Malaysia facing surplus of gas as output jumps

Dateline 2016-06-13, Interfax:

Malaysia’s domestic gas supply could jump by 25% over the next five years, but with the fuel losing market share to coal in the power mix, the challenge will be finding a use for it.

Malaysia has significant gas potential, which could see production rise by around 42.5 million cubic metres per day between 2016 and 2020, Edi Saputra, a specialist in Southeast Asian gas and power at energy research company Wood Mackenzie, told Interfax Natural Gas Daily. The figure includes supplies from probable developments.

But at the same time as production is growing, gas is starting to lose market share to coal in terms of power generation. Woodmac estimates coal will increase its share of the fuel mix for power from 47% to 65% by 2020.

However, the fall in global gas prices could change things. New-build coal power plants made economic sense when oil was near $100 per barrel and gas was selling at $14-15/MMBtu. But lower gas prices will make the fuel more competitive during the post-2020 phase of development as there is little difference between the cost of new-build gas versus coal, Graham Tyler, a Singapore-based senior director at consultancy Galway Group, toldInterfax Natural Gas Daily.

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