MGA Roundtable on LNG Market Prepares the Gas Market for Full Liberalisation

Through its Advocacy Working Committee, on 12^th March 2020, MGA successfully organised the MGA Roundtable on LNG that was attended by more than 130 policymakers, regulator, TPA players and MGA members.The Roundtable is another important step in educating key stakeholders on LNG market and its dynamics in preparation for the full gas market liberalisation in 2022.

The event itself started with MGA President, Hazli Sham Kassim, welcoming the audience.

This is then followed by presentations by a team of experts from Rystad Energy, led by Carlos Torres Diaz, Senior Vice President, Head of Gas and Power Markets Research based in Norway, who presented the following topics on LNG;

• LNG fundamentals: production, shipping and pricing introduction
• LNG pricing benchmark comparison and volatility
• LNG contracting strategy and trends
• Outlook for LNG supply, demand and price

Amongst the key takeaways from the presentations by Rsytad Energy are as follows;

• LNG is the most flexible form of energy to be transported and can be sourced from all corners of the globe.
• Global LNG demand is expected to increase to 728MT by 2040; 77% of which is destined for the Asia region. To meet this demand, 360MT of new LNG supply will be needed.
• There are several gas pricing benchmarks that are differently priced, differently influenced and react differently to the market demand & supply.
• Contracting strategy and how they are priced depends on the customers’ needs and risk appetite.
• As example, in the past two years, Asian spot prices have been mostly volatiles whilst Henry Hub indexed contracts have remained mostly stable.
• The LNG contracts are trending towards shorter-term duration with a good majority of contracts signed in 2020 opting for contact period of less than 10 years.

The presentations by Rystad Energy set the scene for the ensuing Roundtable discussions moderated by Ezran Mahadzir, Chief Marketing Officer for LNG, PETRONAS.

The Roundtable itself featured the following leading policymakers & industry players;

• Zaeidah Mohamed Esa, Director of Energy, Economic Planning Unit (EPU)
• Abdul Rahim Mahmood, Head of Strategic Research, PETRONAS
• Steven Aroki, Chairman of Energy & Utilities Committee, Federation of Malaysian Manufacturers (FMM)
• Zahid Osman, Vice President, LNG Business, MISC Berhad

Amongst the key takeaways from the Roundtable discussions are as follows;

• Natural Gas expected to continue to be the prominent driver in Malaysia’s economic growth
• The National Energy Policy (NEP) being formulated, expected to determine long term strategy for energy including identifying challenges and new roles for natural gas in supporting to balance the energy trilemma. The role of gas in further elaborated in the natural gas roadmap that is expected to complement to NEP.
• The government’s path forward for the gas market remains towards achieving full implementation of the market liberalisation.
• Gas users want to see more competition in the market in order to get more options and welcome the recent award of more Import & Shipping licences.

The Roundtable on LNG Market has been designed to be more of an educational session on LNG, the key source of energy supply for the Third Party Access (TPA).

Audience largely found the Roundtable to be informative and looks forward to more roundtables.

The Roundtable also received media coverage. Kindly refer to the “MGA News” section.