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Malaysian energy exports on the up
PERFORMANCE
WITH Asian energy news headlines more often than not focused on the big three in the region – China, India and Japan – Malaysian moves in crude and LNG export circles can go unnoticed.
But with both crude and LNG export values from Kuala Lumpur soaring of late, the country is starting to come to the fore in Southeast Asia, and increasingly so across the wider region.
In June alone, LNG exports from Malaysia rose 150% on a year earlier in real value terms. Crude oil, too, from the peninsular country has also posted impressive figures, with the overall value of exports 80% higher than in June 2021. Whether this trend will continue, though, is cur- rently open to speculation.
Of note is the International Monetary Fund (IMF) again projecting that Malaysia and the other four leading ASEAN countries will see a collective 5.3% expansion in their economies by the end of 2022. Backing the IMF’s projection is the recently increased dollar value of Malaysia’s rising energy exports.
Of significant concern in recent days, though, is China. With China having seen its own econ- omy grow by just 0.4% in the second quarter, weaker demand for Malaysian energy exports is a possibility in the third and fourth quarters.
In 2020, Malaysia was the world’s fourth biggest exporter of LNG, worth $7.3bn. The same year, Japan, Malaysia’s leading customer, imported $3.48bn worth of the fuel, with China and South Korea making up the top three and importing $1.57bn and $1.56bn respectively.
A drop in the global LNG export rankings to fifth last year has not dampened Malaysia’s LNG ambitions. Currently, however, much of East Asia, including Malaysia’s top three LNG buyers, is fully focused on events earlier in the week in Taiwan, and knock-on effects Chinese government posturing over the self-governing island will have on crude and LNG shipping in the region.
On August 2, hours after Nancy Pelosi, the Speaker in the US House of Representatives, touched down in Taipei, Chinese officials con- firmed military exercises in waters surrounding Taiwan that will run until this week.
While ongoing, it is thought that one of the world’s busiest shipping lanes – the Taiwan Strait – will be closed to all but military vessels.
This will not only affect Taiwan, itself Malay- sia’s fifth largest LNG importer; it will also serve as an unofficial blockade of the island. If this is enacted by the People’s Liberation Army Naval forces (PLAN), without exception, crude and LNG tankers from Malaysia and elsewhere heading to Taiwan or ports on China’s eastern seaboard, as well as South Korea, will have to
A drop in the global LNG export rankings to fifth last year has not dampened Malaysia’s LNG ambitions.
take longer, more expensive routes.
News of China’s intent, coincidental or oth-
erwise, was preceded by Malaysia’s state-owned Petronas cutting its July 2022 official selling price (OSP) on domestic crude to $124.30 per barrel.
A month earlier this figure had stood at $132.50.
“OSPs of other Malaysian grades for July (are) Cendor at $125.40 per barrel, Tapis Blend at $119.59 per barrel, Dulang at $127.32 per barrel [and] Bintulu at $122.28 per barrel,” a statement from the energy giant said.
In comparison, the popular benchmark Brent crude oil price hovered around $120 throughout June.
Building on its recent boom in exports, Pet- ronas also highlighted possible future moves to expand further, presumably in wake of Chi- nese-Taiwanese tensions easing.
“With onshore prospects in Canada, explora- tion in South America and deepwater drilling in Brunei, we are venturing into a broad portfolio of reserves and play types, applying innovative technology and developing niche technical solu- tions to maximise our hydrocarbon potential,” the company said on its website.™
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