Nation charges into diversifying, expanding its energy sector

Malaysia has big plans to power up its energy sector with diversified investment in oil and gas, hydroelectric power in Borneo and rare earth.

The country is striving to become a major international centre for oil and gas production by 2017, having launched this vision in 2001 with the formation of the Malaysia Petroleum Resources under the department of Prime Minister Najib Razak.

Within the next three years, Malaysia hopes to build 10 million cubic metres of storage to meet rising demand from China and India, though domestic consumption is expected to remain largely stable over the next few years.

The International Energy Agency (IEA), in its "Southeast Asia Energy Outlook" report for this year, says energy consumption in Malaysia is expected to record moderate growth amid population growth of around 1.2 per cent.

"These factors help drive an increase in Malaysia's primary energy demand by an annual growth rate of 2.3 per cent," the agency says. "The prospects for continued exports remain strong in the medium term, with recent discoveries and new developments set to keep the liquefied natural gas (LNG) terminal operating at full capacity through at least 2018."

IEA says gas production should rise to about 70 billion cubic metres by 2020, with almost half of this catering to the export market, and Japan as a major buyer. The country's proven gas reserves stood at 2.4 trillion cubic metres. The agency also says Malaysia's oil supply is expected to grow to 740,000 barrels per day (bpd) in the short term compared with 670,000 bpd last year.

Ramu Thannirmalai, director of Southeast Asian trade research organisation Decision Insider, says Malaysian energy providers can leverage on the shortfall in global supply created by uncertainty in major Middle Eastern oil suppliers.