Meanwhile, where are the best LNG project investment returns to be made?
**********
Cheap LNG will discourage investment
10 June 2013 06:11 GMT
Henry Hub gas prices have remained depressed with a supply glut in the North America building up from the massive shale gas production in the US.
While energy hungry countries in Asia - Malaysia included - will benefit from immediate supplies from the shale gas boom, Shamsul called "the notion of cheap LNG prices" a fallacy that will "discourage investment, curtail future projects [and] hampers supply" over the long run.
Many countries have also "implemented subsidised energy pricing to promote domestic consumption and curb inflation", but this has in turn, disrupted the balance between supply and demand.
Energy prices kept artificially low, will fuel "imprudent consumption, promote inefficient industries and increase emissions to the detriment of the environment", Shamsul opined.
"Energy users need to understand energy security requires a premium to allow investment [to take place]," Shamsul said, calling on all industry stakeholders to allow the market to find its own equilibrium.
Petronas has begun importing liquefied natural gas at market prices to blend with domestic gas supplies in its efforts to avert an emerging gas shortage in Peninsular Malaysia.
Gas imported through the LNG regasification terminal in Melaka, which entered started operations in late May, will be blended with volumes supplied from gas fields offshore Malaysia and fed to domestic users.
A government official told Upstream in an earlier interview, that the blended gas supplies will be sold at a weighted average between going market prices and subsidised rates.