Gas Pipeline Issues Blamed for Malaysia's Falling LNG Exports

SINGAPORE (Reuters) - Malaysia's exports of liquefied natural gas (LNG) fell to a four-year low in July as domestic gas pipeline issues plaguing the country since January took their toll, according to industry sources and Thomson Reuters data.

Natural gas supply from the Sabah Oil and Gas terminal to the Petronas LNG Complex in Bintulu was cut in January following a gas leak in the 500 kilometer pipeline which transports gas from Kimanis in Sabah to the Bintulu plant in Sarawak for processing.

While the pipeline has been repaired, Petronas is still awaiting the necessary approval from authorities to resume operations at the pipeline, a source familiar with the matter told Reuters.

Petronas did not comment on the pipeline issue but a spokeswoman said that there is no disruption to cargo deliveries from the Petronas LNG complex in Bintulu and that operations at the complex are being carried out as scheduled.

The Petronas LNG Complex, which has a capacity of 24 million tonnes per annum (mtpa), comprises three LNG plants owned and operated by Petronas and joint venture companies.

It is supplied with gas from several facilities off Sarawak, according to the company website.

LNG Exports Fall

Malaysia's LNG exports fell to about 1.5 million tonnes in July, the data showed, the lowest since July 2014 when it was about 1.43 million tonnes.

Petronas has purchased replacement cargoes to meet some of its contractual obligations to term customers, one source said, which would reduce spot exports as a result.

The drop in export volumes comes at a time when demand from Japan, the world's biggest importer of LNG, has been robust amid sweltering heat.

"Overall, the market is quite tight in terms of supply but new supply from Australia should help going forward," a Singapore-based trader said.

Revenue from LNG, which accounted for 3.5 percent of Malaysia's total exports, decreased to $663 million (2.7 billion ringgit) in June, down about 31% from a year ago, as export volumes fell, official statistics show.

Petronas also operates the 1.2 mtpa Petronas floating LNG facility off the coast of Sarawak. ($1 = 4.0730 ringgit)

(Reporting by Jessica Jaganathan; Additional reporting by Emily Chow in Kuala Lumpur Editing by Eric Meijer.) Image: Eric Teoh

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