By 2020, Malaysia could surpass Qatar to become the largest supplier of flexible LNG to the global market, Wood Mackenzie forecasts. Malaysian petroleum company Petronas is adding new capacity in eastern Malaysia and Canada, forming offtake agreements with other suppliers and developing projects such as GLNG in Australia. Its supply potential could grow by more than 55%, from 27 million tonnes per annum (mtpa) in 2013 to 42 mtpa in 2022. Some of its new capacity is committed to buyers, but some is not. In addition, some of its current commitments to buyers will expire during the next 10 years.

Analysis by Wood Mackenzie predicts that Petronas’ flexible LNG volume will increase from 2.5 mtpa in 2013 to 26 mtpa in 2022. Wood Mackenzie estimates that Qatar’s flexible LNG volumes in 2013 were 20 mtpa. Whether Qatar or Malaysia will have the larger flexible volume in 2022 will depend on contracting strategy in the interim. Wood Mackenzie’s Asia gas research analyst Chong Zhi Xin said, “In addition to challenging Qatar, Malaysia’s growing volume of uncontracted LNG will provide strong supply competition for new LNG projects, such as from the U.S., Canada and East Africa.”

Zhi Xin cited some of the additional advantages of Petronas having a long LNG portfolio: “Should other new supply struggle to get developed, a long LNG portfolio would position Petronas well for a tight global gas market. Also, flexible supply from its existing portfolio could be used to support marketing of Petronas’ Pacific North West (PNW) LNG project in Canada, prior to production startup. This will differentiate Petronas’ project to other greenfield projects with uncertain startup times. It also removes pressure on delivery and provides customers with a diversity of supply sources. In addition, Petronas has the opportunity to supply LNG to Peninsular Malaysia when legacy offshore gas supply inevitably declines.

“As a reliable LNG supplier, Petronas will likely secure contract renewals for a proportion of the volume under contract that expires,” Zhi Xin said. “Also, Petronas has the ability to find a market for its LNG domestically, an option not available to its competitors.”

According to the analysis, about 4 mtpa of LNG is needed to balance the Peninsular Malaysia market by 2022. However, Petronas’ management of indigenous pipe gas, both new supply and existing contracts, could enable some piped gas to be backed out in favor of LNG. This would allow Petronas to increase Peninsular Malaysia LNG imports to as much as 8 mtpa by 2022. Zhi Xin concluded, “Therefore, Peninsular Malaysia could be Petronas’ hidden trump card to accommodate ‘excess’ LNG.”