Clarification on Recent News Articles Quoting MGA Spokesperson

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There were several news articles published recently that quoted a spokesperson from MGA about the price mechanism for liquefied natural gas (LNG).

MGA wishes to clarify some factual errors in the original news article, which has since been rectified and redistributed.

Specifically, the amendments made were to clarify the following points:
1. That MGA’s statement about its expectation for competitive market prices in 2019 was in reference to Natural Gas (and not Liquefied Natural Gas or LNG). Similarly thereafter, references are mostly on natural gas.

2. That the country’s natural gas is currently supplied by PETRONAS and Gas Malaysia Berhad. PETRONAS Gas Berhad meanwhile is gas infrastructure and utilities company with core businesses in Gas Processing and Utilities (GPU) and Gas Transmission and Regasification (GTR).

3. That MGA did not make any statement about the Malaysian government providing a 30 per cent gas subsidy to the power sector.

The amended news article can be accessed here or Visit Website at the top right of the page:

MGA: Competitive natural gas market prices by 2019
http://www.newsabahtimes.com.my/nstweb/fullstory/20831

BACKGROUND
On 29 November 2017, upon approval from the Government received via a letter from Suruhanjaya Tenaga, Gas Malaysia Berhad (GMB) has announced the tariff revision on natural gas for the non-power sector. The tariff revision, to be implemented in Peninsular Malaysia, is in line with the implementation of Incentive-Based Regulation (IBR) and Gas Cost Pass-Through (GCPT) mechanism for every six months as part of gas subsidy rationalisation programme.

On 28 December 2016, GMB announced the six-monthly base tariff from January 2017 to December 2019, providing visibility of base tariff increments to to relevant parties for their business planning from.

The base tariff is however will be subjected to the Gas Cost Pass Through (GCPT) mechanism. Under the GCPT, a surcharge or rebate will be charged to GMB customers in accordance to the price difference between the referenced LNG price in the base tariff against actual price due to market price movement. Gas Malaysia Berhad (GMB) receives a combination of gas at regulated price and LNG indexed price. In implementing the first two cycles of price rationalization, the customers received rebates of RM0.40 MMBtu and RM1.59 MMBtu for the first and second halves of 2017, respectively. These savings are due to lower market price for the cycle against the forecasted price in the base tariff determination.

For the period from January to June 2018, under the GCPT mechanism, GMB will be applying a surcharge of RM1.62/MMBtu due to increased LNG price.

There has been no announcement on any change to the price of cylinder gas used in cooking (LPG).

NG, LNG, CNG and LPG
The distinction between
• Natural Gas (NG)
• Liquefied Natural Gas (LNG)
• Compressed Natural Gas (CNG), and
• Liquefied Petroleum Gas (LPG)

NATURAL GAS
Natural Gas is supplied to power, industrial, commercial and some residential consumers in gaseous form through pipelines.

The natural gas supplied to customers in Peninsula Malaysia originates from;
1. Offshore fields: natural gas is extracted, processed and piped directly to customers.
2. Liquefied Natural Gas (LNG): LNG is transported in liquid form into the Peninsula via ocean tankers and is offloaded into the Regasification Terminal (RGT). At the RGT, the LNG is converted into gaseous form (Natural Gas) before being delivered to customers via same pipelines.

LIQUEFIED NATURAL GAS (LNG)
Liquefied Natural Gas (LNG) is natural gas converted into liquid form at -162 degrees Celcius but at low pressure. LNG is much more condensed and enables much larger volume of natural gas to be transported, typically over long distances in ocean tankers.

COMPRESSED NATURAL GAS (CNG)
Compressed natural gas (CNG) is natural gas compressed at high pressure (3,000psi) but at ambient temperature. Compression enabled larger volume of natural gas to be stored. In Malaysia, CNG is typical known for use as fuel for vehicles. These vehicles are called “Natural Gas Vehicles” (NGV).

LIQUEFIED PETROLEUM GAS (LPG)
Liquefied petroleum gas (LPG) is usually a product from petroleum refining. LPG is not natural gas. In Malaysia, LPG is commonly known as cylinder cooking gas (“tong gas”).