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.