As part of its gas market reforms, Malaysia has implemented third party access (TPA) when the Gas Supply (Amendment) Act 2016 came into force on 16 January 2017. As its name suggests, the TPA allows third parties to access the gas infrastructure such as the RGTs as well as the transmission and distribution pipelines. Under the TPA, new gas suppliers can bring LNG into the country via the RGT and ship their gas to their buyers using the existing PGU transmission and NGDS distribution pipelines. Similarly, the TPA would also allow large gas users to purchase their own LNG from any source and subsequently use the same gas infrastructure to bring the gas to their facilities.

The LNG Regasification Terminals (RGTs) that have been built in Sungai Udang, Melaka and in Pengerang, Johor have paved the way for LNG from global sources to be brought into Peninsular Malaysia, be converted back into gas and then fed into the PGU and NGDS pipeline. The former terminal commenced operations in May 2013, while the latter was commissioned October 2017. The operationalisation of the RGTs is an important development for Malaysia’s energy security as it enables the import of LNG from any source in the world, which can then be sold to domestic consumers and is therefore, it is a crucial step towards the liberalization of the domestic gas market.

Source: ST

Under this legal framework:

  • The Gas Supply (Amendment) Act 2016 provides the legal basis for implementation of the TPA.  It is a legislation that is approved by Parliament.
  • The amendments to the Gas Supply Regulations 1997 enable regulatory requirements as provided for under the Act to be prescribed. The amendments are approved by the Minister.
  • The Third Party Access Codes prescribe principles of access by the owners, operators and users to gas facilities. These codes are approved by the Minister.
  • The Guidelines are reference or explanatory documents that detail out technical, commercial or procedural requirements for the implementation of provisions under the Act and Regulations. These guidelines are approved by ST.

The TPA will enhance gas supply industry competitiveness as well as optimize development costs and gas infrastructure utilization, in line with the government’s effort to liberalize the gas market. Market liberalization will not only facilitate entry of new industry players but also encourage energy efficiency and benefit consumers through competitive gas pricing. The TPA will contribute towards the country’s stronger foundations for energy security fostering economic security, prosperity and well-being.

Further information on the TPA is available from ST, the regulator of Malaysia’s gas market, which can be obtained by clicking here.

Video of Third Party Access