Business

Friday June 19, 2009

Petronas to buy LNG from Australia

By FINTAN NG


PETALING JAYA: Petroliam Nasional Bhd (Petronas) will be purchasing at least two million tonnes of liquefied natural gas (LNG) per year for 20 years from 2014 from the integrated LNG facilities currently being undertaken in Queensland, Australia, by Santos GLNG Pty Ltd and Petronas Australia Pty Ltd (PAPL).

The agreement to purchase the LNG was signed on Wednesday by the representatives of the three companies. The project in Gladstone is a 60:40 venture between Santos GLNG, a subsidiary of Santos Ltd, and PAPL, a subsidiary of Petronas.

The agreement includes a provision for Petronas to purchase a further one million tonnes of LNG, which Santos GLNG and PAPL may exercise on or before the year-end.

AmResearch Sdn Bhd analyst Alex Goh said the purchase had come at the right time as Asian LNG prices were linked to crude oil prices, which were rebounding. Nymex crude oil has risen 50% to around US$70 per barrel from its lows in February.

Goh said there was also the issue of gas supply for the peninsula in the future as energy demand would pick up again following signs of economic stabilisation.

“There won’t be enough supply for the peninsula because all the new gas finds offshore Terengganu and Kelantan are for export,” he told StarBiz yesterday.

Gas from Sabah and Sarawak was also for export, he said, adding that there was also the question of royalty rights for both states.

Goh said currently, Peninsular Malaysia imported 10% to 20% of its gas needs from Indonesia.

Meanwhile, FACTS Global Energy analysts Nelly Mikhaiel and Siamak Adibi said in a report that LNG demand in Asia would be sluggish this year and Asian cargoes were “likely to be seeking markets west of Suez.”

They said weak economic growth would depress LNG demand in the region by 5% to 112 million tonnes in 2009 compared with last year with the only bright spot for demand being in India.

Mikhaiel and Adibi said India had the potential to reduce the amount of LNG that some analysts expected to be delivered to the Atlantic Basin from mid-year.


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