Gas Malaysia price increase unfair for consumers

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Traders had long wondered why Malaysia, as of 2015 the world’s 2nd largest exporter of Liquefied Natural Gas, would occasionally import cargoes of LNG.

The answers may astonish you – it is now more expensive to buy natural gas in Malaysia, the worlds 3rd largest exporter of LNG than it is to buy gas in Japan ! 

At RM 27.05 per MMBtu, Gas is trading at about USD $6.68 per MMBtu. The price for LNG shipped to Japan in May is only USD $4.1 per MMBTU (see here). That means it costs 63% more to buy gas in Malaysia than it is in Japan.

This pricing is  even more unfair to the consumer when we compare the price of gas with other benchmarks, such as Henry Hub in the US (see here). There gas is traded at USD $2.80, or 60% cheaper than it is being sold here in Malaysia.

The Government should not have allowed such a cost increase – especially when the price of gas worldwide has declined considerably. Currently LNG, which is how gas is traded in the international markets, costs about USD $4.00 – USD $4.50 per MMBtu.

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With this price mechanism, GAS Malaysia can even afford to buy as much gas as it wants from the international market, absorb a cost of about $0.50 per MMBtu for the re-gasification, and still turn around a profit for practically doing nothing.
It is feared that this cost increase may lead to an increase in the price of electricity which will affect the lower income group considerably.

The Rembau Times calls on the Government to reconsider this price increase in the light of the current challenging times faced by the people, especially those from the lower income group.

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