We are known to have rich reserves of natural gas. So why is Petronas facing a shortage in gas supply, which has resulted in crippling losses for Tenaga Nasional?
Petronas used to deliver 1200 million standard cubic feet per day (mmscfd) of gas to the power generation sector. The supply has now dropped to around 900mmscfd this year.
The shortage is squeezing the life out of TNB, which has had to resort to fuel substitutes that are six times more expensive than gas. TNB posted serious losses in its third quarter and its fourth quarter results could be just as dire.
A proposal has reportedly been put forward that some of the independent power producers should share the higher costs.
Energy costs for TNB in FY2010 added up to RM19.1bn of which RM12.5bn went to the IPPs, reported The Edge last month. TNB will now have to shell out an additional RM400m per month in fuel costs. Imagine, it had to reportedly put a tender out for fuel supply on two occasions and even had to import electricity from Singapore. The gas supply situation must be really grim if you have to import electricity from Singapore!
The worst part is that, if nothing is done, the higher costs could soon be passed to the public, perhaps in December or after the coming general election, which some believe could be held by the end of the year.
According to Petronas, the gas shortage is due to subsidised gas prices (tell us, who benefited the most?) and the use of gas as a substitute for coal and this has spurred the demand for gas. Declining reserves and aging facilities have also taken its toll, it added.
Petronas also highlights the following:
- Subsidised gas prices since 1997 created impetus for gas demand as a substitute for coal and oil = pushing demand beyond organic requirements.
- Declining reserves coupled with aging facilities stretched supply dynamics = eventual gap between supply and demand.
- Little room for error on supply management.
- We have intensified mitigation actions to alleviate the gas shortage.
- Material portion of future supply = derived from imports at market prices = 1997 subsidies gradually withdrawn.
Less well known is the impact of a fire last December at the Bekok C gas platform, located 200km off-shore from the east coast of the peninsula. The resumption of full supply has been repeatedly delayed.
But even if supply from Bekok C is fully restored, will the shortage be resolved? Unlikely.
The funny thing is that Malaysia is ranked 14th in the world in terms of its gas reserves, according to the Gas Malaysia website.
As at 1 January 2008, the natural gas reserves in Malaysia stood at 88.0 trillion standard cubic feet (tscf) or 14.67 billion barrels of oil equivalent, approximately three times the size of crude oil reserves of 5.46 billion barrel.
Of this, 33.5 trillion standard cubic feet (tscf) or 38% is found off the East Coast of Peninsular Malaysia, 41.8 tscf (48%) offshore Sarawak and the remaining 12.7 tscf (14%) offshore Sabah. At the current rate of production, Malaysia’s gas reserves expected to last another 36 years.
In 2007, Malaysia’s production of natural gas averaged 7.01 bscf per day. As at 31 March 2008, Malaysia had 88 producing fields of which 61 were oil fields and 27 gas fields. About 50% of these producing fields are solely operated by PETRONAS’s subsidiary, PETRONAS Carigali.
So, I repeat the question, why are we facing a gas shortage? The reason often cited is ongoing maintenance work. But that sounds vague. What’s really going on?
A thorough independent audit is needed on all the country’s gas platforms and the delivery process to find out what is happening to our gas supply and the reason(s) for the shortage.
Meanwhile, someone from Petronas should tell us what’s happening.
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Let me say this; it’s all resource management big time screw-up in petronas pmu / petronas carigali pmo :
Bekok C : Contract awarded to use gryphon (ex-perisai petroleum) mopu to reproduce gas 160 mmscfd + oil 5000bpd by 1st may, 2011 but now only oil, no gas BUT mopu get paid in higher rates.
Plus gryphon (allegedly) re-sell back the mopu + contract to perisai petroleum.
So the rakyat get power tariff hikes and perisai, gryphon and petronas guys (allegedly) in cahoots makes tonnes of $$$$$$$.
Malaysia boleh as usual !!!!!!
Sold to Taiwan, Korea and China with contracts over 25 years!(?) Nothing left! The selling price seem to be very much lower than the present market price as it was sold before all the price hike.
Why are we facing a gas shortage ???
No, I don’t experience it personally. My car always able to refuel that Petronas gas and my wife never complain any shortage of that Petronas gas.
And, yes I need subsidy from the government.
Perhaps Anil is Shell gas fanboy o.O
And why is RON 95 still being sold at 1.90 when the price of oil has dropped to less than 80.00 per barrel. And they have the nerve to keep putting up the old subsidies rates at the petrol pump. Isn`t this another half truth and true lies by UMNO and the Najib administration. Scandal, controversies, corruptions name it and you will find it. Now its IWK where money from the rakyat are being use to keep it afloat. How much more do we have to suffer? Lets not listen to all the half truth and true lies anymore. Lets… Read more »
Putrajaya said today it had spent RM1.2 billion to sustain Indah Water Konsortium’s (IWK) operations since nationalising the national sewerage company in 2000.
Keep bailing until government is bankrupt ?
Yep… IWK, an unforgettable tale of how piratisation… oops, I mean, privatisation… has benefitted the rakyat. Kindly join me in ten kow’tow to the great BN! Hah! Another project BN under Mahathir Mohammad who handed sewage over to Vincent Tan in 1990. And folks we asked to pay for yet another fee for something which they had been paying for via their local council assessment fees. Nothing taken off their assessment fee; just have to pay for the extra IWK charge. better still, there was no contract signed between those who were asked to pay, and the IWK people. And… Read more »
Gerakan K: feeling some pain.
Bravo to Anil’s investigative report which escalate social issues to create awareness among the readers !!! With my “limited” knowledge, somehow we can feel many “operasi” have many dark levels beneath skin deep skewed reporting in mainstream media report. Gas reminds us of IPP. There are many IPP-equivalent terms for lucrative public business like in the case of High-Speed Broadband businesses ? Will TM (like Tenaga) sub sub sub to many other operators near future ???? Will such dealings benefit the masses or just the “prefered connected” ones ????? We are now eager to read Anil’s blog because such things… Read more »
Have you heard of Sub Sub Shui?
Sub-Subcon to whoever cheapo enough and the Shui (Money-Money) is there for the maxi-taking!
I hope your investigative reporting of this matter will gain prominent attention and further press coverage like the sPice matter.
The Anil brand name is on the rise, to fill the void left by The Sun’s Terence Fernandez. Keep it up!
Why indeed. Paraphrasing the classic shipwrecked sailor’s lament, “gas, gas everywhere, but we still have to buy from overseas”. (see: Malaysia imports LNG in struggle to eliminate subsidies http://www.themalaysianinsider.com/litee/business/article/malaysia-imports-lng-in-struggle-to-eliminate-subsidies/ ) Seems to me there are countless “why?” which I would also like Najib to answer. Why on earth are so many folks still despartely poor when the country is so blessed with natural resources. Najib’s Airbus A319 VIP jet (supposed to be for royalty and other ministers too, but so far, he and his FLOM seem to be the ones reported flying in it) already cost the nation RM9.1 million… Read more »
And this just in: http://www.bbc.co.uk/news/business-15178097
Where’s Gugu? Cut and paste: This is black box operation. Nobody knows what has happened but the thing still go on. Why do these people in power always like that ???
Check the approval records and relevant documents and reveal the dark hand behind the scandal.
You seem to have missed out another pertinent question? Has the “gas shortage” been engineered or orchestrated using Bekok C as an “excuse”? Petronas tends to make significant profits if it sells its gas on the market as compared to selling it at subsidized prices to power producers, including Tenaga. The longer this “gas shortage” problem, the better for Petronas. There is no independent verification that there is indeed a physical shortage of gas at the production level.