Dear Members, Associates and Friends of the Malaysian Gas Association,
Ladies & Gentlemen,
As we usher in the new year, I am excited with developments achieved in the Malaysian gas industry. The gas industry reforms remains on track. The grace period for the Third Party Access ends in January 2018 and the regulated gas price is projected to achieve market price by 2019. Malaysia is well underway advancing towards a sustainable gas industry.
Looking back to 2017, MGA is proud to gain further recognition of our role as the voice of the gas industry when we were appointed into both the steering and technical committees for the national Gas Price Rationalisation Communication Plan, led by the Economic Planning Unit (EPU). MGA will be playing an active role in communicating the benefits of the gas industry reforms to key stakeholders, providing perspective as an industry representative.
2017 has been quite a busy and eventful year for MGA. Our priorities for 2017 has been the following;
2.Enhancing Value Proposition for Members
We stepped up our Gas Advocacy with more engagements with policy makers, series of interviews and articles in the newspapers, face to face engagements at our booths in major exhibitions and media launch of the report on “Natural Gas: Flipping the Switch’. We ended the year with a “Gas Advocacy Series” campaign on social media.
In addition to gas advocacy, MGA members benefited from the multiple networking platforms established by MGA. We continued our annual networking events, namely the Industry Golf and Industry Gala Dinner, and have increased members activities with more industry talks, a technical visit to RAPID in Pengerang and a CSR intiative in the form of a Blood Donation Drive. We also kept members regularly informed through the newly introduced Quarterly bulletins. This in addition to the regular updates via e-mails and posts on our webpage and social media.
On the international front, as part of the Executive Committee, MGA plays a key role in charting the direction of the International Gas Union (IGU). IGU have similarly stepped up Gas Advocacy on the global arena, engaging global bodies such as United Nation, G20, World Bank and International Energy Agency (IEA). 2017 also saw the election of the first Women President of IGU. Ms. Li Yalan will be the first woman to lead IGU when China assumes the Presidency of IGU for the Triennium 2021-2014. Her appointment gives encouragement for more active participation by women in the energy sector, especially in leadership positions.
Likewise, MGA recognised the importance of women in the energy sector when we organised the inaugural Forum in Women in Energy; an event supported by women networks in member companies.
In 2017, MGA continued our outreach to students in schools and higher learning institutions. We are delighted to share that several schools and universities found our outreach so beneficial that they have invited us to collaborate.
2017 is also the year of collaborations for MGA. In addition to universities, MGA collaborated with other organisations, such as MOGSC, 30% Club and PEMANDU, and with MGA’s own member companies to organised major events.
We are extremely grateful for the support and contribution from our members throughout 2017. We are particularly appreciative of the efforts put in by the following working committees;
•Regulatory and Government Affairs
•Learning and Development
•Communications and Multimedia
•Membership and Social
the taskforce on Promotion of Cogeneration and the respective organising committees for our major events. Your commitment and contributions ensured the success of our activities. On average, we have organised 2 events or major activities per month, more than what we have achieved in the previous years.
Going into 2018, we expect our priorities to remain. We will be stepping up our Gas Advocacy even further with more advocacy related activities, more communication and more engagements with the media.
The country needs to increase utilisation and demand for gas in order to make the market more attractive to third party gas suppliers. MGA has proposed to collaborate with Federation of Malaysian Manufacturers (FMM) to jointly promote cogeneration and will be collaborating with PEMANDU Associates to organise an “Increasing Gas Demand” workshop.
2018 will also see IGU organising the World Gas Conference (WGC2018) in Washington DC, USA. We urged members to participate in this prestigious triannual congregation of global gas industry players. WGC2018 will be expecting 500 speakers and 12,000 participants.
Before I sign-off, I would like to take the opportunity to congratulate and thank the MGA Secretariat for their keen dedication and oustanding efforts.
On behalf of the Council of MGA, I close by again thanking all our members, including all the volunteers from members organisations, for your keen support and participation in all our activities. We look forward to similar support in the coming year.
I wish everyone a happy and successful 2018.
Hazli Sham Kassim
Malaysian Gas Association
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A month ago, crude oil prices were riding a wave, comfortably trading in the mid-US$70/b range and trending towards the US$80 mark as the oil world fretted about the expiration of US waivers on Iranian crude exports. Talk among OPEC members ahead of the crucial June 25 meeting of OPEC and its OPEC+ allies in Vienna turned to winding down its own supply deal.
That narrative has now changed. With Russian Finance Minister Anton Siluanov suggesting that there was a risk that oil prices could fall as low as US$30/b and the Saudi Arabia-Russia alliance preparing for a US$40/b oil scenario, it looks more and more likely that the production deal will be extended to the end of 2019. This was already discussed in a pre-conference meeting in April where Saudi Arabia appeared to have swayed a recalcitrant Russia into provisionally extending the deal, even if Russia itself wasn’t in adherence.
That the suggestion that oil prices were heading for a drastic drop was coming from Russia is an eye-opener. The major oil producer has been dragging its feet over meeting its commitments on the current supply deal; it was seen as capitalising on Saudi Arabia and its close allies’ pullback over February and March. That Russia eventually reached adherence in May was not through intention but accident – contamination of crude at the major Druzhba pipeline which caused a high ripple effect across European refineries surrounding the Baltic. Russia also is shielded from low crude prices due its diversified economy – the Russian budget uses US$40/b oil prices as a baseline, while Saudi Arabia needs a far higher US$85/b to balance its books. It is quite evident why Saudi Arabia has already seemingly whipped OPEC into extending the production deal beyond June. Russia has been far more reserved – perhaps worried about US crude encroaching on its market share – but Energy Minister Alexander Novak and the government is now seemingly onboard.
Part of this has to do with the macroeconomic environment. With the US extending its trade fracas with China and opening up several new fronts (with Mexico, India and Turkey, even if the Mexican tariff standoff blew over), the global economy is jittery. A recession or at least, a slowdown seems likely. And when the world economy slows down, the demand for oil slows down too. With the US pumping as much oil as it can, a return to wanton production risks oil prices crashing once again as they have done twice in the last decade. All the bluster Russia can muster fades if demand collapses – which is a zero sum game that benefits no one.
Also on the menu in Vienna is the thorny issue of Iran. Besieged by American sanctions and at odds with fellow OPEC members, Iran is crucial to any decision that will be made at the bi-annual meeting. Iranian Oil Minister Bijan Zanganeh, has stated that Iran has no intention of departing the group despite ‘being treated like an enemy (by some members)’. No names were mentioned, but the targets were evident – Iran’s bitter rival Saudi Arabia, and its sidekicks the UAE and Kuwait. Saudi King Salman bin Abulaziz has recently accused Iran of being the ‘greatest threat’ to global oil supplies after suspected Iranian-backed attacks in infrastructure in the Persian Gulf. With such tensions in the air, the Iranian issue is one that cannot be avoided in Vienna and could scupper any potential deal if politics trumps economics within the group. In the meantime, global crude prices continue to fall; OPEC and OPEC+ have to capability to change this trend, but the question is: will it happen on June 25?
Expectations at the 176th OPEC Conference
Global liquid fuels
Electricity, coal, renewables, and emissions
Source: U.S. Energy Information Administration, U.S. liquefaction capacity database
On May 31, 2019, Sempra Energy, the majority owner of the Cameron liquefied natural gas (LNG) export facility, announced that the company had shipped its first cargo of LNG, becoming the fourth such facility in the United States to enter service since 2016. Upon completion of Phase 1 of the Cameron LNG project, U.S. baseload operational LNG-export capacity increased to about 4.8 billion cubic feet per day (Bcf/d).
Cameron LNG’s export facility is located in Hackberry, Louisiana, next to the company’s existing LNG-import terminal. Phase 1 of the project includes three liquefaction units—referred to as trains—that will export a projected 12 million tons per year of LNG exports, or about 1.7 Bcf/d.
Train 1 is currently producing LNG, and the first LNG shipment departed the facility aboard the ship Marvel Crane. The facility will continue to ship commissioning cargos until it receives approval from the Federal Energy Regulatory Commission to begin commercial shipments. Commissioning cargos refer to pre-commercial cargo loaded while export facility operations are still undergoing final testing and inspection. Trains 2 and 3 are expected to come online in the first and second quarters of 2020, according to Sempra Energy’s first-quarter 2019 earnings call.
Cameron LNG has regulatory approval to expand the facility through two additional phases, which involve the construction of two additional liquefaction units that would increase the facility’s LNG capacity to about 3.5 Bcf/d. These additional phases do not have final investment decisions.
Cameron LNG secured an authorization from the U.S. Department of Energy to export LNG to Free Trade Agreement (FTA) countries as well as to countries with which the United States does not have Free Trade Agreements (non-FTA countries). A considerable portion of the LNG shipments is expected to fulfill long-term contracts in Asian countries, similar to other LNG-export facilities located in the Gulf of Mexico region.
Cameron LNG will be the fourth U.S. LNG-export facility placed into service since February 2016. LNG exports rose steadily in 2016 and 2017 as liquefaction trains at the Sabine Pass LNG-export facility entered service, with additional increases through 2018 as units entered service at Cove Point LNG and Corpus Christi LNG. Monthly exports of LNG exports reached more than 4.0 Bcf/d for the first time in January 2019.
Source: U.S. Energy Information Administration, Natural Gas Monthly
Currently, two additional liquefaction facilities are being commissioned in the United States—the Elba Island LNG in Georgia and the Freeport LNG in Texas. Elba Island LNG consists of 10 modular liquefaction trains, each with a capacity of 0.03 Bcf/d. The first train at Elba Island is expected to be placed into service in mid-2019, and the remaining nine trains will be commissioned sequentially during the following months. Freeport LNG consists of three liquefaction trains with a combined baseload capacity of 2.0 Bcf/d. The first train is expected to be placed in service during the third quarter of 2019.
EIA’s database of liquefaction facilities contains a complete list and status of U.S. liquefaction facilities.