This article first appeared in The Edge Financial Daily on October 3, 2018

KUALA LUMPUR: A clearer policy by the new Pakatan Harapan government on the country’s energy mix and market pricing for the gas industry is needed, said players in the gas supply chain.

Malaysian Gas Association (MGA) president Hazli Sham Kassim said while there are existing policies in place, more clarity is needed to encourage more investments into the industry.

“We hope to see a clearer policy stance on the energy mix, which will make it easier for our members to plan their investments. For example, there are still international companies reluctant to invest in the gas industry in the peninsula because they are not sure of the market conditions,” Hazli told a media briefing yesterday.

He said this is especially the case as usage of coal increases, potentially reducing gas usage.

“As far as the gas industry in Malaysia is concerned, it is under pressure because of coal production which is expected to increase, [and] of which gas usage is also expected to decline.”

As at August 2018, Malaysia’s production of natural gas stood at 6.7 billion standard cu ft per day.

“But there is still room to grow. We want to ensure the country has enough robust energy mix because in future, the usage may change based on supply,” said Hazli.

Natural gas is also an important component of the energy mix, ensuring the country’s energy security should there be disruptions to supply of other fuels, he said.

“So it’s important for us to engage with policymakers and tell them the implication. We definitely need gas, a little bit of coal and solar as every energy has its plus and minuses.”

Estimates by the Energy Commission show the percentage of gas to the country’s energy mix in Peninsular Malaysia is expected to decrease from 41% in 2016 to 32% in 2026, while others such as coal are expected to increase.

Malaysia’s natural gas industry contributed 4.2% to the nation’s gross domestic product in 2015, with domestic sales at US$2.45 billion and exports in the form of liquefied natural gas worth US$10.56 billion.

MGA is represented by 148 members from the gas supply chain, including Petronas, Shell, Gas Malaysia, Murphy Oil, Dialog, MISC, Exxon Mobil and Malakoff.