Petronas to Decommission Sabah-Sarawak Gas Pipeline: A Pragmatic Decision?
Background
Petronas, the national petroleum company of Malaysia, has announced its plan to decommission the Sabah-Sarawak Gas Pipeline (SSGP) as part of its decommissioning plans from 2025 to 2027. The SSGP, which runs for 500 km from Kimanis, Sabah to Bintulu, Sarawak, was built in 2011 for over RM4 billion.
Operating Costs a Major Factor
According to Sabah finance minister Masidi Manjun, operating costs may have driven Petronas to decommission the SSGP. He pointed out that the cost of maintaining the Sabah Oil and Gas Terminal, which runs from Kimanis to Bintulu, was high. "So I reckon Petronas was being practical," he was quoted as saying.
Challenges in Maintaining the Pipeline
Masidi emphasized that attending to any problem along the pipeline was difficult and expensive due to its length. He suggested that Petronas was reassessing its priorities given the challenges and the cost of maintenance involved in the transfer of gas between the two states.
Petronas’ Stance on Decommissioning
Petronas has stated that decommissioning activities of matured assets in Malaysian upstream operations are "essential to restore the area to a safe and environmentally stable condition." The company has also planned to construct a floating liquefied natural gas (LNG) facility in Sipitang and an LNG facility in Bintulu, which is reputed to be the largest in the world.
Alternative Options
Masidi suggested that Petronas might have also taken into account the LNG facility in Sipitang and the one in Bintulu when deciding on decommissioning the SSGP. He emphasized that the company was likely to have factored in these facilities when making its decision.
Conclusion
Petronas’ decision to decommission the SSGP is a pragmatic one, driven by the high operating costs and challenges involved in maintaining the pipeline. The company’s focus on decommissioning matured assets and constructing new facilities, such as the LNG facilities in Sipitang and Bintulu, is a strategic move to ensure the long-term sustainability of its operations.
FAQs
- What is the Sabah-Sarawak Gas Pipeline (SSGP)?
The SSGP is a 500 km pipeline that runs from Kimanis, Sabah to Bintulu, Sarawak. - Why is Petronas decommissioning the SSGP?
Petronas has announced its plan to decommission the SSGP as part of its decommissioning plans from 2025 to 2027. The company cites high operating costs and challenges involved in maintaining the pipeline as the reason for its decision. - What are the alternative options for Petronas?
Petronas is planning to construct a floating liquefied natural gas (LNG) facility in Sipitang and an LNG facility in Bintulu, which is reputed to be the largest in the world.