MALAYSIA. August 2017 COUNTRY ENERGY REPORT

Transcription

1 MALAYSIA August 2017 COUNTRY ENERGY REPORT

2 Table of contents Table of contents 1 List of graphs &tables 2 Overview 3 Institutions and energy policy 5 Energy companies 10 Energy supply 14 Energy prices 19 Energy consumption 21 Issues and prospects 24 Graphs & data files 27 Abbreviations 30 Glossary 32 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 1

3 List of graphs &tables List of graphs GRAPH 1: CO2-energy emissions (MtCO2) GRAPH 2: Installed electric capacity by source (2016, %) GRAPH 3: Gross power production by source (TWh) GRAPH 4: Power generation by source (2016, %) GRAPH 5: Map of natural gas infrastructure GRAPH 6: Gasoline & diesel prices (US$/l) GRAPH 7: Electricity prices for industry and households (US$c/kWh) GRAPH 8: Consumption trends by energy source (Mtoe) GRAPH 9: Total consumption market share by energy (2016, %) GRAPH 10: Final consumption market share by sector (2016, %) List of tables Table 1: Economic indicators Population, GDP growth Imports & exports Inflation rate, exchange rate Energy security and efficiency indicators CO 2 emissions Table 2: Supply indicators Oil & Gas proven reserves Electric & refining capacity detailed by source Production by energy source Power production by source External trade by energy source Table 3: Demand indicators Consumption / inhabitant and consumption trends Total consumption by energy source Final consumption by energy source and by sector Electricity consumption by sector Table 4: Energy Balance Total energy balance Detailed energy balance by energy source 2 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

4 Overview Map source: OCHA/ReliefWeb Highlights In moving towards a greener Malaysia, the Government is taking steps to encourage energy efficiency and lowcarbon energies. State-owned Petronas and TNB remain the dominant companies in their respective fields. Malaysia remains one of the top energy suppliers in Southeast Asia, although it still has a strong energy potential to be exploited. With the recent drop in oil prices, the Malaysian Government took the opportunity to remove fuel subsidies, resulting in market-based price adjustments. Energy consumption is increasing very rapidly. The share of oil in final energy consumption is decreasing, whereas the share of electricity and gas is increasing. Malaysia expects to become a regional leader through large investments in the oil and gas sector. Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 3

5 3 rd largest LNG exporter in the world +5.7%/yr electricity consumption growth over % share of renewables in the power capacity in 2030 Table 1 : Economic Indicators Population million GDP growth rate %/year GDP/capita US $ Inflation Rate %/year Exchange rate lc/$ Sources : World Bank, IMF Energy security Energy independence rate % Share of oil imported(+) exported(-) % Energy efficiency Total consumption/gdp * koe/$ Total consumption/gdp * 2005= Rate of T&D power losses % Efficiency of thermal power plants % CO 2 emissions CO 2 emissions/gdp * kco 2 /$05p CO 2 emissions/capita tco 2 /cap * at purchasing power parity 4 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

6 Institutions and energy policy In moving towards a greener Malaysia, the Government is taking steps to encourage energy efficiency and lowcarbon energies. The Economic Planning Unit (EPU), a powerful planning body under the supervision of the Prime Minister, drafts the country s energy policy through its energy division (Energy Section). Decisions are taken by a restricted council of ministers, the Cabinet Committee on Energy. Economic Transformation Programme (2010): targets for 2020 will be achieved through the implementation of 12 National Key Economic Areas (NKEAs) An independent authority, the Energy Commission ( Suruhanjaya Tenaga ), has regulated the electricity sector and the piped gas supply industry since It is in charge of supervising the sector and granting exploitation licences, a task which was previously carried out by the Ministry of Energy, Communication and Multimedia. The Ministry of Energy, Green Technology and Water (KeTTHA) implements the energy policy for the electricity sector, renewables and energy conservation. GreenTech Malaysia, formerly known as Pusat Tenaga Malaysia (PTM; Energy Centre in English), is a public research centre on energy, created in 1998 by the Ministry of Energy. It plays an active role in the promotion of energy efficiency and renewables, planning and R&D. The main objectives of the energy policy are defined in the 11 th Malaysia Plan, The plan focuses on four key areas: conserving natural resources to improve energy security, sustainable consumption and production by increasing the share of renewables and other measures, strengthening the enabling environment for green growth, and enhancing the climate change adaptation plan. The Economic Transformation Programme (ETP) aims to make Malaysia a developed country by Under this plan, the oil and gas sector is among the 12 National Key Economic Areas (NKEAs) selected by the Government to generate income to support the targeted growth. The oil, gas and energy sector has been a mainstay of Malaysia's growth and contributes approximately 20% of GDP. The policy goal is to strengthen a competitive market and to phase out energy subsidies in stages. Energy Report Malaysia Copyright Enerdata All rights reserved 5

7 Electricity The country launched the liberalisation of its electricity sector in 1990 with the Electricity Act which opened the production to Independent Producers (IPPs). Four priorities for electricity production: improving energy efficiency, building up a solar capacity, deploying nuclear energy and tapping hydroelectric potential Since the opening of the sector, several IPPs obtained contracts to supply electricity to the 3 national companies within the framework of "Power Purchasing Agreements" (PPAs). The first PPAs were signed with relatively high electricity prices (most of which in 1993). The first PPA expired in 2015 and many of them were given short-term renewals by the Government (up to 3 years). The Malaysia Electricity Supply Industry (MESI) initiative was launched in 2009 to restructure the electricity industry. The core policy of the MESI is the Incentive-Based Regulation (IBR), which aims to bring more transparency in the electricity supply by unbundling the generation, transmission, distribution and system operation from an accounting perspective. The ETP set out four priorities for electricity production: i) energy efficiency (replacement of old power plants); ii) development of solar power plants; iii) development of a nuclear programme; and iv) strengthening of the hydroelectric programme. Nuclear power development has been a difficult issue for the Government. However, the 11 th plan does not rule out the option of exploring nuclear power and steps are ongoing to set up a regulatory commission for nuclear power generation. The plan also aims to balance renewable growth and power generation economics, which favours coal-based power generation. Oil In accordance with the Petroleum Development Act of 1974, the State granted Petronas exclusive property rights to the country s hydrocarbon resources. Of the 13 Entry Point Projects (EPPs) set out in the Oil, Gas and Energy National Key Economic Areas (NKEAs) under the ETP, most concern the oil sector: EPP1) rejuvenating existing fields through Enhanced Oil Recovery (EOR); EPP2) developing small fields through innovative solutions; EPP3) intensifying exploration activities; EPP4) building a regional storage and trading hub; EPP6) encouraging investments in the oil and gas services and equipment industry; EPP7) taking local oil and gas services and equipment companies to the global stage; EPP8) attracting MNCS to set up operations in Malaysia and partner with local firms; EPP13) increase petrochemical outputs. 6 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

8 Gas In 1993 the gas sector was liberalised through the Gas Act. Within the ETP s Oil, Gas and Energy NKEAs, EPP5 (unlocking premium gas demand in Peninsular Malaysia) applies to the gas sector with several other EPPs overlapping with the oil sector. The main focus is on increasing the exploration efforts and unlocking the premium demand for natural gas. Many industrial consumers in Malaysia have expressed their interest in using natural gas at a price higher than those set by the Government (i.e. at a premium rate). However, due to limited supply and a lack of infrastructure, these consumers do not have access to natural gas. Unlocking the premium demand would require price reforms, which would help tackle the supply shortage and lack of infrastructure, as well as providing access to natural gas for industrial consumers willing to pay higher prices. The Gas Supply (Amendment) Bill 2016, is designed to enhance gas supply industry competition by implementing Third Party Access ( TPA ). Energy efficiency Target: 80 TWh accumulated energy savings in the industrial, commercial and residential sectors KeTTHA developed the National Energy Efficiency Master Plan to ensure the efficient use of energy in the country. To promote growth, the master plan outlines several incentives that would encourage the development of energyefficient designs and products. The Plan aims to encourage the mass production of energy-efficient equipment and appliances, which would eventually bring down their production cost, making them cheaper in the market. The final draft of the National Energy Efficiency Action Plan (NEEAP), published in 2014, has set a target of roughly 50.6 TWh cumulated electricity savings over the plan period (10 years) compared to the business-as-usual scenario, to be achieved in the 3 main sectors (i.e. the industrial, commercial and residential sectors). The lifetime savings of technologies to be implemented during the plan period amount to about 121 TWh. This will lead to a reduction of 40 MtCO 2 over the 10-year period (96 MtCO 2 accumulated). The electricity demand growth reduction at the end of the plan is 6% compared to a BAU scenario. Peak demand reduction resulting from the plan implementation is estimated at 2.3 GW. The NEEAP focuses only on electricity. The transport sector (30% of final energy demand in 2013) is not covered in the plan. Minimum Energy Performance Standards (MEPSs) were introduced for refrigerators, air-conditioners, televisions, fans and lamps (Fluorescent, CFL, LED and Incandescent) in 2013 through an amendment to the Electricity Regulations, with energy-efficiency labels. Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 7

9 Renewables Solar or wind capacity target of 3.5 GW by 2030 The main objective of the National Renewable Energy Policy and Action Plan (2010) is to introduce an appropriate regulatory framework for the development of renewable energy. This plan sets targets for the renewable electricity capacity of 975 MW (6% of total capacity) in 2015, MW (10% of total capacity) in 2020, MW (13% of total capacity) in 2030 and MW (34% of total capacity) in 2050, excluding large hydro. So far, between 2011 and 2015 just 327 MW worth of renewable generation capacity was connected to the electricity grid in the framework of the programme. In 2011, the Renewable Energy (RE) Act and Sustainable Energy Development Authority (SEDA) Act was passed in Parliament. The RE Act lays out the establishment and implementation of the FiT system as well as other related matters. The SEDA Act established the Sustainable Energy Development Authority (SEDA) Malaysia and establishes its function and powers. Feed-in tariffs Biofuels FiTs include a basic fee determined according to the size of the installation and bonus rates for specific installations. From 1 January 2017 the basic FiT for Solar PV (community) was RM0.7424/kWh (US$16.5c) for installations < 4 kw; RM /kWh (US$16c) for installations between 4 kw and 24 kw; and RM /kWh (US$11.6c) for installations above 24 kw. This translates into reductions of around 10%, compared to January The installed capacity limit for a FiT approval under the Community Quota was increased from 24 kw to 48 kw in January Malaysia is the world s second largest exporter and producer of palm oil, behind Indonesia. In 2011, the Malaysia Biomass Initiatives (MBI) was launched to develop and promote palm oil. This project is led by two major palm oil producers (Felda and Sime Darby; both are public firms). It aims to turn the country into a highincome economy by the year 2020, and propel it into a Green Future. B7 Biodiesel implemented in 2014, replacing the B5 biodiesel programme In 2011 Malaysia launched its B5 biodiesel programme. B5 is a blend of 95% diesel and 5% palm oil-based biodiesel. In 2014, the B7 Programme was implemented (7% palm oil-based biodiesel). However, both the B7 and B10 programs were deferred to a later date (possibly indefinitely) in November The government planned to complete the full implementation of the B10 biodiesel in August 2016, raising the mandatory share of biodiesel in motor fuels from the current 7% to 10%. To ensure the viability of the B10 programme, the Government decided to provide RM 414 million (US$127m) per year starting in For the industrial sector (programme B7), the mandate was due in June 2016, 8 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

10 raising the mandatory share of biodiesel to 7%. The new standard is expected to raise the consumption of palm oil from 0.5 Mt/year to 0.7 Mt/year in Industry. In 2016, the country has 18 biodiesel plants with a total capacity of 2.3 Mt/year and the current facilities in oil depots are able to handle blending up to 10%. In 2015, total crude palm oil production was 20 Mt (annual growth of 2% since 2013). CO 2 In the NDCs submitted to UNFCC in 2016, the country aims to reduce GHG intensity of GDP by 45% in 2030 relative to Out of the total target, 35% is unconditional and 10% is conditional to financing and technology transfer by developed countries. CO 2 emissions from energy combustion increased at a high rate over (around 6.5%/year), but since 2009 the growth rate has been half as slow (around 4.4%/year since 2010); CO 2 emissions reached 237 Mt in GRAPH 1: CO 2-ENERGY EMISSIONS (MtCO 2) Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 9

11 Energy companies State-owned Petronas and TNB remain the dominant companies in their respective fields. Electricity Three electricity companies dominate the country s 3 geographical areas: TNB (Tenaga Nasional Bhd) for the Peninsula; Sarawak Energy Bhd for Sarawak (previously SESCO before its privatisation in 2005); and SESB (Sabah Electricity Sdn. Bhd) for Sabah. TNB was partially privatised following a first sale of 27% of the capital in 1992 and further sales bringing the public stake down to under 50% (28.2% in 2017 held by Khazanah Nasional Berhad). Generation Tenaga Nasional Bhd (TNB) holds 36% of Malaysia s electricity capacity TNB has a power capacity of 12.9 GW (10.8 GW thermal and 2.1 GW hydro), and a generation mix as follows: coal 16%, gas 58%, oil 4% and hydro 22% (June 2017). TNB also owns 60% of the IPP Kapar Energy Venture, a multi-fuel (coal-oil-gas) IPP power plant (2 420 MW) and 80% of SESB. TNB holds 36% of the country's electricity capacity (June 2017). Sarawak Energy has an installed capacity of over MW (2016). SESB (formerly Sabah Electricity Board), which was privatised in 1998, is held by TNB (80%) and the state of Sabah. It has an installed capacity of MW (2016) connected to the Sabah grid, including two oil power plants (Patau, 99 MW and Tawau, 64 MW) and one hydropower plant (Tenom Pangi, 66 MW). The production capacity held by independent producers (IPPs) amounts to 12.5 GW. They accounted for around 47% of electricity production in Malakoff Corporation Berhad (MCB) is the country s main IPP, with an effective production capacity of 6.73 GW (end 2016) through its stakes in 6 power plants: 4 gas combined cycle plants, i.e. Lumut (1 303 MW, 93.75% stake), GB3 (640 MW, 75% stake) and Prai (350 MW, 100% stake); a coal power plant, Tanjung Bin (3 100 MW, 90% stake); a gas turbine, Dickson Port (440 MW, 25% stake); and Kapar (2 420 MW, 40% stake). Edra is the second largest IPP, with a capacity of 3.5 GW (2016) in Malaysia spread in 3 power plants: Telok Gong1 (440 MW), Telok Gong2 (720 MW), and Tanjung Kling (330 MW). 10 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

12 Transmission Distribution The Malaysian power transmission system is divided into three independent networks managed by TNB, SESCO and SESB. TNB, Sarawak Energy and SESB have the monopoly on electricity distribution in each of their respective regions. TNB s customer base is around 9.2 million, covering Peninsular Malaysia, Sabah and Labuan. Oil The oil sector is dominated by Petronas, a public company. Upstream Petronas dominates Malaysia s oil and gas sector Petronas is involved in exploration-production activities through its subsidiary Petronas Carigali. Petronas produced around 40 Mt of crude oil (2016. Petronas Carigali is also involved in overseas exploration activities in over 20 countries. Petronas owns and operates, through its subsidiary Engen Ltd, a refinery in Durban, South Africa ( bbl/d). The group has a total oil refining capacity of bbl/d. Foreign firms are active in exploration through joint ventures with Petronas, within the framework of production sharing contracts. Its main partners are ExxonMobil, followed by Shell. In 2007, Murphy Oil started production in the deep offshore Kikeh field (1 300 m) (production of bbl/d). Reserves are estimated to range between 0.4 Gbl and 0.7 Gbl. Shell is the operator of the offshore Gumusut-Kapap field (production of bbl/d, started in 2012) with a 33% stake; its partners are ConoccoPhilips (33%), Petronas (20%) and Murphy Oil (14%). Production in the field of Malikai, which is operated by Shell, ConocoPhillips (35% each) and Petronas (30%) started in 2014 with bbl/d. Midstream Downstream Of the six refineries in activity, three are operated by Petronas (Kertih with bbl/d, and Melaka I and II with bbl/d each), one is operated by SRC, Shell Refining Company, (Port Dickson with bbl/d), one by Petron Corp. (Port Dickson with bbl/d) and one by Kemaman Bitumen Co (Kemaman with bbl/d). In February 2016, Shell reached agreement with MHIL, Malaysian Hengyuan International Ltd (a subsidiary of Chinese private refiner Hengyuan Petrochemical Company) for the sale of its 51% shareholding in SRC for US$66.3m, which completed in December 2016 In the distribution sector, Shell owns more than 900 petrol stations and has a market share of about 36% in terms of sales volumes. Petronas, through its Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 11

13 subsidiary PetDag, Petronas Dagangan Bhd, ranks second: it owns more than petrol stations and has a market share of 31%. Gas Petronas is the main player both in natural gas production and on the LNG market. Petronas controls the 3 LNG complex units of Bintulu through 4 subsidiaries. In 2016 its gas production reached 85 bcm, Malaysia LNG (MLNG) (90% held by Petronas and 5% each by Sarawak and Mitsubishi) manages the first unit, which has a capacity of 8.4 Mt/year and was commissioned in Petronas purchased the stakes held by Shell and Mitsubishi (15% each) in The second unit belongs to MLNG Dua (Petronas 60%, Shell 15%, Mitsubishi Corporation 15% and the state of Sarawak 10%). It has 3 trains, a capacity of 9.6 Mt and was commissioned in The third unit belongs to MLNG Tiga (Petronas 60%, Shell 15%, the state of Sarawak 10%, Nippon Oil 10% and Diamond Gas Netherlands 5%) and has 2 trains of 3.85 Mt, commissioned in The fourth unit, owned by PL9SBP (Petronas 80%, JXTG Nippon Oil & Energy Corp 10% and PTTGLI (a Petronas-PTT joint venture company) 10% since July 2017). It has a capacity of 3.6 Mt and commenced commercial operation in early Petronas also takes part in the processing and ground transportation of natural gas through Petronas Gas Sdn Bhd (PGSB). On the Peninsula, Petronas sells natural gas to the private gas distribution consortium, Gas Malaysia Sdn Bhd (Petronas 14%, MMC-SHAPADU 41%, Tokyo Gas Mitsui 19%, public 26%). In Sarawak, Petronas sells gas directly to big consumers. In Sabah, the distribution of gas is carried out through the intermediary of a public company, Sabah Energy Corporation (SEC). Petronas is involved in the transport of LNG via its subsidiary MISC (Malaysia International Shipping Corp), which has 26 LNG carriers. 12 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved Petronas is expanding abroad. It now produces gas in Iran (fields of Sirri and since 2002 blocks 2 and 3 of South Pars), Myanmar, Indonesia and Egypt. In March 2003, Petronas purchased the 50% stake held by Edison in the West Delta Deep Marine project in Egypt, operated by British Gas. At the same time, Petronas acquired the 35.5% stake held by Edison in Egyptian LNG (ELNG), which exploits the LNG plant of Idkou. ELNG is made up of BG (operator) with 35.5%, Petronas with 35.5%, EGPC with 12%, EGAS with 12% and Engie with

14 5%. The plant includes 2 trains of 3.6 Mt/year each, commissioned in The entire production of the first train was contracted by Engie, although exports have been severely curtailed since 2014 due to gas shortages. Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 13

15 Energy supply Malaysia remains one of the top energy suppliers in Southeast Asia, although it still has a strong energy potential to be exploited. Resources Malaysia s oil reserves were estimated to be about 490 Mt at the end of 2016 (i.e. about 17 years of production). The country s gas reserves are far larger (2 740 bcm in 2016); they represent around 40 years of production. The country also has substantial coal reserves, evaluated at 4 Gt, which are essentially located in the states of Sarawak and Sabah. Moreover, Malaysia has a strong hydroelectricity potential, only a small part of which is being exploited. Malaysia also has a renewable energy potential, mainly from waste of the palm oil and wood industry (potential estimated at 665 MW). Electricity Installed capacity 80% of the installed power capacity is thermal The installed electricity capacity is 33.5 GW, 80% of which is thermal (end of 2016). The share of gas in the total capacity is 46%, while the share of coal stands at 26%. Hydro accounts for 19%, oil and biomass each account for 4%, while the remainder (1%) comes from wind and solar. The main coal plants are: Manjung (3 100 MW, commissioned by TNB in 2004 and 2014), Tanjung Bin (3 100 MW commissioned by Malakoff in 2006, 2007 and the last extension of MW in 2016) and Jimah (1 400 MW, commissioned by Jimah Energy Venture in 2009). The 2400MW Bakun dam in Sarawak has been fully operational since mid The power plant is operated by Sarawak Hidro Sdn Bhd, which is 100% controlled by the Ministry of Finance. The Murum hydropower project (944 MW) was fully commissioned in 2015 by Sarawak Energy. Kimanis Power Sdn Bhd, a joint venture between Petronas Gas (60%) and NRG Consortium (40%), fully commissioned its CCGT in Sabah (300MW) in TNB commissioned the 1071 MW CCGT in Pariin February Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 14

16 GRAPH 2: INSTALLED ELECTRIC CAPACITY BY SOURCE (2016, %) 19% 1% 4% Oil Gas 4% 33.5 GW Coal Biomass Hydro Nuclear 26% 46% Wind, solar, geoth. Power generation In 2016, electricity production reached 164 TWh, 89% of which was thermal. Gas accounts for 47% of production and coal for 39%. GRAPH 3: GROSS POWER PRODUCTION BY SOURCE (TWh) Electricity production reached 164 TWh with 89% from thermal power TWh Nuclear Hydro Oil Gas Coal Biomass Others Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 15

17 GRAPH 4: POWER GENERATION BY SOURCE (2016, %) 39% 1% 11% 0.2% 47% Oil TWh Gas Coal Biomass Hydro Nuclear Wind, solar, geoth. 2% Transmission Malaysia is interconnected with Singapore (with two 230 kv submarine cables with a capacity of 200 MW) and Thailand (with one 300 kv line of 300 MW). Electricity trade is limited (75 GWh of imports and 45 GWh of exports). In the framework of the ASEAN Power Grid project between Indonesia, Singapore and Malaysia, the interconnection between Sarawak and West Kalimantan in Indonesia was commissioned in The financing came from ADB (US$49.5m) and the French Development Agency (AFD, US$49.5m), as well as a US$2m grant provided by the Multi-Donor Clean Energy Fund under the Clean Energy Financing Partnership Facility. Oil Oil production has remained relatively stable over the last ten years (33.5 Mt in 2016). Two thirds of the oil produced comes from the offshore fields on the Peninsula (50% of which from the field of Tapis near Terengganu) and 1/3 from Sabah and Sarawak. Malaysia has been an oil exporting country since Crude oil exports reached 23 Mt in the early 1990s. Between 2005 and 2015, they have decreased by 3.8%/year, but rebounded to 19.5 Mt in bbl/d Malaysia s refining capacity The country s refining capacity amounts to bbl/d, distributed over six refineries. Malaysia has invested heavily in refining activities during the last two decades and is now able to meet most of the country s demand for petroleum products domestically, after relying on the refining industry in Singapore for many years. 16 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

18 Natural gas Natural gas production has been increasing since 2012, growing from 61 bcm to 66.7 bcm in 2016, following a period of slight decreases. Production increased quickly until 2005, from 18.4 bcm in 1990 to 50.4 bcm in Production at the JDA offshore field between Malaysia and Thailand ( Joint Development Area ) started in The project was developed by CTOC (Carigali Triton, 50/50 Petronas Carigali and Amerada Hess). The gas is evacuated via the TTM (Trans-Thai-Malaysia) gas pipeline to Thailand and Malaysia. A gas separation plant entered into service in Around 50% of the gas produced is exported, mainly as LNG, from the complex liquefaction plant of Bintulu (capacity of 28 Mt/year including the last train commissioned in early 2017). In 2015 Malaysia lost its second rank among the largest LNG exporters in the world; in 2016, it ranked third after Qatar and Australia, with 34 bcm. A floating LNG facility (FLNG) of 1.2 Mt/year was commissioned near Kanowit (Bintulu, Sarawak region), at the end of 2016, with first commercial cargo in Malaysia has traditionally been a major exporter of LNG with long-term sales to Japan, South-Korea and Taiwan. However, increased domestic demand has led to the construction of Malaysia's first LNG import terminal in Melaka, commissioned in 2013, with a capacity of 3.8Mt/year (FRSU located offshore Sungai Udang). More than half of the gas exports go to Japan In 2016, LNG exports went mainly to Japan (62%), South Korea (16%), China (11%) and Taiwan (11%). Since 1992, gas is also exported by pipeline to Singapore (1.6bcm/year). Within the framework of the Trans-ASEAN gas pipeline project, a pipeline between West Natuna (Indonesia) and Duyong was commissioned in The pipeline is used for the delivery of 6.7 mcm/d of gas over a 20-year period under a contract signed between Pertamina and Petronas in In 2016, Malaysia net gas trade (including pipeline) remained unchanged at 25.3 Bcm. Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 17

19 GRAPH 5: MAP OF NATURAL GAS INFRASTRUCTURE Malaysia Gas Map Thailand Malaysia FLNG 2 bcm/yr (2020) Kuala Lumpur Melaka LNG 5.1 bcm/yr (2013) Indonesia Singapore Pengerang 4.7 bcm/yr (2019) Malaysia LNG 35 bcm/yr ( ) Malaysia LNG exp. 4.9 bcm/yr (2017) Kanowit FLNG 1.6 bcm/yr (2017) MARLIN 0.7 bcm/yr (2015) LEGEND LNG import terminal LNG import terminal planned or under construction LNG export terminal LNG export terminal planned or under construction Gas pipeline Gas pipeline planned or under construction Gas fields zone Sources: Shell, Malaysia Energy Commission, Enerdata Estimates 18 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

20 Energy prices With the recent drop in oil prices, the Malaysian Government took the opportunity to remove fuel subsidies, resulting in market-based price adjustments. Oil Cuts in fuel subsidies to improve the current account deficit and reduce the fiscal deficit In an attempt to improve its current account deficit and to reduce its fiscal deficit, Malaysia cut fuel subsidies in 2013, which saved US$1bn in Endconsumer prices increased by US$0.06/l. Low-income families benefit from higher cash pay-outs to soften the impact of the price hike. In 2014, the Government removed subsidies on a popular grade of gasoline (RON95) and diesel. Instead, the prices will be fixed according to a managed float system. In 2016, the average prices of motor fuels fell further to US$0.45/l for gasoline and US$0.44/l for diesel. However, even after subsidy cuts, gasoline and diesel are much cheaper than in other Asian countries. Consumers in Japan and in South Korea pay more than double the price in Malaysia. GRAPH 6: GASOLINE & DIESEL PRICES (US$/l) Gasoline Diesel Brent Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 19

21 Electricity In 2015, the average price of electricity was the same for households and industrial customers (US$7.4c/kWh). Electricity prices are similar to those in neighbouring countries like China but much lower than in Japan and South Korea. GRAPH 7: ELECTRICITY PRICES FOR INDUSTRY AND HOUSEHOLDS (US$c/kWh) Industry Households 20 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

22 Energy consumption Energy consumption is increasing very rapidly. The share of oil in final energy consumption is decreasing, whereas the share of electricity and gas is increasing. In 2015, consumption per capita was 3.1toe. Electricity consumption per capita has increased from around kwh per capita in 2000 to 4 00 kwh in Total energy consumption increased at the rapid pace of 4.2%/year, on average, from 2000 to Natural gas and oil account for 37% and 39%, respectively, of total consumption (2016). The share of coal has increased significantly since 2000 (from 5% in 2000 to 20% in 2016). The weight of the other energy sources (biomass, hydro, etc.) is still low. GRAPH 8: CONSUMPTION TRENDS BY ENERGY SOURCE (Mtoe) Around 15 points increase in the share of coal from 2000 Mtoe Coal Oil Gas Primary Electricity* Biomass *Including heat ; Nuclear (1TWh = 0.26 Mtoe), Hydroelectricity and wind (1 TWh = Mtoe), Geothermal (1 TWh = 0.86 Mtoe) Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 21

23 GRAPH 9: TOTAL CONSUMPTION MARKET SHARE BY ENERGY (2016, %) 2% 2% Coal 20% 37% Oil Gas Primary Electricity* 94.3 Mtoe Biomass 39% *Including heat ; Nuclear (1TWh = 0.26 Mtoe), Hydroelectricity and wind (1 TWh = Mtoe), Geothermal (1 TWh = 0.86 Mtoe) The electricity sector is the biggest gas consumer, with a 52% share in 2016; the rest is consumed almost exclusively in the industrial sector. Electricity consumption more than doubled between 2000 to 2015 Between 2000 and 2016, final energy consumption grew by 4%/year. Electricity consumption has more than doubled since 2000 and reached 149 TWh in Oil products accounted for 58% of final consumption in 2016; their share has decreasing modestly since the beginning of the 90s (65% in 1990 and 60% in 2000). The market share of gas was 14% in The share of electricity is progressing steadily (23% in 2016 compared to 18% in 2000). The share of biomass and coal is low, representing 4% and 2% of final consumption, respectively. Transport accounts for 42% of final consumption, industry for 29%, the residential-tertiary sector for 18%, and non-energy uses for 11% (2016). 22 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

24 GRAPH 10: FINAL CONSUMPTION MARKET SHARE BY SECTOR (2016, %) 11% 29% 18% Industry Transport Households & services 56 Mtoe Non energy uses 42% Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 23

25 Issues and prospects Malaysia expects to become a regional leader through large investments in the oil and gas sector. Oil Following Singapore s example, Malaysia is considering becoming an important export hub for oil products. Refining Petronas world-scale integrated refinery and petrochemical complex should be completed by 2019 Petronas is developing a world-scale integrated refinery and petrochemical complex in the state of Johor to answer the growing demand for petroleum and petrochemical products in the Asia Pacific region by 2019 (US$19bn). The project will have a refining capacity of bbl/d and will supply naphtha and LPG feedstock for the RAPID petrochemical complex, as well as produce gasoline and diesel that meet European specifications. In 2014 Petronas awarded the front-end engineering and design (FEED) contract to Technip and the engineering, procurement and construction management (EPCM) contract to Technip and Fluor. In February 2017 Aramco agreed to invest US$7bn for an equity stake in the project. Gas Exploration, production Gas pipelines The Sabah-Sarawak Gas Pipeline project transports gas from the fields of Sabah to the Bintulu terminal for export Petronas is investing in the development of the North Malay gas basin. This new project comprises the development and commercialisation of nine discovered gas fields and the construction of 300 km of pipeline. This project is expected to produce 1.6 bcm when it enters the full production phase, having produced its first gas in July The Trans-ASEAN Gas Pipeline (TAGP) is the big project for the interconnection of the gas networks of the ASEAN countries. An MoU was signed in 2002 by the ASEAN Ministers for the construction of the km-long gas pipeline to connect the 10 member countries (cost of 7bn). To date, 11 bilateral connections have already been established, with a total length of more than km. ASEAN expects the full interconnection of these pipelines to be achieved by 2020 (including LNG as virtual pipelines) The Sabah-Sarawak Gas Pipeline (SSGP), operated by Petronas, began operation in 2014 and is part of the Petronas Sabah-Sarawak Integrated Oil and Gas project master plan. The project faced several delays. In 2014, an Enerdata Energy Report Malaysia February 2015 Copyright Enerdata All rights reserved 24

26 explosion occurred in a section of the interstate gas pipeline in Lawas, Sarawak, causing further delays. This 512 km-long pipeline will transport gas from the field of Sabah to the Bintulu terminal for export. The project also includes the construction of a gas terminal in Kimani. LNG projects The Pengerang regasification terminal is expected in 2019 As two liquefaction projects have started production in 2017, there is only one remaining project for LNG liquefaction facilities with a total capacity of 1.5 Mt/year; and one LNG regasification project (3.5 Mt/year). Petronas other FLNG project, Rotan FLNG, which is offshore Sabah, with a capacity of 1.5 Mt/year, saw its original commissioning date of 2018 pushed back to Petronas has awarded Samsung a contract to build the LNG regasification terminal in Pengerang (Southern Johor). It will have a capacity of 3.5 Mt/year and is expected to be commissioned in Electricity 8.5 GW of power plants are under construction or at the approved stage Hydropower projects Malaysia has around 8.5 GW worth of power plants at the approved stage or already under construction Gas accounts for 35% of that capacity, coal accounts for 42% and hydro for 21%. One dam has been approved by Sarawak Energy, namely the MW Baleh hydro dam (expected to start in 2025). The company has awarded a contract to a joint venture consisting of the China Gezhouba Group Co. Ltd. and Untang Jaya Sdn Bhd to perform main civil work construction, expected to start in More than 4 GW worth of hydro projects are under the planning stage by TNB, Sarawak Energy and TEPSO. Coal power projects Plans for 4 coal-fired plants to supply electricity needs in Sarawak Gas power projects Sarawak Energy is constructing the 600 MW Balingian plant, which is expected to be commissioned in TNB s MW Fast Track Project 3A has been approved and is expected to be commissioned in October Another project by TNB, MW project 3B-1 & 2, has also been approved and is expected to start in Petronas Gas is building the 1220 MW Pengerang plant, and the first phase of 400 MW is expected to be commissioned in TNB is developing Project 4A, a MW CCGT project approved in 2014 with commissioning expected in Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved 25

27 Renewable projects The renewable energy capacity should reach 576 MW by 2018 Transmission projects Based on approved projects eligible for feed-in tariffs, SEDA estimates that the capacity of renewables should reach 576 MW in 2018, with solar PV accounting for 87 MW, small hydro for 204 MW and biomass for 168 MW. 1MDB Solar will build a 50 MW solar plant in Kedah. Tawau Green Energy s 30 MW Apas Kiri Geothermal plant started construction in February 2016 and is expected to be commissioned in Produced electricity will be exported to the Sabah Grid, under a 21-year renewable energy PPA with Sabah Electricity at a feed-in tariff of RM0.45 per kwh. In the framework of the ASEAN Power Grid project, Indonesia, Singapore and Malaysia have agreed to build interconnection networks worth US$1bn. PLN (Indonesia), Sarawak Energy and TNB and Singapore Power will jointly build 3 power transmission lines connecting Sarawak in Malaysia to Pontianak (West Kalimantan) in Indonesia; Penang in Malaysia to Riau (Sumatra) in Indonesia; and Singapore to Batam and Bintan in the Riau Islands of Indonesia. The first part between Sarawak and West Kalimantan was commissioned in The two other projects are the Malacca-Sumatra interconnection that is still under development, and the Nunukan-Sabah link, which is still at the planning stage. 26 Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

28 Energy Statistics Table 2 : Supply Indicators Reserves* Oil Mt Gas bcm * On December 31 st Capacity* Refining capacity mb/d Electricity capacity GW of which Thermal GW Hydroelectricity GW Nuclear GW Geothermal GW Wind GW * On December 31 st Production Oil Mt Gas bcm Coal Mt Electricity TWh of which Thermal % of which Coal % Gas % Hydroelectricity % Nuclear % Geothermal % Wind % External trade* Crude oil Mt Oil products Mt Gas bcm Coal Mt Electricity TWh * Imports(+) exports(-) balance Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

29 Energy Statistics Table 3 : Demand Indicators Consumption per capita Total toe Electricity kwh Consumption trends Total %/year Gas %/year Electricity %/year Total consumption Total Mtoe of which Oil % Gas % Coal, lignite % Primary electricity* % Biomass % * Nuclear (1TWh = 0.26 Mtoe), Hydroelectricity and wind (1 TWh = Mtoe), Geothermal (1 TWh = 0.86 Mtoe) Final consumption Total Mtoe By energy Oil % Gas % Coal, lignite % Electricity % Heat % Biomass % By sector Industry % Transport % Households & services % Non energy uses % Electricity consumption Total TWh of which Industry % Households % Services % Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

30 Energy Statistics Table 4 : Energy Balances Total energy balance (Mtoe) Production Imports Exports Aviation and marine bunkers Stock Changes Primary Supply Final Consumption of which Industry Transport Residential & Services Non-Energy Uses Detailed energy balance (Mtoe) 2016 (Mtoe) Coal Crude Oil Natural Primary Elec. Biomass Total** Oil Products Gas Elec.* Production Imports Exports Aviation and marine bunkers Stock changes Primary supply Petroleum refineries Power plants Others Final Consumption of which Industry Transport Households & services Non energy uses * Nuclear (1TWh = 0.26 Mtoe), Hydroelectricity and wind (1 TWh = Mtoe), Geothermal (1 TWh = 0.86 Mtoe) ** Including heat Mtoe Production Primary consumption Enerdata Energy Report Malaysia Copyright Enerdata All rights reserved

31 Abbreviation Oil bbl bbl/d mbl mb/d kb kb/d Gbl kboe Mboe Gboe l LPG NGL E&P Coal ktoe Mtoe Mt IGCC Economy GDP barrels barrels per day million barrels million barrels per day thousand barrels thousands barrels per day billion barrels thousand barrels of oil equivalent million barrels of oil equivalent billion barrels of oil equivalent liters Liquefied Petroleum Gas Natural Gas Liquids Exploration& Production thousands tonnes of oil equivalent million tonnes of oil equivalent million tonnes integrated gasification combined cycle Gross Domestic Product BAU Business As Usual c euro cents k thousands of euros m million euros bn US$ lc/$ billion euros US dollars local currency vs. Dollar $05 dollars at constant exchange rate and price of the year 2005 $05p dollars at constant exchange rate, price and purchasing power parities of the year 2005 %/year Natural gas mcm bcm mcm/year bcm/year LNG GCV percentage per year million cubic meters billion cubic meters million cubic meters per year billion cubic meters per year Liquefied Natural Gas Gross Calorific Value FSRU Floating Storage and Regasification Unit FLNG Electricity kw kwp MW GW kwh MWh TWh GWh CCGT IPP Floating Liquefied Natural Gas Kilowatt Kilowatt-peak Megawatt Gigawatt Kilowatt hour Megawatt hour Terawatt hour Gigawatt hour combined cycle gas turbine Independent Power Producer CHP Combined Heat and Power PPA Power Purchase Agreement T&D Transmission & Distribution kv kilo volt HVDC High Voltage Direct Current UHV UHVDC FiT Ultra High Voltage Ultra High Voltage Direct Current Feed-In Tariff

32 CO 2 MtCO 2 gco 2 tco 2/cap CO 2eq kg CCS ETS GHG INDC million tonnes of carbon dioxide grammes of carbon dioxide tonnes of carbon dioxide per capita CO 2 equivalent kilogrammes carbon capture and storage Emission Trading Scheme Greenhouse Gases Intended Nationally Determined Contribution EUA European Union emission Allowances Energy Efficiency NEEAP National Energy Efficiency Action Plan EPBD EED Uranium $/lb Mlb Infrastructures km HOA MoU LOI FEED Energy Performance of Buildings Directive Energy Efficiency Directive dollar per pound million pounds kilometers Head of Agreements Memorandum of Understanding Letter of Intent Front-End Engineering Design FID EPC EPCC BOO BOOT BOT O&M TSO TYNDP Final Investment Decision Engineering, Procurement, Construction Engineering, Procurement, Construction and Commissioning Build-Own- Operate Build-Own- Operate-Transfer Build-Own- Transfer Operation and Maintenance Transmission System Operator Ten-Year Network Development Plan

33 Glossary Production Production Energy production always corresponds to gross domestic production. It consists of primary and secondary gross production, except for natural gas for which production corresponds to marketed production. Gross power generation Gross production of electricity includes the public production (production of private and public electricity utilities) and the autoproducers, by any type of power plants (including cogeneration). Trade Balance of trade The trade balance is the difference between exports and imports. The balance of a net exporter appears as a negative value (-). Imports Imports are the quantities of energy products imported from abroad into the national territory, deductions being made for quantities simply in transit destined for other countries and those quantities which are processed within the national boundaries on behalf of another country. Exports Exports are the quantities of energy product exported from the national territory to foreign countries, deductions being made for products simply in transit and quantities processed on behalf of other countries. For reasons of accounting conformity, exports appear with a negative sign (-) in the energy balance. Consumption Total energy consumption Total energy consumption, for each energy product, is the sum of total production, balance of trade, aviation and marine bunkers, and stock variations. Final consumption Final consumption is the difference between total consumption and the consumption of the energy sector for its own uses or as inputs in transformations (e.g. power generation, refining, oil, coal, gas extraction, LNG plants...), in transport and distribution (T&D losses,.), as well as statistical discrepancies. Final consumption measures the needs of the final consumers of the country. They are broken down into several sectors: industry, transport, residential, tertiary, agriculture and non-energy uses. Final consumption of industry Final consumption of industry includes the final consumption of the mining sector, manufacturing sector, and construction and water distribution and processing. It excludes the fuel used as input for autoproduction and includes the autoproduced electricity. It excludes the fuel consumption of all modes of transport used by industry, and also excludes energy products employed for non energy uses (e.g. raw materials in petrochemicals, lubricants). Final consumption of transport Final consumption of transport is the total consumption of all modes of transportation regardless of to whom they belong, and to what purpose the transport serves. Aviation and marine bunkers (international aviation and sea transport) are excluded. Final consumption of residential, tertiary and agriculture This consumption is broken down into three sub-sectors: residential, tertiary, agriculture (including fishing activities).it is often defined as the total final energy consumption energy uses, excluding industry and transport sectors. Final consumption for non energy uses This covers products used in the petrochemical industry (e.g. naphta), for the production of ammonia (natural gas), for electrodes (carbon), and all other products used for their physical-chemical properties (bitumen, paraffin, motor oils, etc...).it is divided into chemical and others. CO 2 CO 2 emissions cover the emissions from fossil fuels combustion (coal, oil and gas). They are calculated according to the UNFCCC methodology. Here the sectoral approach is presented, ie the sum of CO 2 emissions of each sector.

34 Prices Gasoline and diesel prices Price all taxes in Dollar or Euro. For gasoline corresponds to the premium gasoline unleaded 95; for the former years series retropolated from the variation of premium gasoline 98 and / or normal unleaded gasoline and / or premium leaded gasoline. For diesel, corresponds to price including all taxes of the motor fuel for the motorists. Households and Industry prices (Gas and Electricity) Price all taxes in Dollar or Euro. They used to be calculated as the average revenues per kwh of electricity received by all (or main) public or private utilities of the sector. They can also refer to the price applied to a particular class of consumer; in particular for European countries for prices after 2007 (Eurostat data). Economy GDP GDP measures the economic activity of a country. To allow comparison between countries and avoid the impact of inflation it provided in constant price at purchasing power parities (converted on the basis of the exchange rate of 2005 and the rate of purchasing power parity of World Bank).

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