Petronas Gas to gain from market liberalisation

KUALA LUMPUR: Petronas Gas Bhd (PetGas) is unfazed by competition arising from the liberalisation of the gas market, with an expectation that the implementation of the Gas Supply (Amendment) Act 2016 will benefit the company as its regasification and transmission facilities are open for third party access.

Speaking to reporters after the group’s AGM yesterday, managing director and CEO Yusa’ Hassan expressed his support towards the move to liberalise the gas market.

“Our infrastructure, both regasification and transmission, will open for third party access and that will be supporting the gas ventures downstream with more competitive and liberal supply of gas from different suppliers, which will promote the development of gas and gas-related industries,” he said.

He said it is still in discussions with the Energy Commission (ST) to iron out the details of the liberalisation, adding that PetGas has a one-year grace period to prepare for the various agreements and access codes.

“We’re actively discussing in respect of what the customer wants, what rules and so forth. All these are still in discussion,” said Yusa’.

He said PetGas sees opportunities of the liberalisation as it has unutilised capacity, including about 50% of its regasification facility and another 20%-25% of its pipelines.

“Our infrastructure is available and hopefully with higher utilisation, we could benefit from those. These are subject to the shipper that comes in and the schedule. It’s still under discussion with the ST on how to operationalise the third party access,” explained Yusa’.

He said talks with ST have started since September 2016 and it is now trying to understand the code (developed by ST) with respect to the implementation.

“As far as infrastructure in concerned, we’re ready. In terms of implementation of the commercial arrangement, shipper, customers, one of the key components is the gas subsidy. As long as that is in place, there will be some difficulties in terms of any new shipper or new suppliers who want to come and find their customers.”

Chairman Datuk Mohd Anuar Taib said any volume that goes through its facilities is a source of revenue for the company and fundamentally more demand needs to be created in Peninsular Malaysia for gas to be utilised.

“The gas market in Malaysia needs to be liberalised and the price of gas in Malaysia cannot be subsidised, or else who want to bring in gas to Malaysia only to be sold at a low price? If we can bring in more gas industries into Malaysia and consume more gas, there could be a potential future revenue for PetGas,” said Anuar.

He said as a gas transporter and shipper, PetGas has the most extensive pipeline infrastructure in the country and it has over 30 years of experience in managing these infrastructure.

“While it (liberalisation) brings potential competitors, for us, competition is good. It makes us sharper and keep us on our toes. At the same time, to invest in gas infrastructure requires significant investment and if you’re going to be this extensive like the way we are, that would be a significant hurdle for new parties to come in,” said Anuar.

He declined to preempt on the timeline that talks with ST would conclude, noting that one should “let that activity continue”.