPPLY SOURCE Closed System Regulated open access Source: PETRONAS 15

16 Government and PETRONAS are undertaking transformation efforts to ensure efficient and sustainable domestic gas market Regulated Market DOMESTIC GAS MARKET REFORM Open Market Infrastructure Pricing Mechanism Third Party Access for PGU Supply Demand Mgmt Regulatory Framework Gradual removal of subsidy Malaysia LNG Regasification Terminal RGT 1 in Melaka RGT 2 (under study) Source: PETRONAS LNG imports Supply from surrounding regions JDA Natuna Domestic E&P Accelerating marginal fields monetisation Intensifying exploration efforts New Energy Policy th Malaysia Plan National Key Economic Area (NKEA) Malaysia s Competition Act 2010

17 THANK YOU 2011 PETROLIAM NASIONAL BERHAD (PETRONAS)