THE Sarawak Legislative Assembly (DUN) passed the Distribution of Gas (Amendment) Bill 2023 on Tuesday, empowering the Majlis Mesyuarat Kerajaan Negeri to appoint a gas aggregator for Sarawak.
Utility and Telecommunication Minister Datuk Julaihi Narawi who tabled the bill said this is to ensure adequate supply of gas to meet the needs of domestic consumers, industries and potential investors as well as to strengthen, improve and expand the existing gas distribution network and systems.
State owned oil and gas company – Petroleum Sarawak Berhad (Petros), he said, would be appointed as a gas aggregator due to their requisite experience and knowledge in gas distribution.
“Currently, Petros is already a licensed distributor of Liquefied Petroleum Gas (LPG) in Sarawak and will be appointed as the sole distributor for LPG effective December 1, 2023,” he said when tabling the bill which saw a total of 16 assembly members take part in the debate.
“The appointment of the gas aggregator would not in any way prejudice or adversely affect the existing arrangements entered into by upstream gas producers.
“They are rest assured that the Sarawak government will continue to support their upstream operations which are critical for sustainability of gas supply,” he said.
Under the current Petronas Production Sharing Contractors (PSC) terms, Julaihi said, all gas produced in Sarawak has to be sold by PSCs, such as Shell to Petronas, which purports to act as an aggregator of the gas.
He stressed that it is Petronas which determines how much gas is produced within the boundaries of Sarawak, allocated for industries or power generation in Sarawak and the price for such gas.
“Presently, nearly all gas produced offshore Sarawak is converted into Liquefied Natural Gas (LNG) for export by Petronas overseas. Almost all of the gas produced in Sarawak is allocated by Petronas to supply gas to feed the LNG plants in Bintulu.
“Consequently, the volume of gas available for local industry and power sectors is a very low percentage of gas produced in Sarawak. Based on the above inequitable arrangement, there is insufficient volume of gas for industrial use in Sarawak,” he said.
With uncertainty over availability of gas and the price thereof, Julaihi said, it has become very challenging to attract foreign investors, who require gas for their industrial processes, to establish or locate their plants in Sarawak.
“This has hampered our efforts to accelerate industrial growth to enable Sarawak to have a high income economy by 2030.
“To overcome the challenges outlined above, the Sarawak government has decided that it would appoint its own gas aggregator to procure adequate gas for distribution and supply for use in Sarawak at reasonable and affordable prices,” he said.
“Additionally, it allows Sarawak to build, expand, manage and maintain gas distribution networks and infrastructures state-wide to supply gas to industries and other consumers who require gas,” he said.
The principal functions of the gas aggregator, he explained, are to manage the procurement of natural gas from all sources for distribution and supply to any person, plant, facility and premises in Sarawak; to develop, expand, manage and maintain gas distribution network and systems including but not limited to, pipelines, terminals for receiving gas, processing plants and storage facilities; and to carry out such other functions related to the distribution of gas in Sarawak as the Majlis Mesyuarat Kerajaan Negeri may direct in writing.
