Page 7 - GLNG Week 06 2022

GLNG COMMENTARY GLNG

and CEO of upstream, Adif Zulkifli, described feedstock gas for its LNG complex at Bintulu
the partnership as “one of the many efforts to and ensure that Malaysia remains a major LNG
establish Malaysia as a leading CCS solutions exporter. However, backfilling the LNG com-
hub in the region”. plex over the coming years will require devel-
This was followed by a joint study and collab- oping gas fields with a high CO2 and hydrogen
oration agreement (JSCA) on CCS with Royal sulphide content and the emissions from these
Dutch Shell’s Sarawak Shell subsidiary. fields, including Kasawari, will need to be
Under the JSCA, Petronas and Shell said they addressed.
would perform an integrated CCS area develop- Indeed, consultancy IHS Markit has said that
ment plan study to support the decarbonisation if emissions from these fields are to be managed,
ambitions of both companies offshore Sarawak. then CCS will be key. It has estimated that CCS
The scope of the agreement includes explor- could reduce emissions from the Kasawari field
ing the provision of decarbonisation service to by around 46mn tonnes over the field’s operat-
Shell’s local and cross-border facilities, as well as ing life. But the economics of developing large- Like other oil and
to other potential regional customers, Petronas scale CCS capacity in Malaysia have yet to be
said. demonstrated. IHS Markit found that with CCS, gas companies,
the capital investment into Kasawari would Petronas will
What next? jump by about $900mn and operating costs
The partnerships are being struck as Petronas would rise by $2.1bn over the lifespan of the therefore need
moves towards a final investment decision (FID) project. Net present value (NPV) for Petronas
on the Kasawari CCS project, which it has said would fall by $430mn according to this analy- to balance
could be one of the largest in the world. The pro- sis, while the government’s NPV would drop by
ject is designed to capture emissions from the about $800mn. decarbonisation
Kasawari gas field offshore Sarawak and would Like other oil and gas companies, Petronas with profitability.
form part of the second phase of development at will therefore need to balance decarbonisation
that field. The field’s first phase is anticipated to with profitability. Rising natural gas prices and
come online in 2023. demand globally have improved the prospects
The Kasawari CCS project would capture for new LNG projects, and higher profits are
more than 3.5mn tonnes per year (tpy) of CO2, also expected to give LNG developers more
and Petronas is pursuing an FID in 2022, fol- options in terms of decarbonisation initiatives.
lowed by start-up in 2025. The Malaysian com- And this is not just a question for LNG produc-
pany invited bids for front-end engineering and ers, but the global oil and gas industry more
design (FEED) work on the CCS scheme in late broadly to consider as they move forward with
2021. both new upstream projects and decarbonisa-
Petronas is developing Kasawari to provide tion initiatives.™

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