"Malaysia gas production is likely to increase by 8% this year" - Bank Negara
Petroleum Intelligence Weekly
May 3, 1999
Sheltered Economy Fuels Malaysia's Fragile Recovery
The Malaysian economy is recovering
from last year's 6.7% shrinkage at a
faster pace than many expected.
Although some projected economic
expansion of 1%-1.5% this year and
double that in 2000 is due to artificial
stimulus in a protected environment, three
bond-grading agencies were impressed
enough to boost Malaysia's debt rating in
the past two weeks.
Oil analysts are not far behind.
The East-West Center in Honolulu
admitted surprise upon discovering
that oil demand rose 1.8% last year, to
436,000 barrels a day. It had forecast that
1998 oil demand would be flat, at best.
The center is now projecting 2% growth in
1999, to 445,000 b/d. Modest numbers by
historic standards, perhaps, but a clear
sign of revival in one of Asia's bellwether
economies. Others put 1999 oil demand
growth at anywhere from flat to 2%. A
10,000 b/d drop in gas oil use in 1998
reflected weak industrial performance,
while strong gasoline demand growth of
9,000 b/d indicates resilience in the
transportation sector, the East-West
Center says. It is symptomatic of the
fragility of the recovery that state power
company Tenaga Nasional forecasts a rise
of anywhere from 2%-8% in power use this
year.
If Malaysia is a symbol of a tentative Asian
resurgence, however, it is also an example
of the vulnerability of any Asian country to
its neighbors' health, particularly where
natural gas is concerned. Some 60% of
Malaysia's 1.4-billion cubic feet a day of
production goes as liquefied natural gas to
economically ailing Japan, South Korea, and
Taiwan, with the rest used domestically.
This limits Malaysia's control over demand
for its gas and the health of a key
industrial sector. Japan and South Korea
each cut back on LNG purchases in 1998.
South Korea is considered another good
turnaround example and may boost LNG
consumption by as much as 19% this year,
to 12.43-million tons, according to Korea
Gas (Kogas) President Kap-soo Han. But
there is no guarantee that Malaysia will
share in such a resurgence {38#01-03}.
For its part, Japan is considered a
continuing economic disaster zone.
Malaysia gas production is likely to increase
by 8% this year, says Bank Negara,
Malaysia's central bank. Independent
analysts are skeptical. "I don't know where
they are going to put that gas, much less
the new sources coming on in the next
several years, " says one. While Exxon just
ramped up capacity at its Lawit complex by
250-million cf/d, to 700-million cf/d,
Swedish Lundin Oil is postponing by two
years a 250-million cf/d scheme originally
due on line by 2001.
The biggest question is the durability of
Malaysia's improved performance. On the
economic plane, the current combination of
shelter and stimulus cannot last forever.
Prime Minister Mahathir Mohamad has also
stirred a chord of dissent through the
treatment of his former deputy, thus
making politics part of the equation, as
well. Mahathir projects 5% economic
growth in 2000 from his home- grown
version of bunker economics. He imposed
stern capital controls on foreign investors
and pumped money - including some
$1-billion from state Petronas - into
infrastructure spending to stimulate the
economy. "This economy is like a hothouse
flower," says Alan Troner of Kuala
Lumpur-based Asia Pacific Energy
Consulting. "You have to put it back
outdoors to see how it really does."
______________________________________
Statoil signs agreement for Vietnam natural gas project to develop two fields
OSLO, AFX May 3
Statoil AS said it signed three agreements
on April 29 laying the basis for a major
natural gas project in Vietnam.
The venture includes the development of
the Lan Tay and Lan Do gas and
condensate discoveries in block 06.1 off
southern Vietnam, building a gas pipeline to
land from these fields in the Nam Com Son
Basin, and new facilities to utilize the
production for power generation and
fertiliser.
The deal is Norway's most extensive
development project with foreign
participation to date, Statoil said. |
