Gas Malaysia: 80% of gas taken up, additional volume to be delivered via extended pipeline (5209)

PETALING JAYA: Gas Malaysia Bhd has officially secured contracts for more than 80% of the additional natural gas volume that is coming on stream next year.
Gas Malaysia managing director Datuk Muhammad Noor Hamid
said most of the 40 million standard cu ft per day (mmscfd) increased
allocation by Petronas next year had been allocated for new customers
and existing ones that were undertaking expansion of their facilities.
“The
volume of gas is just waiting to be delivered via our extended
pipeline. Some of the pipelines are in the midst of construction while
some are in the design process. The target is to make sure we complete
these pipelines as quickly as possible so that when the gas become
available by Jan 1, we can deliver it to our customers,” he told StarBiz.
Previously,
Gas Malaysia's management had indicated it would spend about RM140mil
to add another 90km to its 1,800km Peninsular Gas Utilisation (PGU)
pipeline network operated by the company.
Initially, he said
there were concerns on the take-up rate of the additional capacity as
customers no longer enjoyed heavily subsidised natural gas price.
“But,
so far, we have received warm response from our customers. We actually
have an almost complete take-up of the volume, the remaining 20% is not
official yet as we are still waiting for the formality of signing the
agreements. Suffice to say as far as commitment is concerned our
customers have committed to take up all the additional volume,” he said.
Even
though the industrial users were not enjoying prices at
heavily-subsidised levels, natural gas was still a very efficient fuel,
and the economies of gas was still cheaper as users would not need to
have an inventory for it, Muhammad Noor added.
Gas Malaysia had recently signed an agreement with Petronas Gas Bhd
to increase the natural gas supply by 110 mmscfd to 492 mmscfd from its
current 382 mmscfd capacity on a step-up basis, with 40 mmscfd for
2013, 30 mmscfd for 2014 and 40 mmscfd for 2015.
“The additional
volume we have currently is only for a staggered three years, and we
are sourcing for additional volume from Petronas. We are in discussion
and is optimistic of getting more additional volume,” he said.
The
company needed to look for what was beyond 2013 to 2015, as it needed
to continue on with its growth momentum, he said, adding: “We need to
secure the volume for 2016 to 2018, and we think we can secure similar
numbers in what we have secured so far.”
Muhammad Noor also said
the upcoming third-quarter results to be released in November would
also be the quarterly results to look out for.
“The third
quarter is the key quarter, as it is the first quarter that you could
compare apple with apple with the previous year's quarterly result,” he
said.
The first two quarters of its last financial year were
exposed to the old margin which had seen quarterly comparison showing a
high decline in profit due to the revised margin which is significantly
lower.