Petronas expands overseas to secure LNG supply

Malaysia’s state-funded oil and gas company Petronas has recently invested in overseas expansion for its liquefied natural gas (LNG) activities.

According to market analysts, the strategy, which includes agreements with companies in Canada, is designed to safeguard its LNG supply because of challenges from the state of Sarawak regarding control of the fossil fuel.

Researchers noted that the move appears fuelled by continuing disputes over operational control and ownership. Although Malaysian assets are still central to the oil and gas company’s operations, its main role as LNG aggregator and regulator in Sarawak is expected to become less significant, even if a deal is achieved regarding rights to the Malaysian state’s gas and oil reserves.

Sarawak currently holds approximately 60 per cent of Malaysia’s gas reserves and 40 per cent of its oil. As a result, Petronas losing its hold in the state would substantially impact its downstream and upstream activities in the future.

To negate the impact, Petronas has ramped up its collaborations on a regional and global scale. Working with a range of different energy companies, it is looking to extend its international footprint.

In early November, Petronas signed a new agreement with Canada’s Pembina Pipeline Corporation. The deal gave the company equity rights for 1.0 million tonnes per annum of liquefaction capacity at the corporation’s Cedar LNG facility for two decades, with an estimated project completion date of 2028.

As well as being a global energy group, Petronas also provides a diverse range of lubrication products ranging from compressor oil to coolant.

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