Petronas inks gas supply deal and explores decarbonization avenues by extending regional methane reduction program

Malaysia’s state-owned energy firm Petronas has inked a gas sales agreement (GSA) for its subsidiary Malaysia Petroleum Management (MPM) to deliver gas to compatriot firm Sabah Electricity Sdn. Bhd. (SESB). The oil and gas giant has also teamed up with energy players from the Association of Southeast Asian Nations (ASEAN) to drive methane emissions reduction efforts in the region.

Under a newly formalized five-year deal, Malaysia’s national oil and gas company will continue supplying 16 million standard cubic feet of gas per day (MMscfd) to SESB for power generation. The agreement, signed on June 30, was recently marked with a formal document exchange ceremony held on September 29, 2024.

The contract is described as a reflection of the partners’ commitment to efficient and responsible energy solutions. Furthermore, gas is expected to play a key role in fueling the domestic economies of the state of Sabah and the federal territory of Labuan. 

MPM Senior Vice President Bacho Pilong noted: “This Gas Sales Agreement is a testament to our enduring partnership with SESB and our shared ambition in securing a sustainable energy future for Sabah. PETRONAS remains committed to supporting Sabah’s industrial development by ensuring a stable and sustainable energy supply, which will be vital in driving the state’s growth.”

The agreement fits Petronas’ broader agenda of driving growth through sustainable energy initiatives and its plan to achieve net-zero carbon emissions by 2050. Since liquefied natural gas (LNG) also plays a part in this, Mitsubishi Corporation signed new agreements reaffirming its engagement in two of Malaysia’s LNG plants owned by the energy major in the country’s Sarawak region, MLNG Dua and MLNG Tiga.

Another step on its energy transition path was the launch of the ASEAN Energy Sector Methane Leadership Program 2.0 (MLP 2.0) in collaboration with ASEAN energy sector operators, government agencies, and international organizations.

Under the ‘Turning Capacity into Action’ motto, the program aims to boost regional methane emissions reduction efforts as a continuation of the inaugural Methane Leadership Program that lasted from June 2023 to October 2024. The plan is to do this by enhancing collaboration between companies and governments and driving collective regional actions on methane emissions reduction strategies and initiatives to support the Global Methane Pledge.

Launched in September 2021, the Global Methane Pledge aims to cut global methane emissions by at least 30% compared to 2020 levels by 2030. The initiative was signed by over 150 countries, including Malaysia and five other ASEAN countries.

Petronas has also been exploring methane reduction options outside the ASEAN region. In April, Japan’s JGC Corporation was picked to conduct a study aimed at formulating methods to control and reduce methane and other greenhouse gas (GHG) emissions at offshore production facilities operated by the Malaysian firm.

Alongside its decarbonization efforts, the state-owned giant recently made an offshore oil and gas discovery at the Bekok Deep-1 exploration well in Peninsular Malaysia, assisted by TGS, which pointed out that this represents “a significant milestone for the region’s energy sector.”