Saturday, October 24

Stay on course with natural gas market liberalisation — MGA


KUALA LUMPUR: The Malaysian Gas Association (MGA) has called on all parties to stay on course with the liberalisation of the natural gas market to ensure a robust local market that can serve the industries and contribute to the country’s socio-economic progress.

The association said it has repeatedly seen across the globe that artificial pricing distorts markets, escalating regulatory and commercial risks to all players.

“This will only further discourage interest and investments in the industry by both existing and new players.

“Therefore, reducing gas price is not sustainable for Malaysia’s natural gas industry and energy security,” MGA said in a statement yesterday in response to the Malaysian Rubber Glove Manufacturers Association’s (MARGMA) call on Tuesday for lower natural gas price due to a sharp fall in international liquefied natural gas (LNG) prices.

MARGMA president Denis Low Jau Foo said the association expected a “substantial” drop in natural gas price due to the sharp fall in liquefied natural gas (LNG) and coal prices and urged Gas Malaysia Bhd and Tenaga Nasional Bhd to reduce their tariff rates.

On the other hand, MGA said the TPA system, which came into effect on Jan 16, 2017, allowed third parties to access gas infrastructure such as the regasification terminals (RGTs) as well as the transmission and distribution pipelines.

“With this, large gas users stand to benefit the most as they will now be better empowered to purchase their own LNG from any source,” it said.

MGA said the TPA enabled gas suppliers to bring in LNG via RGTs and ship gas to their buyers using existing transmission and distribution pipelines.

“Both these aspects (of pricing and TPA) have been well thought out and mandated by the government with foresight to strengthen the nation’s energy security, maintain Malaysia’s leading position as an LNG exporter and ensure the natural gas industry’s competitiveness,” it added.

MGA said current low global LNG prices are the result of a temporary imbalance in the supply-demand equilibrium.

“For now, Asian spot LNG prices have fallen because of oversupply given the new supply capacity in the United States and Australia, coupled by weakening demand owing to a milder-than-expected winter.

“Historically, such temporary imbalances are generally restored within a short time which will then increase the spot LNG prices,” it added. — Bernama