SNAPSHOT

Energy & Resources

OVERVIEW Energising Malaysia ....................................78 ANALYSIS OF INVESTMENT OPPORTUNITIES WITH PARTNERS Capitalising on power investments.... 80 TOP 10 ENERGY AND RESOURCES COMPANIES ................................................... 82 RATING BY INSIDE INVESTOR A sector that generates returns ............. 83

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INSIDE MALAYSIA JULY

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OVERVIEW

ENERGY & RESOURCES

Energising Malaysia

With over 30 different types of mineral resources and significant reserves of oil and gas, Malaysias grounds are well endowed by nature. However, not all resources can easily be reached and in some cases environmental constraints put a stop to the development of resources in certain areas.
Oil and gas The oil and gas industry in Malaysia contributes a total of RM111 billion, or 16.6 per cent, to the nations gross domestic product (GDP). The share of the upstream oil and gas production stands at RM87 billion, while downstream activities, including refining, constitute RM24 billion. Malaysia has the worlds 27th largest crude oil reserves. According to the 2011 BP Statistical Energy Survey, Malaysia had proven oil reserves of 5.8 billion barrels at the end of 2010, or 0.4 per cent of the worlds reserves. Malaysia was producing an average of 664,800 barrels of crude oil per day in 2010, according to the CIA World Factbook. Malaysia exported 234,000 barrels per day of crude oil in 2010, down slightly from the 236,000 barrels per day exported in 2009, latest statistics of the US Energy Information Administration show. This was about 35 per cent of Malaysias crude oil production. In 2010, Malaysia imported 205,000 barrels per day of
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Inside MALAYSIA JULY 2012

Petronas

Petronas has operations in a broad spectrum of the oil and gas value chain, like exploration, development, production and sales.

lower-cost crude oil for processing at its oil refineries, the EIA said. Petroliam Nasional Berhad, or Petronas, is the national oil and gas company of Malaysia is wholly owned by the government. Petronas has operations in a broad spectrum of the oil and gas value chain, like exploration, development, production and sales. Petronas operates in partnership with various international oil companies under a production sharing system, which is believed to result in oil production of 833,000 barrels per day by 2015, according to Business Monitor International (BMI). Large international oil companies operating in Malaysia include Shell, ExxonMobil, and BP. According to the Oil and Gas Journal, Malaysia held 2,350 billion cubic meters of proven natural gas reserves as of January 2011, and was the fourth largest natural gas reserves holder in the Asia-Pacific region behind Australia, China, and Indonesia and ahead of India. The natural gas resources in

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OVERVIEW

ENERGY & RESOURCES

Malaysia are distributed almost equally between Peninsular Malaysia in the west and Sarawak and Sabah in the east. According to the EIA, gas production reached a total of 76.45 billion cubic meters in 2010. Malaysias Petronas LNG Complex in Bintulu is the worlds largest production facility at a single location of liquefied natural gas (LNG), with a production capacity of 24.2 million metric ton per year. Malaysia is the worlds 9th largest gas exporter, exporting almost 30 billion cubic meters of gas in 2010. Malaysia was the third largest exporter of liquefied natural gas (LNG) in the world after Qatar and Indonesia in 2010, exporting over 28 billion cubic meters of LNG, which accounted for ten per cent of total world LNG exports. Japan, South Korea, Taiwan, and China have supply contracts with Malaysia, and are the largest purchasers.

The total coal consumption for electricity generation in Malaysia in tonnes:

12.4

36
million in 2020

million in 2005

In 2010 exports amounted to RM7.6 billion, or two million tonnes, whereas in 2007 exports totalled to RM10.5 billion. The main export markets for Malaysian iron and steel are Vietnam, Singapore, Thailand, Indonesia, Australia, and China. Malaysia used to be one of the largest tin producing countries in the world, but since ore resources depleted, tin production has decreased. Malaysia is currently dependent on tin imports, mainly from Australia, South Africa, and Indonesia to meet the demand of smelters and refineries. Malaysia imported a total of 30,589 tonnes of tin ores and concentrates in 2010, according to the United Nations Commodity Trade Statistics Database,

Coal Even though the utilisation of coal is accompanied by major challenges like the emissions of greenhouse gases and air pollutants such as sulphur dioxide (SO2) and carbon dioxide (CO2), coal is still projected to play a very important role in Malaysias energy supply. According to the Asia Pacific Energy Research Center (APERC), among the fossil fuels, coal is expected to grow fastest in Malaysia in the coming years, with forecasted growth in demand 9.7 per cent between 2002 and 2030. Fortunately, technological advances achieved in recent years have made coal a much cleaner fuel today than it used to be. 70 per cent of the demand for coal is used for the generation of power. The remaining supply is consumed by the cement, iron, and steel sectors. The total coal consumption for electricity generation in Malaysia is projected to increase from 12.4 million tonnes in 2005 to 36 million tonnes in 2020. The country has huge supplies of coal resources, amounting to around 1.9 billion metric tonnes. 69 per cent of the coal reserves in Malaysia are in Sarawak, 29 per cent in Sabah and the remaining two per cent of the reserves are in Peninsular Malaysia.

Metals and other commodities Consumption of steel in Malaysia has seen strong growth since the late 1980s. The countrys industrial development was fuelled by significant developments in construction and manufacturing, driven by the public and private sectors, with an increasing demand for steel. The construction sector is vital to the Malaysian steel market as it represents 71 per cent of the countrys steel consumption. Malaysia consumed a total of 7.1 billion metric tonnes of steel in 2009. There are currently around 230 companies in Malaysia producing iron and steel products, like flat and long rolled coils, pipes, wire rods, and wire ropes, with a total annual output of approximately RM32 billion and creating employment for some 62,000 workers. With a few the exceptions, Malaysian steel products were hardly exported in the past, because local demand absorbed almost the entire production. Between 2000 and 2010, however, exports of iron and steel products saw a compounded annual growth rate (CAGR) of 15.9 per cent, with a contraction caused by the global financial crisis from 2008 onwards.

Transfer and distribution Three utility companies dominate electricity generation in Malaysia, namely Tenaga Nasional Berhad (TNB), Sabah Electricity Sdn Bhd (SESB) and Syarikat SESCO Berhad, formerly known as Sarawak Electricity Supply Corporation (SESCO). These companies operate independently in their separate jurisdictions and are complimented by various independent power producers (IPPs). Besides generating power, the energy sector also comprises transmission and distribution. TNB is responsible for the power generation, transmission, distribution, and retail supply in Peninsular Malaysia, whereas SESB and Syarikat SESCO are responsible for the same important activities in the east of Malaysia, in Sabah and in Sarawak, respectively. To improve the efficiency of TNB, the company has been undergoing restructuring since 1996, whereby several subsidiary companies have been set up. TNB Transmission Berhad operates and owns the national grid, Peninsular Malaysias high-voltage electric power transmission network. TNB Transmission says it aims to provide a reliable and economically profitable operation to supply the a large part of the population.
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