Petronas: LNG to Remain Core Product

Gas will remain core to Petronas' business as a natural partner to renewables, Petronas CEO Tengku Muhammad Taufik told the Energy Intelligence Forum 2021 Tuesday.

The Malaysian state-owned company, which is aspiring to become carbon neutral by 2050, will also diversify its portfolio with investments in hydrogen and ammonia.

But the foray into hydrogen and ammonia is not intended to displace LNG because natural gas remains an integral part of many countries' energy mix.

Petronas is one of the largest LNG producers in the world with its nine-train 30 million ton per year Bintulu LNG Complex in Sarawak, and gas representing around 70% of its upstream portfolio.

Gas Is Here to Stay

"In any given future, in any given decarbonized scenario, we do not see it being a hydrocarbon-free scenario," Taufik said.

He added that operators need to be more responsible in the way they produce oil and gas to limit emissions.

Even the International Energy Agency's most rapid policy shift scenario shows that gas will still have a significant part to play in the global energy mix in the next two to three decades, Taufik said.

"If you take a view over the long run, we are looking at a possible scenario even within a decade hitting a possible high 500 or even 600 million tons/yr of total LNG being consumed," he said.

Taufik touted gas as the cleanest-burning fossil fuel and a flexible tool for countries negotiating shifts in energy policy.

"Gas is something that is perhaps presenting itself as not a perfect solution, but better than what we have today," Taufik said.

He said analysis shows that if the full life-cycle emissions of a gas-fired power plant are compared with a coal-fired plant, “we are looking at half the emissions.”

Hydrogen

While LNG will remain Petronas' main product, the company is making a foray into hydrogen/ammonia to address the future needs of its customers.

“Customer-centricity is now going to be very much part of the fabric operating in this transition phase towards a lower-carbon future, because we now cannot hold on to the philosophy that whatever we produce we can sell," Taufik said.

Petronas believes it has a geographical advantage with proximity to important future hydrogen markets such as Japan and Korea, which are already some of its largest LNG clients.

Venturing into the production of hydrogen/ammonia is a "natural step" as Petronas can already produce so-called "blue hydrogen" from its facilities, Taufik added.

Blue hydrogen can be made from natural gas, with the resulting carbon emissions captured and stored.

However, transporting hydrogen remains a challenge and more work needs to be done in this field with Petronas looking at developing a liquefied form of the fuel.

The Malaysian firm is looking at transporting hydrogen in the form of liquid methylcyclohexane.

Petronas and Japanese refiner Eneos recently agreed to conduct a joint technical-commercial study into producing hydrogen and transporting it as methylcyclohexane.