KUALA LUMPUR, The government is shifting the allocation of 100 million metric British thermal units (mmbtu) per day from independent power producers (IPPs) to the power-hungry manufacturing sector.

Malaysian Industrial Development Authority (Mida) Director-general Datuk Jalilah Baba said natural gas was in in short supply while there was a growing demand from new manufacturers.

Oleochemical and food industries would be given priority in considering the distribution,, as these industries need gas for industrial processing,” she said, adding Mida was entrusted by the government to distribute the natural gas based on the companies’ needs.
She was speaking to reporters after Mida released its report on the performance of the manufacturing and services sectors 2009 here yesterday. Also present was International Trade and Industry Minister Datuk Seri Mustapa Mohamad.

Power producers pay US$3.21 (RM10.98) opermmbtu compared to manufacturers who pay US$4.49 to US$4.60 permmbtu, according to Reuters. The tariffs represent a subsidy of up to 40% when compared to the March gas contract on the New York Mercantile Exchange which closed on Wednesday at US$5.419 per mmbtu.

Malaysia produced 2,146 million standard cubic feet of processed gas per day in 2009, according to Petroliam Nasional Bhd (Petronas).

Jalilah said new companies should not rely on gas alone but alternative energy. She added only existing companies working with Mida were eligible to seek gas supply under the allocation.

She said gas would have to be sourced from areas in 2013 due to greater shortage of gas supply in Malaysia in the next four years. She said Petronas would continue to seek new gas fields to ensure there would be adequate supply for industries in the future.
Petronas, she said, would buy two million tones of liquefied natural gas per annum in a 20-year deal, starting 2014, with firms in Gladstone in Queensland in efforts to meet future domesticdemand.