Technical Problems Facing Natural Gas Industry in Malaysia

Natural gas is one of the main sources of energy supply in Malaysia other than crude
oil and petroleum. Natural gas met nearly a quarter of the worlds energy demand [1].
Natural gas resources are discovered in Malaysia especially off the states of Sarawak and
Terengganu. Malaysia is the 9th worlds leading exporter of natural gas in Asia [2]. Figure 1
shows the final energy consumption by fuel type. Natural gas has raised its consumption by
9.8% from year 1993 to 2013 [3]. However, due to the trends of consumption and production
in Malaysia, it gives indication that this natural gas will be depleted physically as it is nonrenewable resources. This is one of the challenges facing by natural gas industry. Hence, it is
a must for natural gas industry to discover its conservation and exploration within Malaysia
and abroad to replenish the reserves of this resource to meet ever-increasing demands [2].

Figure 1: Final Energy Consumption by Fuel Type

Rising of natural gas production and exportation due to its consumption and demand
have directed the natural gas industry to face some technical problems either upstream or
downstream sector operation. The upstream sector of natural gas industry involves different
operations such as the searching for and recovery of natural gas as well as its production.
Meanwhile, the downstream sector of the industry is the sector relates with the consumers.
Facilities involved in this sector include natural gas plant, distribution companies, retail
outlets and others [4].

Firstly, we will look into the technical problems in the upstream natural gas industry
facing in current technology era. The biggest challenge to this industry is the depletion of
sources of oil and gas since it is non renewable natural resources [5]. The current intensive
use of oil and gas contributes the worlds crude oil supply at risk. However, this problem
cannot be solved by preventing or reducing the usage of oil and gas or their products
especially during this era. One of the ways to deal this problem is by utilizing the state of the
art technologies available to convert various natural resources to petroleum products such as
agricultural products and biofuels [4].
Other than depletion oil and gas sources, oil and gas industry also encounters the
problem of higher demand for natural gas than its supply. This is due to the increasing
population and economic growth. Global oil supply will struggle to keep pace with the
demand due to decreasing output in mature fields by about 80 percent in 2035. Another
problems faced is economic uncertainty and fluctuation of crude prices. These problems led
to the slow movement of some firms in the upstream sector. Fluctuation of crude prices occur
due to instability of political and it resulting slow approval of new capital projects, the
squeezing of talents as a result of early retirements and acquisition activity [4].
Now, we will look at downstream challenges in natural gas industry. Many challenges
are faced in the supply mechanism of natural gas. The performance of the supply chain can be
significantly affected by timely flow of accurate information. Information technology is
really helpful to ensure optimization in the process even though it currently seems to be a
huge challenge. Various processes and technicalities such as modelling, designing and
monitoring of engineering assets should be used to ensure efficiency in this process. By using
this method, oil supply can be mechanized and carrying cost can be reduced. It is important
as it gives advantages towards the collaboration in between oil and gas business and its
vendor organizations [4].
In the downstream sector of natural gas industry, they will meet the challenge of
refining incapability. There are few factors that have reduced the performance in the
downstream sectors including economic uncertainty and higher oil prices. More efficient,
flexible and integrated refineries are needed to solve this problem. Other than that, increased
cost of services also categorized as problem faces by natural gas industry. This increased
service cost cuts across the value chains from exploration to production as well as refining
and transportation. This results to higher commodity prices and it has driven the industry
activity to a point where the service industry lacks the capacity to respond [4].
In conclusion, the upstream and downstream sector in natural gas industry encounters
lots of challenges and problems which have been clearly evaluated. These challenges have
constrained lots of activities in the oil and gas industry and disturbed lots of processes.
However, current era technologies are highly needed to solve these problems in the oil and
gas industry in the twenty first century [4].

References

[1]

S. A. Solarin and M. Shahbaz, Natural Gas Consumption and Economic Growth: The
Role of Foreign Direct Investment, Capital Formation and Trade Openness in
Malaysia, Munich Pers. RePEc Arch., 2015.

[2]

K. A. Rahim and A. Liwan, Oil and gas trends and implications in Malaysia, Energy
Policy, vol. 50, pp. 262271, 2012.

[3]

Energy Commission, Malaysia Energy Statistics Handbook 2015, p. 84, 2015.

[4]

A. Bhardwaj, Challenges and Solutions in an Upstream and Downstream Oil and Gas
Operation, Gobalenergy.pr.co, 2013. [Online]. Available:
http://globalenergy.pr.co/65678-challenges-and-solutions-in-an-upstream-anddownstream-oil-and-gas-operation.

[5]

MGA, Malaysia: Natural Gas Industry Annual Review - 2014 Edition, Malaysian
Gas Assoc., pp. 442, 2014.