Malaysia braces for impact of solar energy expansion

The future of solar energy in Malaysia received a powerful boost on June 16 with the commissioning of the country’s largest solar power plant to date. The project’s operator, Malaysia-based Amcorp Group, awarded the production of the power plant’s solar panels to Chinese manufacturer Yingli Green Energy Holding Company. The project spans an area of almost 14 ha and will require some 40,000 photovoltaic (PV) units, which are estimated to produce 13.6m KWh of electricity annually.

While Amcorp Group’s decision to commission Yingli Energy is a testament to China’s dominance in the field of solar panel production, Malaysia is quickly gaining a reputation as one of the region’s leaders in renewable energy production.

In January, plans were unveiled for the installation 19 MW of solar energy units at Kuala Lumpur International Airport. Malaysia Airports’ managing director Bashir Ahmad told Renewable Energy News, “Rooftops, parking lots and ‘buffer’ areas at airports are traditionally not multi-purpose facilities, but we’ve turned them into a clean energy generation facility. This initiative also demonstrates our support towards the government’s initiative in introducing renewable energy and also to further reduce our carbon footprint.”

Pro-solar policy

Malaysia’s increasing momentum in the renewables arena is also attributed to a generous feed-in tariff (FIT) policy which requires energy providers such as Tenaga Nasional and Sabah Electricity to purchase power from Feed-In Approval Holders (FIAHs) at a rate that ranges from RM0.85 ($0.02) to RM1.23 ($0.38) per kilowatt produced. The FIT system is part of a larger development initiative set forth by the Malaysian government in June 2010, the 10th Malaysia Plan, which targets 5.5% of energy production to be derived from renewable sources by 2015 and 11% by 2020.

A tariff war currently taking place between solar panel producers in China and the US has further strengthened Malaysia’s growing status in the solar power arena. Chinese producers face US import duties of between 18% and 35% on solar panels, a response to US allegations that Chinese solar panel manufacturers have dumped their products into the US market.

To bypass the tariff, Chinese PV cell producer Comtec Solar Systems has opted to move its manufacturing operations to Malaysia. “We have been considering producing in Malaysia for over a year because we have a major customer there, but now our main consideration for moving there is to avoid trade barriers in our main markets,” John Zhang Yi, CEO of Comtec Solar, told the South China Morning Post.

The question of efficiency

As a nation historically known for an abundance of natural resources including oil, gas, hydropower and coal, the decline in hydrocarbons reserves in recent years has reinforced a national desire to secure renewable energy sources. Solar energy has proven to be chief among the renewables with a market share of 43%, followed by small hydropower (26%), biomass (26%) and biogas (5%).

As with any industry in relative infancy, technological efficiency remains a topic of debate among those for and against solar power production. The amount of energy produced per solar panel, a maximum of about 33.5% efficiency, is still a concern for many looking to invest in the technology. In comparison to conventional energy sources, the cost of solar power is relatively high.

While Malaysia’s FIT system claims to take the high cost of solar panel installations into account when considering what it takes to see a return on investment, the rates received by the FIAHs are dependent on the date of installation. Those that installed PV equipment at earlier times will receive higher rates than those which do so later on. This is based on the assumption that the price of solar technology will decrease as it becomes more efficient and widely available.

Follow Oxford Business Group on Facebook, Google+ and Twitter for all the latest Economic News Updates. Or register to receive updates via email.

Continue at source - 

Malaysia braces for impact of solar energy expansion

Technorati Tags: , , , , , , , , ,

Malaysia’s oil and gas services looking farther afield

Companies servicing Malaysia’s oil and gas sector are using the experience and expertise gained during collaborative ventures with foreign firms as a launchpad for overseas expansion.

Four decades of developing solutions for Malaysia’s operational environment, under the state-owned hydrocarbons producer, Petronas, have put local outfits on a solid footing to enter the rapidly expanding global oil services industry.

However, the fast pace of growth has also produced challenges for firms embarking on international expansion, including project delays and equipment shortages, which are taking their toll on margins.

Production on the rise

At home, Malaysia’s oil sector services providers have benefited from Petronas’s efforts to galvanise production in recent years, spearheaded by a $30bn investment aimed at ramping up output, developing new offshore reserves and extending the production life of existing fields.

The country is looking to return oil and condensate production to more than 600,000 barrels per day (bpd) equivalent, having reversed a decline which saw output fall to a 20-year low in 2011 of 569,000 bpd.

Malaysia is also aggressively developing its natural gas resources. The country is now the world’s second-largest liquid natural gas (LNG) exporter behind Qatar. Like most of its oil fields, the majority of Malaysia’s gas reserves are located offshore, offering many growth opportunities for service providers.

With their overseas expansion well on track, key Malaysian firms now rank among the largest serving the international oil and gas sector. SapuraKencana has evolved to become a major provider of support platforms for drilling rigs after expanding its fleet to 24.

Firms eye new ventures

At the end of August, meanwhile, the Malaysian offshore oilfield services company, Bumi Armada, announced it had signed a joint venture agreement with Dutch geo-science specialist, Fugro, to provide well services.

Bumi Armada’s CEO, Hassan Basma, told the press that the initiative marked a new direction for the company, which has, to date, focused on floating production storage and offloading (FPSO), transport and installation, and offshore supply.

“This investment will represent our first foray into the lucrative and expanding subsea market where Bumi Armada intends to make its presence felt. These additional services will contribute to our footprint on a global scale with focus on our core markets,” he said. Bumi Armada will have a 51% stake in the new firm.

State-backed services provider UMW Oil &Gas Corporation is also eyeing expansion, with its plans to launch an initial public offering (IPO), tentatively valued at $850m, already generating considerable interest. The provider is expected to begin taking orders for its offering in October, while a scheduled listing is set to come in the following weeks. The Wall Street Journal reported in mid-September that both J P Morgan and US financial group Fidelity Investments have agreed to be two of eight key institutional investors in the IPO.

Funds raised will likely be used to pay down existing debt and boost capital expenditure for future expansion. A total of 39% of the company’s shares will be offered through the listing.

Offshore drilling fuels demand

Malaysia-based Scomi Group has already extended its reach into Africa, the Caucasus region and Asia, with the firm’s oil services unit underpinning a 13.3% increase in revenue in the quarter ending June 30 and posting profits of $7.3m.
“Strong demand for drilling fluids and drilling waste-management solutions in Malaysia, Thailand, Turkmenistan and West Africa contributed significantly to the group’s financial performance,” the company said in a statement filed with Bursa Malaysia in late August.

The firm’s expansion reflects the heightened activity taking place in the global offshore oil and gas industry. However, the rapid pace of expansion has also put several regional players under pressure, leading to cost overruns and increasing competition for both equipment and manpower, resulting in a squeeze on margins.

Reuters reported that despite winning work, Singapore’s Ezra Holdings posted a 68% fall in profits for the three months ended May 31, due to project delays and cost overruns incurred by its subsea division. SapuraKencana said it faced similar risks, Reuters added.

Operators will be aware of the pitfalls that rapid expansion can produce. However, with exploration and exploitation activities set to increase in the coming years, particularly across the offshore segment, Malaysia’s firms will be well placed to tap into the services that the global oil and gas sector requires.

Continue reading:  

Malaysia’s oil and gas services looking farther afield

Technorati Tags: , , , , , , , , , , ,

Malaysia: Gas imports to strengthen growth

Rising domestic demand for energy, fuelled by industrialisation and a growing population, has prompted Malaysia to take on a new role of major gas importer as it looks to augment its own extensive reserves.

The government’s decision to boost gas imports forms part of a shift in energy-related economic policy that will see Malaysia’s long-standing power subsidies phased out by 2016.

While the new pricing structure for energy has been in the pipeline for some time, it is almost sure to prove unpopular, as consumers may well bear the brunt of sharp increases passed on by producers.

Malaysia has long been finalising its plans to begin using imported gas as a driver of economic growth. In 2009, Petroliam Nasional, the state-owned oil and gas company more commonly known as Petronas, signed an agreement with Gladstone LNG of Australia to buy 2m metric tonnes of liquid natural gas (LNG) annually for a 20-year term, from 2014 onwards.

The agreement, which included an option to purchase an additional 1m tonnes, was part of Petronas’s plans to secure adequate supplies for the domestic market. Since then, Malaysia has struck similar deals with other producers, including Statoil of Norway, France’s GDF Suez and Qatargas.

Petronas is currently developing a receiving and regasification plant at the Sungai Udang Port, Melaka, which will process imported LNG. In a statement issued to Bursa Malaysia in late November, the company said that although the project is behind schedule, the facility was expected to be commissioned by the second quarter of 2013. Once fully operational, the plant will have the capacity to process 3.8m tonnes of gas annually.

On November 26, Malaysia LNG, a production subsidiary of Petronas, announced that the German engineering firm Linde Group had won a tender to design, build and deliver a new boil-off gas re-liquefaction facility that will be constructed at the Bintulu LNG complex in Sarawak, East Malaysia. The plant will have a daily capacity of processing 670,000 tonnes of gas annually and should be up and running by the end of 2014.

The shift to imported gas will signal the end of an era for Malaysian consumers who have long benefitted from the subsidies policy, which the government was able to maintain thanks to ample quantities of cheap, locally-produced stock.

The government is believed to have subsidised gas prices by approximately $6.6bn in 2011, half of which was channelled into the electricity segment. The subsidies, which formed part of a government drive to keep down electricity costs and promote industrial growth, are expected to be phased out by 2016, when gas prices should be fully deregulated.

While Malaysia is laying the foundations for gas imports, it continues to work on maximising output from its existing fields, exploring how it can use extraction enhancement technology to extend production life.

Malaysia’s gas reserves remain extensive, with its proven deposits of around 2.4tr cubic metres earning it a 13th -place global ranking for untapped holdings. Existing reserves should allow Malaysia to maintain production at its present rate of around 63bn cubic metres for years to come, although projected increases in domestic usage are likely to speed up a reduction in the life expectancy of its fields. Much of the increased demand will come from industries dependent on gas for feedstock, such as manufacturers of plastics, chemical fertilisers and other petrochemical products.

Efforts are also being channelled into identifying and developing new reserves. In November, Petronas and its partners announced a number of new finds in offshore fields, although the full extent of reserves and their quality have yet to be determined.

While new fields will help prolong the lifespan of gas production, Malaysia’s rising demand for gas is set to grow at a rate easily outstripping domestic output. Despite concerns that higher energy bills will irk consumers and could push up inflation, foreign gas looks set to play a growing role in powering Malaysia’s economy.


Malaysia: Gas imports to strengthen growth

Technorati Tags: , , , , , , ,

Malaysia: Push for liquefied natural gas

As gas consumption levels reach record highs in Malaysia and across the continent, the country is positioning itself as a regional trade centre for liquefied natural gas (LNG). With a series of capital-intensive LNG investments, Malaysia will likely see a strong increase in LNG import-export volumes for some time to come. However, muted economic growth in China and India, and with it slowing demand, could limit the country’s ability to export its new LNG production.

Heavy gas subsidies and increasing LNG demand, which has increased from 315bn cu feet in 1990 to more than 1260 cu feet in 2010, a compounded annual growth rate of 7.2% — is expected to result in Malaysia’s consumption rate outstripping production between 2011 and 2016. This trend may lead to a potential gas shortage beginning in 2014, signalling the need for Malaysia to expand its LNG import infrastructure.

To this end, Malaysia has invested in a number of infrastructure projects, including an LNG re-gasification terminal (RGT), located offshore near the Sungai Udang port in Malacca. The RGT was developed by the gas-processing subsidiary of Petroliam Nasional (Petronas), Petronas Gas, and work was completed in mid-2012.

The RGT includes an island jetty with a re-gasification unit, two floating storage units and a new 3-km, sub-sea pipeline that connects to the onshore gas pipeline network. According to the Prime Minister’s office, the facility is expected to commence operations this month. Once it is operational, the RGT will have the capacity to process and store up to 3.8m tonnes per annum (tpa) of LNG, Petronas Gas said in a statement.

Current supply contracts with the new facility include a deal with Norway-based Statoil to supply 1bn cu metres of LNG over three and a half years, a deal with France-based GDF Suez to supply 2.5m tpa also over three and a half years, and a 20-year deal with Qatargas for 1.5m tpa. Petronas is also looking to import gas from the Santos-Petronas Gladstone LNG project in Australia, with the first shipments of LNG to arrive in 2014, once the deal is completed.

To further enhance LNG import capacity, a second re-gasification plant and import terminal is being planned at the Pengerang Integrated Petroleum Complex (PIPC) in Johor. The $56bn project will include oil refineries, petrochemical plants and a $1.3bn investment allocated specifically for the LNG terminal and the re-gasification plant.

The investment will be a joint venture among local engineering firm Dialog Group, Netherlands-based oil and gas storage company Royal Vopak, and the Johor state government, with the first phase of construction expected to be complete by 2014. Storage capacity at the terminal is expected to be around 5m cu metres and will enable international users to store and trade LNG.

According to Mohd Yazid Jaafar, the CEO of the Johor Petroleum Development Corporation, studies by oil companies and the Performance Management Delivery Unit (the state body responsible for overseeing the implementation of the country’s economic transformation programme, PEMANDU) show that the PIPC will contribute RM17.7bn ($5.73bn) to gross national income by 2020, with the PEMANDU study also showing it will provide 8500 high-skilled job opportunities by 2020.

In addition to the onshore LNG developments, Petronas has recently awarded the Technip-Daewoo Consortium with a contract to develop Malaysia’s first floating LNG (FLNG) facility, which is expected to be operational by 2015. The FLNG facility is expected to produce 1.2m tpa and increase Malaysia’s overall production capacity from 25.7m tpa to 26.9m tpa.

The Sabah-Sarawak Gas Pipeline (SSGP) in Borneo, meanwhile, has reached 85% completion and is now entering the final phase of development. According to Shaiful Bahrin Hashim, the senior project manager at SSGP, “We estimate the gas to start flowing by April 2013, if everything goes as planned.” The pipeline is approximately 521 km in length and will deliver natural gas from a terminal in Kimanis to an LNG facility in Bintulu.

With high population growth rates across Asia and increasing demand for power, Malaysia’s ongoing natural gas investments may be a highly strategic asset entering the second half of the decade, particularly if it can secure its position as a major supplier now. If, however, demand slows considerably in China, for which the IMF recently downgraded its 2012 GDP growth prediction of 8% to 7.8%, and India, which also just saw the IMF’s GDP growth estimate for the year fall from 6.9% to 6%, Malaysia could be faced with more capacity than it can use.

Still, the new projects should provide Malaysia with substantial manoeuvrability in the LNG market, both in terms of expanding export capacity, as well as developing a more sustainable import mechanism to meet domestic consumption trends.

Continue reading here:

Malaysia: Push for liquefied natural gas

Technorati Tags: , , , , , , , ,

Malaysia: Confronting the energy dilemma

Committed to reducing its carbon intensity by 40% by 2020, Malaysia is currently facing some tough decisions on whether natural gas or coal will be the best energy source to meet its rapidly growing consumption needs and looming environmental targets.

While some officials say coal will dominate the future energy mix due to its cost benefits, others believe gas will lead the way, largely based on international trends and the overall environmental benefits. At present, some 60% of the country’s power is generated by gas, 30% by coal and 10% by hydropower plants. As of January 2011, the country is estimated to have 85trn cu feet of gas reserves and proven oil reserves of 4bn barrels.

In May of this year, Peter Chin Fah Kui, the minister of energy, green technology and water (KeTTHA), said the government was moving towards more coal-driven power plants in order to ensure the cost of electricity will not burden the public.

“We are planning to make the shift to 44% coal and 46% gas. We do not want to be too dependent on coal either. The price of gas has gone up and we do not want to burden the public,” Chin said, while speaking with The Malay Mail in June, adding that coal prices are less prone to market variations.

In the same month, the government confirmed it plans to invest $3bn through state-owned energy provider Tenaga Nasional Berhad (TNB) for the construction of four new power plants over the next five years, including two hydropower plants and two coal-fired facilities.

Construction of the Hulu Terengganu (250 MW) and Ulu Jelai (378 MW) hydropower plants, and a 1000-MW coal-fired plant in Manjung, is expected to be complete by 2015. Meanwhile, the fourth, a 1000-MW coal-fired plant in Tanjung Bin, is scheduled to be operational by July 2016.

Discussing the plans, Che Khalib Mohamad Noh, the outgoing president and CEO of TNB, said that when the four plants are operational, national capacity will increase to 2630 MW from the current 2050 MW.

However, Khalid told local media that gas-fired plants will be the focus of future projects, as they have a more minimal impact on the environment. “Gas accounts for 40% of the world’s power generation and this is expected to grow to 60% by 2030,” he said.

On the other side of the debate, KeTTHA’s desire to shift to coal is likely explained in part by a gas supply shock in 2011 that saw daily supply fall from the normal 1050m standard cu feet per day (cfd) to as low as 850m cfd.

To prevent this from happening again, a new liquefied natural gas (LNG) regasification terminal in Melaka, which will be operated by Petronas is due for completion in August. In June, plans were also approved for the firm to build an offshore, floating LNG plant by 2015.

While the Melaka terminal has the capacity to produce 530m cfd of gas, the offshore plant ? set to be the world’s first ? will allow Petronas to drill and ship gas from fields that were either too small or too remote to be profitable previously.

As both LNG and coal will require almost 100% imports in the future due to the depletion of national reserves, another option being considered is nuclear power. Chin confirmed in March that Malaysia was looking to build two 1000-MW nuclear power plants by 2022 to counter an “imbalance” in its energy supplies, despite ongoing environmental concern regarding the safety of nuclear power.

Renewable energy is seen as a greener and safer alternative to the nuclear, gas and coal options, and Kuala Lumpur is committed to a 5.5% contribution from renewables by 2015. However, renewable energy has yet to take off in the country, with investors often seeing it as a risk, due to unproven technologies and potentially high tariffs.

While in late 2011 the country adopted a sophisticated quota system on feed-in tariffs ? a policy mechanism designed to accelerate investment in renewable energy ? critics say its solar segment has been oversubscribed and that the country should focus more on biomass, given the huge amount of municipal waste and biomass generated by palm oil plantations.

Malaysia is also planning to adopt a number of energy efficiency measures. In June Chin said a draft law to mandate energy efficiency would be tabled in 2013, with provisions to include the banning of incandescent light bulbs and the mandatory import of energy-efficient refrigerators. In June, Tan Sri Shamsul Azhar Abbas, the CEO of Petronas, the state-owned oil and gas company, said at the World Gas Conference that heavy subsidies on natural gas may promote economic growth but also lead to energy inefficiency. Indeed, Malaysia began reviewing gas prices last year and aims to achieve market parity by December 2015.

The government insists coal-fired energy will reduce electricity costs and help meet rising demand, however, even with the introduction of new technologies, the burning of fossil fuels will impact environmental goals. Global signs that the coal market is more susceptible to “resource nationalism” than gas suggest the latter will dominate future world energy trends.


Malaysia: Confronting the energy dilemma

Follow Malaysia News @ Oxford Business Group

Technorati Tags: , , , , , , , ,

Malaysia: Power plays

Change is in the air for Malaysia’s power sector, with recent developments including bids on new facilities and change of ownership for old ones. Government oversight has also been evolving, throwing up questions about what the sector’s make up will be in the near term.

The recent changes were set in motion in December 2011, when the government announced plans to build power plants with a total generating capacity of 4500 MW by 2016. The new power generators will replace the capacity lost from retiring plants and add supply to meet increasing demand.

In fact, the second half of 2012 could signal the beginning of a period of strong growth for the power engineering business, Chris Eng, the head of research at OSK Investment Bank, told The Star on December 31.

This will go hand–in-hand with the replacement of first-generation power purchase agreements (PPAs) with new contracts. Eng expected this to be positive in the longer term for both the independent power producers (IPPs) and Tenaga Nasional (TNB), the national electricity utility company.

“As the first-generation PPAs expire from 2015 to 2017,” Eng said, “it is crucial to start the competitive bidding process now to ensure that the new plants are ready by 2016. Without these new plants, Malaysia’s reserve margin is likely to drop to 10% by August 2017.” The country’s reserve margin officially stands at above 35%, but many believe the actual number is significantly lower.

Adding to the mix, the government is allowing bidders for the tenders to include foreign power players partnering with local companies. Many of these bidders will be looking forward to mid-March, when the Energy Commission (EC) is scheduled to release a shortlist of bidders for a combined–cycle, gas turbine (CCGT) power project worth approximately $10bn.

The project, a 1400-MW plant next to Malakoff Corporation’s existing 350-MW CCGT Prai Power Plant, will comprise part of the post-2016 plans to add 4500 MW of capacity. According to the EC’s chairman, Ahmad Tajuddin Ali, the successful bidder should be announced by the third quarter of this year. The plant itself is targeted to come on-stream by mid-2016.

In an interview with The Edge, Tajuddin also said the EC plans to invite tenders for the remaining 3100 MW capacity in two parts. The first would be to replace the 2000 MW that will go offline when the first-generation PPAs expire, and each new plant’s capacity will be between 750 MW and 1000 MW. Both will likely be gas powered, he added.

Meanwhile, French firm Alstom announced on February 23 that it had secured a $1.1bn contract to build a “supercritical” coal-fired power plant in Tanjung Bin. The contract was awarded to Alstom as part of a consortium that includes Malaysian building materials firm Mudajaya and construction company Shin Eversendai. The total value of the consortium’s contract is more than $1.34bn, according to Alstom’s website.

Alstom made its announcement the day after Malaysian business magnate, T. Ananda Krishnan, announced he was selling his entire power portfolio in Malaysia, South Asia and the Middle East, with local media reporting that unnamed sources have claimed a Malaysian company is in talks to buy the entire portfolio in a deal that could be worth between $3.2bn and $3.6bn.

Through his Tanjong Energy Group, Ananda owns stakes in approximately 12 power plants with a net generating capacity of nearly 4000 MW. In Malaysia, Tanjong’s power plants include the 720-MW gas-fired, combined-cycle Telok Gong Power Station Two; the 440-MW, gas-fired, open-cycle Telok Gong Power Station One; and the 330-MW gas-fired, combined-cycle Tanjung Kling Power Station.

Another change – this one of governmental organisation rather than of ownership – is that the new power plants will come under the EC’s purview. This is particularly relevant because the government recently swapped jurisdiction over the regulation of piped gas from the Economic Planning Unit to the EC. If the new plants do end up being gas-powered, the EC’s authority will be increased, as it will have the power to set gas tariffs for the new plants.

With so many changes taking place in such a short time, 2012 is thus looking to be an interesting year for the country’s power producers and energy players, with many watching closely to see how the sector will look in the long term.

People also clicked:

See original article here: 

Malaysia: Power plays

Technorati Tags: , , , , , , , ,