Kuala Lumpur, October 14, 2024 -- The Malaysian Gas Association (MGA) calls for the Government to prioritise the gas industry in Budget 2025 to ensure Malaysia's sustainable transition to a low-carbon economy. MGA underscores the pivotal role of the gas industry as outlined in the National Energy Transition Roadmap (NETR). With the Responsible Transition Pathway 2050 (RT 2050) aiming to increase renewable energy (RE), phase out coal, pursue energy efficiency (EE) and expedite green mobility, the importance of natural gas as a crucial fuel becomes even more critical.
Prime Minister’s statement in the NETR 2023 Executive Summary highlights, “Gas is not only a transitional fuel but also the primary contributor of Total Primary Energy Supply (TPES).” Similarly, the Minister of Economy emphasised, “The reliance on Natural Gas is addressed under Energy Security. Proactive initiatives are being undertaken to secure natural gas, such as infrastructure and commercial arrangements for the importation, including long-term agreements to stabilise fuel imports. At the same time, it is crucial to ensure natural gas prices for domestic consumers reflect market parity. This will enhance the attractiveness of Malaysia as an investment destination for the upstream sector as well as incentivise third-party suppliers to enter the domestic gas supply market, spurring the operationalization of TPA for the gas market.”
Natural gas and Renewable are expected to play a pivotal role in Malaysia’s energy transition journey, while coal usage will diminish over time. In relation to the TPES, natural gas usage will be expanded both in terms of share and absolute terms from 41 Mtoe (43%) in 2023 to 57 Mtoe (56%) in 2050. Additionally, with the recent strong interest by data centres to set up their operations in Malaysia, the nation’s energy demand is expected to increase significantly, hence putting additional expectations on the energy sector, including the gas industry.
Gas will play a greater role in ensuring energy security by 2050 and beyond.
“MGA calls for a more inclusive and supportive Budget 2025 to ensure the gas industry can meet its expected role in Malaysia’s energy future. To fully realise its potential and drive the energy transition, the industry requires urgent government support. Given the heightened expectation on the role and contribution of gas, as stated in the NETR, it is reasonable for the gas industry to be accorded incentives that are similar to those given to the Renewable energy industry. This includes tax incentives, grants and funding that encourage continued and enhanced investments and development within the gas industry.” Abdul Aziz Othman, President of the Malaysian Gas Association (MGA), highlighted in a statement.
In particular, incentives such as investment tax allowances should be enhanced for the following:
1. Supply Side – To develop and commercialize domestic gas supply.
2. Infrastructure – To maintain, upgrade, and build essential gas infrastructures such as processing facilities, pipelines, regasification terminals, etc.
3. Technology Advancement – To support innovation and the adoption of cutting-edge technologies like CCUS, gas development and production to ensure a cleaner gas form.
4. Capacity Building – To develop the skills and expertise required for the future of the gas industry.
In brief
The Malaysian Gas Association (MGA) is urging the Malaysian government to give the gas industry support in Budget 2025 comparable to that offered to renewable energy. The association says gas will remain important to Malaysia’s energy security and transition as coal use declines and electricity demand grows, including from data centres. It cites National Energy Transition Roadmap projections showing natural gas rising from 41 Mtoe (43%) of total primary energy supply in 2023 to 57 Mtoe (56%) in 2050. MGA calls for enhanced investment tax allowances, grants and funding for domestic supply, infrastructure, technology and workforce development. It also asks financial institutions to allocate sufficient funds, treat gas projects fairly and ease restrictive financing requirements. MGA President Abdul Aziz Othman said the association would engage with financial institutions about access to funding, including a RM 2 billion seed fund for roadmap-related facilities and projects.
Key takeaways
- MGA seeks Budget 2025 incentives and funding for gas projects on par with renewable energy support.
- The association says gas will contribute to energy security as Malaysia pursues its transition and coal use declines.
- The roadmap projects natural gas supply rising to 57 Mtoe (56%) in 2050, from 41 Mtoe (43%) in 2023.
- MGA proposes support for domestic supply, infrastructure, technology adoption and industry skills.
- The association urges financial institutions to provide fairer terms and adequate funding for gas-related investments.
Improved Funding from the Financing Institution
Abdul Aziz added that funding is a critical element that ensures NETR targets are achieved. Of late, there seem to be stricter requirements and limitations (fund allocation) for Oil and Gas (O&G) related projects. Based on the current trends in project funding/financing, the situation will get even tougher for the O&G industry. Immediate government intervention is required to reverse the concerning pattern by encouraging financial institutions to recognise the strategic importance of gas projects and provide sufficient support to the gas industry to achieve the NETR targets:
1. Allocation of sufficient funds to support gas-related investments.
2. Fair treatment of gas-related investments.
3. Minimise/reduce restrictive funding requirements.
4. Reasonable funding terms and conditions.
MGA Urges for Equal Attention and Fair Treatment for the Gas Industry
The gas industry is crucial for Malaysia’s aspiration towards Net Zero emissions. The right incentives and funding support are essential for gas industry players, predominantly local companies, to fulfil their expected role and meet the NETR targets. Strong support from the government is crucial to ensure the gas industry can contribute effectively to Malaysia’s energy security, energy transition goals and economic growth objectives.
“Natural gas is a core fuel for Malaysia’s energy security. We urge the government and financial institutions to recognise the strategic importance of gas projects and provide the necessary support to the industry. Representing over 150 members, we are committed to engaging with financial institutions to clarify requirements and ensure our members, along with other industry players, have access to allocated funding, such as the RM 2 billion seed fund for the NETR related facilities and projects. To achieve our ambitious NETR targets, it is imperative that the gas industry receives the same level of support and incentives as the renewable energy sector. This includes tax incentives, grants and funding to encourage continued investment and development. Ultimately, MGA echoes the statements of other industry players, calling for sufficient incentives across all segments of the energy ecosystem. Each segment plays a crucial role in the energy transition journey. Therefore, equal attention and fair treatment must be given to all players to ensure a secure, robust and sustainable energy for the nation.”
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Photo 1- Abdul Aziz Othman, President of MGA emphasised its commitment to advocating for its members across the gas value chain
About MGA:
Founded in 1986, the Malaysian Gas Association (MGA) is the nation’s lead advocate for the natural gas industry, playing a prominent role in promoting engagement, discourse and dialogue with key stakeholders to develop a vibrant and sustainable gas industry, fuelling Malaysia's socio-economic growth. With more than 130 corporate members, MGA champions natural gas as a clean and efficient energy source to drive demand and increase industry participation.
A charter member of IGU, MGA is also its Regional Coordinator and hosted the 25th World Gas Conference (WGC) in 2012 which was attended by more than 5,000 delegates from 90 countries.
Website: www.malaysiangas.com
LinkedIn: https://www.linkedin.com/company/malaysian-gas-association-mga
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Questions around this news
What support is MGA seeking for Malaysia’s gas industry in Budget 2025?
The release calls for incentives and funding comparable to those available to the renewable energy industry. It identifies support for domestic gas supply, gas infrastructure, technology development and workforce skills, including enhanced investment tax allowances. It also urges financial institutions to allocate funds fairly, ease restrictive requirements and offer reasonable financing terms for gas-related projects.
What is third-party access (TPA) in the gas market?
Third-party access allows companies other than the owner or operator of gas infrastructure to use facilities such as pipelines or terminals, subject to applicable rules and available capacity. It can enable additional suppliers to deliver gas to customers and support competition in supply, while infrastructure operators continue to manage the facilities.
What does CCUS mean in the context of energy technology?
CCUS stands for carbon capture, utilisation and storage. It refers to technologies that capture carbon dioxide from sources such as industrial facilities, then either use it in products or processes or transport it for long-term storage. The release lists CCUS among the technologies for which it seeks support.
How does the release describe natural gas’s expected role in Malaysia’s energy supply?
The release presents natural gas as a fuel for energy security and the country’s transition to a lower-carbon economy. It states that natural gas’s share of total primary energy supply is expected to rise from 43% in 2023 to 56% in 2050, while its use is projected to increase from 41 Mtoe to 57 Mtoe over that period.
