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Dec 14 (Reuters) - Malaysia's state utilities firm Tenaga Nasional may start to source gas from the international markets next year to make up for a shortfall in supply for power generation, the New Straits Times reported on Wednesday.
The paper quoted Tenaga President and Chief Executive Officer Che Khalib Mohamad Noh as saying the firm was in talks with oil majors such as Shell, Malaysia's national oil company Petronas, and private suppliers to get the best market price for gas.
The plan to source gas from the open market will be subject to approval from the government that has kept gas and electricity tariff levels low for consumers.
Tenaga officials could not be immediately reached for comment on the report.
Tenaga buys gas from Petronas at a subsidised price of 13.70 ringgit ($4.31) per million metric British thermal units (mmBtu), compared to 30 to 40 ringgit in the open markets.
That has required Petronas to fork out 20 billion ringgit annually to maintain tariff rates.
The latest move to buy gas comes as Petronas cut its subsidised gas allocation to Tenaga due to a domestic shortage, forcing the power company to import expensive distillates that have eaten into its profits.
But in early December, Tenaga said the government agreed to implement a fuel cost sharing mechanism to share extra costs incurred from buying distillates and other expensive fuels to offset the gas shortage.
The costs would be shared between Tenaga, Petronas and the government.
UPDATE 1-Malaysia's Tenaga seeks 100,000 T Nov fuel oil
By Yaw Yan Chong
Oct 7 (Reuters) - Malaysia's national power utility, Tenaga Nasional , has issued a tender seeking 100,000 tonnes of November-delivery fuel oil after buying similar volumes for this month, traders said on Friday.
The utility started buying large volumes of fuel oil regularly from the second quarter of this year and is expected to continue doing so until early next year, because the country's power sector has been receiving only two-thirds of its natural gas allocation from Petronas .
"They will probably have to pay more for their cargoes this time round, given the severely imbalanced state of the market currently," a Singapore-based Western trader said.
The utility is seeking four 20,000 tonne parcels and two 12,500 tonne lots of low 0.98 density, all for delivery Nov. 1-28 to Kapar in Selangor and Pasir Gudang in Johor, via the tender, which closes on Monday.
It last purchased a total of 105,000 tonnes, mostly from oil major Shell (RDSa.L), at premiums of $25-$30 a tonne to Singapore spot quotes on a free-on-board (FOB) basis.
So far, Tenaga has bought about 450,000 tonnes for April delivery onwards, mostly from Shell and European trader Mercuria.
Tenaga's demand, regarded as unexpected and irregular before April, is expected to squeeze the market for low-density cargoes, which is already tight due to a seven-month high in Western arrivals at 3.9-4.0 million tonnes for this month, leading to severe quality imbalances.
Reflecting this, the market's prompt structure has been severely backwardated for about the past three weeks since the start of the October pricing month, with October/November at seven-month highs of above $9 a tonne for the past week.
Tenaga had earlier said it has spent 400 million ringgit ($134.4 million) a month to buy power-generation fuel, draining its cash flow and eating into its reserves.
Petronas usually allocates 1,350 million standard cubic feet per day (mmscfd) of gas to the power sector. Supply has fallen below 1,000 mmscfd since the start of 2011 and now hovers between 900-950 mmscfd.
In its third-quarter financial results, Tenaga posted a net loss after it spent an additional 1.3 billion ringgit on fuel. (Editing by Jane Baird)
Malaysia's Tenaga seeks Nov fuel oil, continues rare purchase
SINGAPORE | Oct 7 (Reuters) - Malaysian power utility Tenaga Nasional has issued a tender seeking 100,000 tonnes of fuel oil for November, after buying similar volumes for this month, traders said on Friday.The utility is seeking four 20,000-tonne parcels and two 12,500-tonne lots of low-0.98-density. All are for delivery Nov. 1-28 to Kapar in Selangor and Pasir Gudang in Johor. The tender closes on Monday.It only started buying large volumes of fuel oil regularly from the second-quarter this year, and is expected to continue doing so till early next year, because Petronas has cut natural gas allocation to the country's power sector by a third. (Reporting by Yaw Yan Chong; Editing by Manash Goswami)
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