Eng Nkea Oil Gas Energy

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ETP ANNUAL REPORT 2011


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Dato Sri

Peter Chin Fah Kui

Minister o Energy,Green Technologyand Water

Energ is an important actor to Malasias economic growth,

constituting about 20 per cent o the nations Gross Domestic Product

GDP. The Government plans to increase diversication o the energ

industr, step up exploration or new oil and gas resources, enhance

production rom known reserves, and encourage the use o alternative

energ sources such as solar, hdro-electric and even nuclear. The

energ sectors contributions to our GNI are expected to rise rom RM110

billion in 2009 to RM241 billion in 2020. Hence, the energ sector needs

to be more efcient and resilient to be able to deliver adequate and

reliable energ suppl to support our countrs rapid growth against

a backdrop o depleting energ resources as well as escalating and

volatile energ prices.

Malaysia has made rapid progress moving rom an agrarian economy intoan industrial economy and now, moving towards a green economy. One othe main reasons or our success is the Governments ocus on providingexcellent inrastructure to support and promote economic growth. We haveto ensure that the inrastructure is present and well-maintained.

Malaysias direction towards a green economy is an essential part o theETP, along with the assurance o sustainable and sucient energy supply toall at reasonable and aordable prices. The Renewable Energy Act, as theoundation catalyst or the nations renewable energy generation, is alignedwith the Malaysian Governments aim o achieving 5.5 per cent renewable

energy in Malaysias total energy mix by 2015. Malaysia is now ready to jointhe league o economies that have eco-riendly and survivable businessthrough the Governments direct participation in promoting consumption ogreen, ecient and environmental-riendly products.

Moving orward, the national vision on energy is set to leverage on greentechnology to achieve sustainable development and contribute to a highincome economy. The proposed vision captures the potential impact ogreen technology in ensuring a higher quality o lie or Malaysians whileensuring that economic growth is sustainable without the over-depletion oits natural resources. Such a state o aairs would also ensure recognition oMalaysia as a responsible global player in the green technology sphere andlow carbon economy.

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NKEA: Oil, Gas and Energ Ministers Message


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131.423.1

53.8

7.4

47.120.3

14.3

4.08.5

109.6 241.0

0

20

10

30

40

240

60

70

80

90

100

110

120

130

50

E & P Down-stream

OFSE Energy TotalEPPs

BusinessOppor-tunities

BaselineGrowth

Multiplier TotalGNI

Impact

2009GNI

2020GNI

2020 GNI contribution

(RM billion)

12 EPPs, two business opportunities, baseline growth and multiplier effect will deliverRM131.4 billion incremental GNI impact by 2020

Exhibit 2.1

To meet this target, the OGE NKEA will ocus on our key thrusts:

sustaining oil and gas production, enhancing downstreamgrowth, making Malaysia the number one Asian hub or oil ield

services and building a sustainable energy platorm or growth.

The OGE NKEA Lab in 2010 identiied 12 Entry Point Projects (EPPs)

as well as two business opportunity thrusts. Combined, they are

projected to deliver RM131.4 billion in Gross National Income

(GNI) and create an additional 52,300 jobs in the OGE sectors. A

signiicant proportion o these jobs will be highly-skilled, with an

estimated 21,000 (40 per cent) or qualiied proessionals such as

engineers and geologists.

Oil, Gas and Energ

The Oil, Gas and Energy (OGE) National Key Economic Area (NKEA)is targeting ve per cent annual growth or the sector rom 2010

to 2020. This is ambitious, particularly against a backdrop o

the natural two percent decline o oil and gas production

Beyond sustaining the production o oil and gas, the OGE NKEA

will also ocus on growing the downstream area o the sector,providing insulation against price shocks in the global commodity

market. It will also be responsible or building a sustainable energy

platorm or the rakyat and business.

Over the course o 2011, signiicant strides have been made in the

sector, notably the approval o the Petroleum Income Tax Act (PITA)

Amendment Bill, which aims to incentivize exploration o marginal

oil and gas ields. Signiicant investments have been made by

major industry players such as Shell, ExxonMobil, Petronas, Dialog

Group and Royal Vopak in line with the our strategic thrusts

o the NKEA. Dedicated bodies such as the Malaysia Petroleum

Resources Corporation (MPRC) have been set up to streamline

cooperation between the government and private sectors.


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NkEa Oil, Gs nd Energy kPI (Quntittive)

No. KPI Target

(Fy)

Actual

(yTD)

Achievement

Method 1 Method 2 Method 3

% %

EPP #1 Addition resources

million stock tank barrel (mmstb)

72 141 196% 100% 1.0

EPP #2 Production rom marginal elds

thousand barrel o oil equivalent per day (kboed)

3.5 3.5 99% 99% 0.5

Production rom marginal elds (oil)

thousand barrel per day (kbd)

3.5 3.5 99% 99% 0.5

EPP #3 Number o explored wells 32 33 103% 100% 1.0

EPP #4 Committed amount o land-based oil

storage capacity million cubic metre

7,000,000 7,300,000 104% 100% 1.0

Number o oil trading companies based in Malaysia 2 5 250% 100% 1.0

EPP #5 Number o additional conrmed gas requirement

(mmscd)

140 139 99% 99% 0.5

EPP #6

and #8

Amount o investments made by OFSE MNCs

RM million

320 454 142% 100% 1.0

Number o MNC or JVs between local OFSE

companies with global MNCs

2 2 100% 100% 1.0

EPP #7 Number o successul merger o abricators 1 1 100% 100% 1.0

EPP #9 Percentage reduction in electricity bill or top 120

government entities against electricity bill or the

year

3% 3% 100% 100% 1.0

Market share o 5-star appliances

1. Rerigerator

13% 13% 101% 100% 1.0

2. Air-conditioner 8% 9% 107% 100% 1.0

3. Chiller 35% 11% 32% 31% 0.0

EPP #10 Amount o grid-connected solar power

generation capacity installed (MW)

24 2.55 11% 11% 0.0

EPP #12 Generated electrity capacity (MW) 300 300 100% 100% 1.0

109% 90% 78%

2011 Ke Perormance Indicators

Exhibit 2.2

Method 1 provides a refection o the actual KPI achievement. I a KPI surpasses its targets signicantly,the nal results will be presented as a large percentage, surpassing the 100 per cent limit.

Method 2 has been ormulated to accommodate or KPI achievements with signicant quantitativeresults. Under this method, any achievement above 100 per cent is capped.

Method 3 represents a simple refection o the KPI achievement. KPI targets that were met or exceededare graded 1, those achieving over hal o their targets are graded 0.5, and those with less than hal their

targets are graded 0.

* Inormation kept

condential at request

o involved parties

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NKEA: Oil, Gas and Energ Overview


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Enhanced oil recovery (EOR) uses methods such as gas or

chemical injection or thermal fooding to increase the amount o

oil recovered rom the underground reservoirs rom a range o 20

to 35 per cent (industry norms) to 30 to 50 per cent.

PETRONAS has a three-pronged strategy to ensure that EOR

techniques are deployed in Malaysia to extract more oil rom the

nations oil elds. Firstly, PETRONAS, where necessary, will review

the production sharing contract (PSC) terms and introduce new

petroleum arrangements to incentivise the implementation o

EOR techniques.

Secondly, PETRONAS will ensure that companies with specialised

EOR expertise are aware o the opportunities in Malaysia and areattracted to operate here. Thirdly, PETRONAS will use its role as the

industry regulator to ensure that the most innovative methods

and technologies are being disseminated and deployed to reduce

capital and operating costs.

AchievementsThere has been signicant development in this EPP in 2011. In

January, ExxonMobil committed to invest over RM10 billion in EOR

techniques. The investments will be made to rejuvenate mature

acilities and undertake enhanced oil recovery activities in the

Tapis eld. The Telok project, oshore Peninsular Malaysia, is being

developed under a Gas Production Sharing Contract to provide

additional supplies or Malaysias power and industrial needs and

will promote organic growth o the natural gas sector.

On 16 January 2012, Shell Malaysia and PETRONAS signed two

new PSCs or enhanced oil recovery (EOR) projects oshore

Sarawak and Sabah. These contracts will see investments o over

US$12 billion to extend the lie and increase the recovery actor o

the Baram Delta and North Sabah elds, located oshore Sarawak

and Sabah, respectively. The average recovery actor in these elds

is expected to increase rom 36 per cent to 50 per cent.

Shell Malaysia has committed investment o RM5.1 billion into

projects to upgrade, expand and build their acilities in upstream,

midstream and downstream across Malaysia. These projects

include the expansion o the Shell MDS wax plant in Bintulu, a

new diesel processing unit at the Shell Renery in Port Dickson,and the Gumusut deepwater development oshore Sabah.

Moving ForwardSigniicant investment in 2011 on EOR techniques ensured

that the Key Perormance Indices (KPIs) or this EPP were met,

and signiicantly surpassed. To ensure that targets in 2012 are

met, additional ocus is needed to ensure that the investment

committed in the best EOR techniques or the remainder o the oil

and gas ields in Malaysia is realised.

In addition to this, the expansion o Shell MDS wax was completed

at the end o 2011, while the new diesel processing unit at Shell

Reinery in Port Dickson has already been commissioned. The

Gumusut deepwater development is still in progress and is

expected to be ready by 2013.

Rejuvenating Existing Fields Through

Enhanced Oil Recovery

EPP 1

EOR techniques can improve oil recovery rates a range o 20 to 35 per cent to 30 to 50 per cent

Entry Point Projects


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A signicant proportion o Malaysias remaining resources lay

in elds with less than 30 million barrels o recoverable oil.Developing these elds in an economically attractive manner is

oten challenging, as they need the same expensive inrastructure

as large elds, while the expected revenue streams are smaller

due to the smaller reserve sizes.

Over 2011, PETRONAS and relevant stakeholders have reviewed

the PSC terms and introduced new petroleum agreements

to ensure that operators o these small elds receive enough

economic incentives to make their investment attractive.

Signicant work has also been done to attract exploration and

production (E&P) operators that specialise in small elds as well

as acilitating collaboration between players to allow sharing o

acilities and other synergistic measures to improve the economics

o small eld development.AchievementsIn June 2011, the Petroleum Income Tax Act Bill Amendment was

read and approved in Dewan Rakyat and later in July 2011, it was

approved by Dewan Negara. The amendments will introduce new

tax incentives or the oil and gas sector to unlock and monetise

stranded oil and gas resources.

Developing Small Fields ThroughInnovative Solutions

The ve new incentives introduced under PITA are:

An investment tax allowance o up to 60 to 100 per cent ocapital expenditure to be deducted against statutory income to

encourage the development o capital intensive projects in the

area o enhanced oil recovery, high carbon dioxide gas elds,

high pressure high temperature, deepwater and inrastructure

projects or petroleum operations

The tax rate o 38 per cent currently or marginal oil eld

development would be reduced to 25 per cent to improve

commercial viability o the development

Accelerated capital allowance o up to ve years rom 10 years,

where ull utilisation o capital cost deducted could improve

project viability

Qualiying exploration expenditure transer between

non-contiguous petroleum agreements with the same

partnerships or sole proprietor to enhance contractors

risk-taking attitude, which could encourage higher levels o

exploration activity

Waiver o export duty on oil produced and exported rom

marginal eld development to improve project viability

In addition to this, in January PETRONAS awarded a risk

service contract or its Berantai marginal eld to a consortium

consisting o, Kencana Energy Sdn Bhd, Sapura Energy Ventures

Sdn Bhd (now Sapura Kencana Petroleum Bhd) and Petroac

Energy Developments Sdn Bhd. Petroac Energy, with a 50

per cent equity stake will lead the project, while Kencana and

Sapura each take a 25 per cent stake. The partners are expectedto invest around RM2.56 billion in the development and are

scheduled to complete the rst phase o oil wells in 2012.

In August, PETRONAS awarded the Balai Cluster marginal oil

eld oshore Sarawak to a venture involving Dialog Group,

Australias ROC Oil Co and PETRONAS Carigali. Production rom

all the elds in the cluster was planned to be online within 24

months rom commencement o the development programme.

Moving ForwardTo bolster production o crude oil and gas and maintain production

at 650,000 barrels per day, additional licences to develop marginal

ields will be awarded by PETRONAS in 2012. Having been passed,

the Petroleum Income Tax Act will be utilised to incentivise newplayers to enter the marginal ield development segment.

EPP 2

PETRONAS awarding a risk service contract to the Berantai marginal

eld consortium

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NKEA: Oil, Gas and Energ EPP 1 EPP 2


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Dialog Group Berhad is leading a consortium to develop an Independent

Deepwater Petroleum Terminal Project at Pengerang, Johor

It has been determined that there are remaining resources that

have not yet been discovered. However, these elds are likelyto be high risk, as the low hanging ruits in shallow waters are

already in production.

To ensure that the necessary exploration investments are made,

PETRONAS, where necessary, will review the PSC terms and/or

introduce new petroleum arrangements, and review specic

processes to expedite uture exploration work.

AchievementsIn March 2010, successul drilling o the NC3 wildcat well and

a subsequent appraisal well brought signicant discovery or

PETRONAS in Block SK316 with early estimation o 2.6 trillion

standard cubic eet (tsc) o net gas in place. Production

fow test results o the wells demonstrate that the eld istechnically producible.

Intensiying Exploration Activities

The Spaoh-1 well o 3,000m drilling depth, located in Block

SK306, shows similar promise. It was drilled in December 2010and ound both oil and gas. The preliminary evaluation indicates

around 100 million barrels (mmstb) o oil and 0.2 tsc o gas in

place, respectively. Currently, the well is being prepared or

production testing.

Moving ForwardIn the next three years, over 50 exploration wells are expected

to be drilled oshore Malaysia by PETRONAS and its production

sharing contractors.

(more on next page)

In Southeast Asia, Singapore has traditionally had a signicant

presence in the oil storage industry, with a total o 10 million

barrels o independent storage capacity. In addition, by 2007

it had built a signicant trading business worth more than RM1

trillion in physical oil trade and RM2 trillion in derivative trade.

With port locations on major shipping routes or crude oil and

rened products, close proximity to Singapore, signicant land

availability and deepwater marine accessibility, Malaysia is well

placed to complement Singapore in this industry.

AchievementsDialog Group Berhad is leading a consortium comprising o

the State Government o Johor and Royal Vopak to develop

an Independent Deepwater Petroleum Terminal Project at

Pengerang, Johor with a total petroleum storage capacity o

about ve million cubic metres.

The terminal will have an initial storage capacity o approximately

1.3 million cubic metres and is expected to be commissioned in

2014. Department o Environment has approved the projects

detailed environmental impact assessment and currently

earthworks reclamation are in progress.

In addition to this, Zhuhai Winbase has teamed up through

a joint venture with RG Gas and Chemical (M) Sdn Bhd to

develop Labuan oil storage terminal in Pulau Daat. This hub will

provide land-based logistics and support services such as tank

arms, oil terminals, container yards, abrication yards as well as

complementing marine support logistics in Labuan.

The rst phase o the project, would involve the building o a

storage tank terminal, with a capacity o 300,000 cubic metres.

The remaining three phases would include building a 1.5 million

cubic metres storage tank terminal, engineering abrication

yards like jacket platorms and other acilities, including waterstorage acilities.

Earthworks are currently in progress and expected to be

completed by end o December 2011. Construction o storage

tanks will begin in the second quarter o 2012.

In addition to this, Tanjong Agas Supply Base and Marine

Services Sdn Bhd (TASBMS) is the concessionaire and project

company to develop the Tanjong Agas Oil & Gas and Logistics

Industrial Park on 4,260 acres o land in Tanjung Agas, Pekan,

Pahang Darul Makmur.

Building Regional Oil Storage and Trading Hub

EPP 3

EPP 4


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The lack o gas supply, driven by declining domestic gas

production, is cited to have resulted in limited additionalinvestment rom new industries, e.g. glass and plastics

manuacturers and semiconductor waer manuacturers, as well

as preventing current industrial diesel and liqueed petroleum

gas (LPG) users rom switching to more competitively priced

natural gas. It is estimated that there would be more than 500

million standard cubic eet per day (mmscd) o additional

latent gas demand by 2020.

Domestic gas supply, including imports rom Indonesia and the

Joint Development Area with Thailand, is expected to decline at

12 per cent per year in the coming decade. Furthermore, there

is insucient gas supply in the region to support additional

piped gas imports into Malaysia. To meet this growing latent gas

demand, a liqueed natural gas (LNG) regasication terminalwill be built to treat imported LNG. To make gas imports

economically easible, the gas will be sold at a liberalised and

unsubsidised price.

Malaysia-based Muhibbah Engineering Bhd in concert with

Perunding Ranhill Worley has been awarded a contract or

the Engineering, Procurement, Construction, Installation and

Commissioning alliance or an LNG regasication unit, island

berth and subsea pipeline o the LNG Regasication Project rom

PETRONAS Gas Berhad.

The contract is valued at approximately RM1.07 billion, under

which the consortium will undertake the construction o the

LNG regasication unit, island berth and subsea pipeline. These

acilities will be constructed near the Sungai Udang Port, Melakawith a capacity to send out 3.8 million tonnes o gas per annum.

Unlocking Latent Gas Demand

AchievementsPETRONAS is embarking on the countrys rst regasication

terminal in Melaka. The acility is designed to receive, store and

vaporize LNG with a maximum capacity o 3.8 million tonnes per

annum (mtpa) (up to 530 mmscd). Its Jetty Regasication Unit will

regasiy the LNG (into its gaseous orm) and the natural gas will be

transported to demand centres through the existing Peninsular

Gas Utilisation network. The project is estimated to be ready or

commissioning by third quarter 2012, ahead o schedule which

projected the rst phase to be operational in 2013.

In December 2011, PETRONAS Gas Bhd set up a code o conduct

which denes standards o behaviour and disclosure in respect

o the provision o third-party access to the gas transportation

system operated by the company in Peninsular Malaysia.Designed to provide a ramework and a clear third-party access

regime through wide, transparent and uniorm principles to allow

entities to gain access to the gas transportation system, the code

will also ensure transparency, and air and equitable practices in

all transactions within the gas transportation system.

Moving ForwardThe ocus in 2012 will be to ensure that the regasiication terminal

is commissioned in Q3 2012. This, coupled with PETRONASs set

up o a code o conduct marks the beginning o the liberalisation

o the natural gas market in Malaysia. Eorts to bring the sale o

natural gas by PETRONAS up to market prices will also continue.

The Tanjong Agas Industrial Park will accommodate the operations

and activities within the oil and gas and maritime industries suchas shipyards, abrication yards, supply/logistics bases, a crude oil

and petroleum storage terminal and a LNG/gas receiving and

storage terminal. It will introduce support services and acilities

such as port and marine services, a centralized integrated utility

waste management plant, an oil and gas college, a ve-star

mariners centre and business park. This park is projected to have a

storage capacity o two million cubic metres.

Vitol has signed an agreement with MISC Berhad to extend

their current storage acility in Tanjung Bin, Johor. This project is

expected to be commissioned in April 2012 with a base capacity

o 841,000 cubic metres. Tanjung Pelepas Port has also committed

to invest in expanding its existing storage acility, which has

a capacity o 3.25 million cubic metres. In Tanjung Langsat,a consortium comprising o Dialog Group, MISC Berhad and

Tragura will expand their existing storage acility to targeted

capacity o 1.027 million cubic metres by 2014.

epp 4 (continued from previous page)

Moving ForwardOver 2011, several large corporations and consortiums havecommitted to construct and expand on petroleum storage

terminals. The ocus in 2012 will be ensuring that these projects

are implemented, with several slated to be commissioned over

the course o the year. In addition to this, we will work to ensure

that plans or uture phases o these acilities are realized.

EPP 5

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Malaysia can be positioned as a cost-competitive and strategic base or installation activities in the AP region

Attracting Multinational Companiesto Bring a Sizeable Share o their GlobalOperations to Malaysia

Malaysia aims to attract 10 to 20 major

international companies in the Oil

Field Services and Equipment (OFSE)

industry to bring approximately 10 per

cent o their business operations to

Malaysia. This translates to around 40

per cent o their regional activities and

would mean positioning Malaysia as a

cost-competitive base or engineering,

procurement and construction as well as

a strategic base or installation activities

in the Asia-Paciic region.

In April 2011 the Malaysia Petroleum

Resources Corporation (MPRC) was

established under the Prime Ministers

Department. Its main objective is to

make Malaysia an oil and gas hub by

2017. The organisation will acilitate

cross-border investments and assist

Malaysian oil and gas companies

through the identiication o suitable

markets and opportunities abroad.

MPRCs Board o Directors consists o

representatives rom PEMANDU, Malaysia

Industrial Development Corporation

(MIDA) and PETRONAS amongst others.

AchievementsMPRC and Labuan Financial Services

Authority (LFSA) have recently announced

the Global Incentives For Trading (GIFT)

programme. The GIFT programme is

established to encourage global petroleum

trading companies to use Malaysia as a

platorm to enter the Asia Pacic market.

To date, ve companies namely

PETRONAS, Dialog Group Bhd, YTL Power

International Bhd, UK-based BB Energy

and Rotterdam group, Vitol Trading, have

signed up or this programme and wereawarded a trading license each.

The key incentives oered are:

Flat corporate tax rate o three per cent

o chargeable income

100 per cent exemption on director

ees paid to non-Malaysian director

50 per cent exemption on gross

employment income or non-Malaysian

proessional traders and others in

managerial capacity o the Labuan

International Trading Companies.

In July 2011, Schlumberger inaugurated

the WesternGeco Penang Product Centre

(WPPC) dedicated to the manuacturing

and support o State-o-the-Art marine

and land seismic equipment. By the end o

2012, the WPPC will employ approximately

300 people, combining local talent with

international experience and expertise to

integrate manuacturing capabilities with

engineering resources and supply chain

support through leveraging opportunitiesin Malaysia and across the region.

Moving ForwardMPRC targets to have at least our more

companies signed up by the end o 2012

or its GIFT programme. MPRC will conduct

international road shows in Houston,

EPP 6

Geneva and London to promote the GIFT

programme and attract international

oil traders to locate their operations in

Malaysia. It also targets to win the bid as

the host o the annual Oshore Technology

Conerence, the worlds oremost event or

the development o oshore resources

in the ields o drilling, exploration,

production, and environmental protection.

It aims to host the conerence by 2014.

The downstream industry o oil and gas will

be kept driven by two key actors namely

high oil prices, which have improved

industry margins hence improving

the economics or oil ield services &

equipment business, as well as the shittowards more exploration and production

activities in geologically-complex ields

which increases demand or OFSE. Both

o these actors are expected to continue

to drive growth in the Malaysian OFSE

industry over the coming years.


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There are ve major oshore structure abricators in Malaysia,

none o which has the required scale or track record to ecientlycompete with major regional players. Industry players say that

there is a need or consolidation within the industry to match the

scale and eciency o major regional players.

Consolidating the many companies operating within the

industry would require PETRONAS to award licenses to only a

limited number o domestic abricators, who are open to such

intervention.

AchievementsIn September, Malaysia Marine and Heavy Engineering Holdings

Bhd (MMHE) made an oer to acquire Sime Darbys Pasir Gudang

abrication yard. The acquisition, worth some RM393.5 million,

Consolidating Domestic Fabricators

is expected to be completed by Q1 2012, which will make MMHE

the largest abricator in the country with its yard size increasing to488 acres. Its capacity will also increase to 69,700 metric tonnes

per year.

Moving ForwardDiscussions between OFSE players in Malaysia are underway,

and in 2012 we target two additional mergers or acquisitions o

domestic abricators.

Developing Capabilities and Capacity ThroughStrategic Partnerships and Joint Ventures

At present there are considerable gaps in the domestic OFSE

industry, with Malaysian companies lacking capabilities and

experience particularly in engineering and installation, limiting

their ability to gain a strong share in the regional market. This

EPP aims to incentivise domestic companies to orm joint

ventures with world class companies to build their capabilitiesand track records.

AchievementsBureau Veritas, a global leader in conormity assessment and

certication services recently acquired Scientige Sdn Bhd,

a Malaysian based company specialising in asset integrity

management services.Through this strategic acquisition, Bureau Veritas will strengthen

its local presence by enhancing technology and knowledge

transers as well as expediting the level o in-house competency.

The new organisation will serve as the heart o the technical

operations in the South East Asia region, providing services to

Singapore, Thailand, Vietnam, Brunei and Indonesia.

In 2011, Sapuracrest Petroleum Berhad and Kencana Petroleum

Berhad laid out plans to merge. The merger, worth RM11.85

billion, will create Malaysias largest integrated oil and gas service

provider by assets. The merger is expected to be completed by

Q1 2012, and SapuraCrest Kencana Petroleum Bhd will become

the ourth largest provider in the world by assets.

In addition to this, there were a number o strategic partnerships

between local companies and international players. For example,

Dialog Group and the Johor State Government ormed a

consortium with Royal Vopak (rom the Netherlands) to develop

an oil terminal in Pengerang, Johor. Partnerships between Petroac

(UK), Kencana Petroleum and Sapuracrest Petroleum (both

Malaysian) as well as between ROC Oil (Australia), Dialog Group

and Petronas Carigali (both Malaysian) were ormed to develop

marginal oil elds.

Moving ForwardThe target or 2012 will be or two additional joint ventures.Strategic partnerships oer opportunities or domestic companies to orm joint

ventures with world class companies to build capabilities

EPP 7

EPP 8

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SAVE, or Sustainability Achieved via Energy Eciency, is spearheaded by the Ministry o Energy,

Green Technology and Water (KeTTHA)

On average, Malaysia is 34 per cent more

energy-intensive than its peer countries.We will ocus on ve relevant levers to

improve energy eciency in Malaysia:

The Government will lead by example1.

on energy-eciency practices and

philosophy

Stimulate sales o energy-ecient2.

appliances

The Government will work with3.

Tenaga Nasional Berhad (TNB) to make

co-generation economically viable

Regulate better insulated buildings4.

Stimulate the sale o energy-ecient5.vehicles

AchievementsSAVE, or Sustainability Achieved via

Energy Eciency, is a programme

spearheaded by the Ministry o Energy,

Green Technology and Water (KeTTHA),

to improve energy eciency in Malaysia

through ve initiatives. It was launched in

July 2011.

This one-o initiative is to stimulate

sales o energy-ecient appliances

by providing rebates or rerigerators,air-conditioners and chillers to

qualied consumers. The programme

is implemented through collaboration

between KeTTHA and utility companies

(TNB , Sarawak Electricity Bhd, Sabah

Electricity Sdn Bhd) with participating

appliance and equipment manuacturers

as well as retailers throughout Malaysia to

reach the targeted groups.

100,000 rebate vouchers or ve-star

rated rerigerators worth RM200 each,

and 65,000 vouchers or ve-star rated

air conditioners worth RM100 each havebeen allocated to states across Malaysia.

To date, about 12.4 per cent and 7.1 per

cent o market share o ve-star rated

energy ecient rerigerators and air-

conditioners respectively have been

recorded through the initiatives being

implemented, with total energy saving

accumulation o 66.3 GWh.

In March, it was announced that Faber

Group Berhad will spearhead the pilot

project or the Energy PerormanceManagement System (EPMS) or

government entities. Faber has

commenced and completed energy audits

at ve hospitals in the northern states o

Peninsular Malaysia. Implementation o

zero and low cost measures are expected

to be completed by December 2011.

To stimulate the use o uel ecient cars,

the import duty on all hybrid cars has

been exempted, bringing the cost o

hybrid models such as the Toyota Prius

and Honda Insight to more competitive

levels. Sales o hybrid cars are expected

to achieve record highs in 2011. This

exemption was extended to the end

o 2013 in the recent Budget 2012

announcement.

Moving ForwardPromotion o awareness in eiciency o

energy utilisation will be increased in

2012 onwards. This is targeted at creatingthe right public attitude in terms o using

energy more wisely and eiciently.

In the meantime the eicient management

o energy programmes (Energy

Perormance Contracting) in 120 top-

energy-using government buildings will

be urther explored or implementation

in all government buildings and private

properties.

Improving Energy EciencyEPP 9


46


12/16

PM Dato Sri Najib Razak on a si te visit

Wind and solar hybrid plant at Pulau Perhentian Kecil. Photo courtesy o Tenaga Nasional Berhad

By 2020, solar power is expected

to contribute to a minimum o 220megawatts, as per the target under

the National Renewable Energy Policy.

Thereore, between 2015 and 2020,

Peninsular Malaysia will need to build

approximately our gigawatts o additional

power capacity to meet rising demand

while maintaining a healthy power reserve

margin.

A regulatory ramework needs to be

developed, both or the eed-in tari

(FiT) mechanism as well as or any solar

power plants that may come on stream

once the cost o centralised solar powergeneration has reached parity with that o

gas. Secondly, adequate business models

need to be developed, including nancing,

public-private partnerships and the role o

the Government, the incumbent generator,

TNB, and private operators. Finally, skills

and learning need to be built in the orm

o small amounts o solar generation by

leveraging the FiT mechanism which was

launched on 1 December 2011.

AchievementsThe Malaysia FiT programme will

be managed by Sustainable EnergyDevelopment Authority (SEDA), a statutory

body under the Ministry o Energy, Green

Technology and Water (KeTTHA). SEDA

is a dedicated and ocussed agency that

serves as a one-stop Renewable Energy

(RE) centre.

As o 28 April 2011, both the RE Bill and

the SEDA Bill were passed by the Dewan

Negara.

SEDA started its operations on 1

September 2011 and its ocial portal was

also launched.

Building Up Renewable Energyand Solar Power Capacity

Applications or the FiT opened on

1 December 2011, with quota or solar

photovoltaic cells o 150MW, biomass

(including solid waste) o 240MW, biogas

(including landll) o 90MW and small

hydro o 150MW oered to any interested

party through an open online application

system. The quota allocation or solar

photovoltaic up until 2014 was almost ully

applied or within 24 hours o its launch,

whilst applications or quota allocationor biomass, biogas and small hydro have

been similarly encouraging.

Cypark Resources Berhad (CRB) will

spearhead an initiative to build an RE

park on 26 hectares o remediated landll

in Pajam, Nilai, Negeri Sembilan. The

proposed RE park involves the integration

o three potential resources available at

the landlls i.e. solar, landll gas (biogas),

and waste (biocell) into a scalable

renewable energy project capable o

generating up to 10 megawatts o power

in Pajam landll alone.

This project will be carried out through

the private investment initiative o CRB.

In December 2011, CRB was designated

as one o the FiT approved holders, and

will be allowed to sell solar energy back

to TNB.

Moving ForwardIn 2012 the target is to encourage

individuals and households to install solar

cells in their properties through the FiTcampaign. This will incentivise local solar

cell manuacturers to urther exploit the

growth in the local solar market, in the

meantime, other sources o renewable

energy such as biomass, biogas & small

hydroelectricity will be continuously

promoted. The possibility o ramping up

the FiT system has been considered, but

will be subject to signiicant consultation

with the public. SEDA is in discussions

with banks in Malaysia to streamline

applications and draw up a ramework

to inance solar and renewable energy

investment projects.

EPP 10

47



13/16

EPP 12 explores Malaysias hydroelectricity potential. Photo o Kenyir Dam courtesy o Tenaga Nasional Berhad

A projected increase in demand or energy, coupled with the

Prime Ministers conditional commitment to reduce Malaysiascarbon intensity by up to 40 per cent in 2020 as compared to

2005 levels has orced the government to reconsider the energy

generation mix in Malaysia.

Malaysias energy consumption level, relative to the size o the

population and economy, is signicantly higher than its peers.

To meet growing demand, an additional 6,000 Megawatts o

electricity generating capacity is expected between 2015 and

2020, with additional capacity required beyond 2020.

Given the longer lead time or nuclear power projects than

conventional non-nuclear power projects, the earliest a nuclear

power plant can realistically be expected to be operational is in 2021.

Deploying Nuclear Energyor Power Generation

AchievementsTo spearhead this initiative, the Malaysia Nuclear Power

Corporation (MNPC) has been ormed to lead the planning

based on the current development timeline o 11 to 12 years,

rom pre-project to commissioning. Dr Mohd Zamzam bin

Jaaar has been appointed the Chie Executive Ocer o this

newly established entity.

Moving ForwardMNPC has since started its easibility study and is expected to

submit a detailed report to the Government in early 2013.

Sarawaks hydroelectricity potential is virtually untapped: only 0.6

per cent o the estimated 20 gigawatts o potential power capacity

is currently being developed (based on the study carried out by

the SAMA Consultancy in the 1980s or the State Government o

Sarawak).

There are approximately 25 terawatt hours o latent power demand

rom industries operating in Sarawak, Sabah and the neighbouring

countries o Brunei Darussalam and West Kalimantan, Indonesia.

AchievementsThe Bakun Hydroelectric power purchase agreement, signed

between Sarawak Hidro Sdn Bhd owned by the Federal Treasury

Tapping Malaysias Hydroelectricity Potential

and state-owned Sarawak Energy Berhad, sets the base tari at

6.25 sen per kilowatt-hour (kWh) with an annual tari hike o 1.5

per cent.

Moving ForwardDiscussions are underway to ensure that energy generated

in Bakun is ully utilised. Further eorts in the hydroelectricity

segment will ocus on developing small hydro power producers

and getting them eed-in approved holder status in order to sell

their electricity back to the utility companies via the FiT.

EPP 11

EPP 12


48


14/16

In 2011, two additional business opportunities were includedunder the OGE NKEA, the Renery And Petrochemical Integrated

Development (RAPID) Project as well as the Sabah Ammonia

Urea (SAMUR) Project. Both these projects are spearheaded

by PETRONAS, and will be monitored in the OGE Steering

Committee.

Business Opportunit 1

Process Improvements

Global benchmarks o rening and petrochemical acilities

demonstrate that signicant process improvements can

be expected with these types o acilities over time. These

improvements typically translate into eciency gains o 0.5 per

cent per year representing an additional GNI contribution o RM3.4 billion. Improvement o overall processes and structure in the

electricity generation sector is expected to add RM 1.5 billion o

GNI contribution.


Economic Growth

Malaysia has targeted a GNI growth o 5.9 per cent per annum.

Achieving this is expected to raise consumption by 3 per cent and

will have a knock-on eect on the oil, gas and energy sector. The

increased consumption will require an additional two gigawatts

o installed capacity to be built at a cost o RM9.6 billion, creating

an estimated 2,500 jobs and adding RM11.2 billion to GNI. Theadditional transmission and distribution o this energy will create

a urther RM5.6 billion GNI and require an investment o RM12.4

billion.


Project RAPID (Renery and PetrochemicalIntegrated Development)

PETRONAS is spearheading the development o Project RAPID

(Renery And Petrochemical Integrated Development) in

Pengerang, Johor. Still at the detailed easibility study stage,

RAPID will comprise a crude oil renery with a rening capacity

o 300,000 barrels-per-day, a naphtha cracker with a combined

annual production capacity o approximately three milliontonnes o ethylene, propylene, C4 and C5 olens and a urther

development o about 22 mini petrochemical complexes.

RAPID will be the largest green-ield investment within the AsiaPaciic region. RAPID is set to leverage on opportunities opened up

by global mega trends in technological advancements, increasing

consumer awareness and aluence. Through this project,

PETRONAS is set to urther expand and diversiy its petrochemical

business through volume growth, a more diversiied product

base and more importantly, a greater ocus on premium specialty

chemicals industry in the vibrant Asia Paciic market.

RAPIDs project easibility is expected to be completed by December

2011 and i approved, earthworks will start by Q2 2012.


Project SAMUR (Sabah Ammonia Urea)Sabah Ammonia Urea (SAMUR) Project is a project by Petronas

Chemicals Group Berhad (PCG) to build an Ammonia Urea

Complex in Sipitang Oil and Gas Industrial Park (SOGIP), Sabah.

This project is one o the strategic developments in supporting

the oil and gas industry or Sabah and will consist o an ammonia

plant, a urea plant and a granulation plant, as well as integrated

utility units and jetty acilities. The ammonia plant will produce

2,100 metric tonnes per day (mtpd) o liquid ammonia while the

urea plant will produce 3,500 mtpd o granulated urea.

Construction is expected to start in Q2 2012 with completion

targeted in 2015.

Business Opportunities

49

NKEA: Oil, Gas and Energ EPP 11 EPP 12 and Business Opportunities


15/16

2020 Trget

Incremental GNI Impact RM131.4 billion

Additional Jobs 52,300

Criticl trgets for 2012

To ensure enhanced oil recovery (EOR) techniques are implemented in existing oil elds

Malaysia to win the bid as the host o Oshore Technology Conerence

Energy Perormance Contract (EPC) implementation in all top 120 government buildings

GIFT international promotion to attract at least our trading companies to be based in Malaysia

To ensure commissioning o regassication terminal by Q3

To enhance discovery o new wells by PETRONAS

To increase production rom marginal oil elds

To increase investment rom Multinational Companies into OFSE industries

Increasing the penetration rate o SAVE awareness

Ensure two mergers or acquisitions between oshore structure abricators

To ensure two additional partnerships or joint ventures in the OFSE industry

To ensure the Feed In Tari (FiT) allocation or biomass, biogas and small hydroelectricity are ully utilised

Summar o Oil, Gas and Energ NKEA


50


16/16

H e r e a n d N o w i n M a l a y s i a

Earl Child Care andEducation in Malasia

knowledge, as well as create better

career pathways or these teachers.

The project, spearheaded by SEGi, is

open to Malaysian teachers in service

at registered private pre-schools.

This training programme was

interesting and interactive. There

were many workshops, group

projects and module presentations,

and were excellent opportunities to

practice the skills acquired during

the training sessions, said Haryani.

She pointed out, Good training and

skills transer can only take you so

ar. One needs to have the passion

and interest and I strongly believe

we must love what we do to perorm

our best.

The other consortium members

o the ECCE Cluster include the

Institute o Early Years Development,

Kolej Dika, TAJ International College,

Institute CECE, Ala International

College (REAL Education Group),

The Childrens House, and Kirkby

International College.

In November 2010, Haryani

Kamaruddin, a preschool teacher,

decided she needed additional

training to become a better educator.

She wanted to be part o Malaysias

vision to raise the levels o pre-schooleducation and increase the number o

children receiving such an education.

Haryani was one o the many early

childcare educators and minders

in Malaysia that did not have the

related qualiication needed or their

current roles.

She signed up or an Early Child

Care and Education (ECCE) Training

held over three weeks. This three-

week training is managed by the

Early Child Care and Education(ECCE) Training Centre Cluster. This

cluster was set up to support the

Governments objectives to raise the

number o students enrolled in pre-

schools and childcare centres.

The aim o the ECCE Cluster is to train

218,500 ECCE educators by 2020,

heighten the teacher-workorce

Good trining nd

sills trnsfer cn

only te you so fr.

One needs to hvethe pssion nd the

interest nd I strongly

believe we must

love wht we do to

perform t our best

51

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