* Production rises from Train 9, floating LNG
* Contracts with Japanese buyers due for renewal in 2018
* Seeks new buyers across Asia
* Steps up marketing to China, to explore LNG bunkering
By A. Ananthalakshmi and Emily Chow
KUALA LUMPUR, May 9 Malaysia's state energy firm
Petronas may try shorter-term LNG contracts and smaller cargo
sizes to entice buyers, senior company officials said, at a time
when it has major contracts coming up for renewal and the market
is awash in supply.
The liquefied natural gas (LNG) marketing drive at Petroliam
Nasional Berhad, or Petronas, coincides with rising
production after the start-up of Train 9 at its Bintulu export
terminal and its first floating LNG unit. Malaysia is the
world's third-largest LNG exporter.
The global LNG market has become a buyers' market as growth
in new supplies, mainly from Australia and the United States,
exceeded demand and depressed prices. Asian spot LNG prices have
dropped by more than 70 percent since 2014.
"New demand creation is becoming a norm," Ahmad Adly Alias,
vice president of Petronas' LNG Trading & Marketing said at the
Asia Oil & Gas Conference on Tuesday.
"We have recently restructured our organization to put a lot
more focus on Middle East and South Asia... We've also set up a
team to cover Southeast Asia," he said.
The company's upstream chief executive officer Mohd Anuar
Taib told Reuters on Monday that it sees significant potential
demand growth in India, Pakistan, Bangladesh and some parts of
In China, Petronas plans to work with a partner to sell
smaller parcels to meet the demand of small buyers, Ahmad said.
Petronas is also exploring LNG sales as a transportation
fuel for trucks and ships, the officials said.
Producers, who used to sell their cargoes on long-term
contracts, now have to become more flexible on selling terms,
including allowing customers to swap contracted supplies and
sell more cargoes in the spot market.
Petronas will soon start negotiating with customers in
Japan, its biggest buyer, as some contracts are set to expire
next year, with some even looking to reduce the volume of LNG
Japan's biggest utility Tokyo Electric Power Company
has a contract to buy up to 4.8 million tonnes per year
(tpy) of LNG, while Tokyo Gas Co's contract is for up
to 2.6 million tpy. They both expire in March 2018.
"(Our) priority is to recontract in Malaysia but probably
volume-wise it will be changed. And, how we can agree to new
terms and conditions with better flexibility or pricing," said
Shigeru Muraki, executive advisor at Tokyo Gas.
"We will compare with other sources, we will consider the
diversification of supply sources or diversification of
Petronas' Ahmad said the company was currently working with
long-term buyers to renew the contracts, but did not give
In the interview Monday, upstream CEO Anuar said long-term
contracts have "almost become a novelty." Petronas could do both
short- and long-term contracts, he said.
(Reporting by A. Ananthalakshmi, Florence Tan & Emily Chow;
Editing by Christian Schmollinger)