Fossil fuels will remain in Malaysia's energy mix to ensure a just transition, hence decarbonisation is essential to meet net zero goals, said speakers today at the UN Cop 28 climate conference.
"The harsh reality we face as citizens of this region, is that our fuel mix is close to 90pc made up of fossil fuels," said Malaysian state-owned Petronas' chief executive officer Taufik Muhammad. "With that dependency on an energy system, decarbonising overnight will affect not only business, but societies at large."
As renewable energy tends to be intermittent, battery and storage investment is necessary, but costly. "If we're going to actually put up all this renewable energy to displace fossil fuels, grids must come along at the same time or slightly leading, and this will cost around $180bn in Malaysia alone," said Taufik. "It is very irresponsible for policymakers and financial institutions to impose boundaries that need to be instantaneously achieved when there are real hard physical and scientific parameters that we have to challenge."
But carbon markets can help the industry achieve its decarbonisation. "Up to the year 2050, regardless of which projections are considered, oil and gas remains relevant," said stock exchange Bursa Malaysia's head of carbon markets Wei-Nee Chen. "Therefore the conversation is [the need to] decarbonise," she added. In Malaysia's national energy transition roadmap up to 2050, 23pc of the total primary energy mix is renewable, with the remainder being fossil fuels, which is "why the carbon market is very relevant to meet that residual gap," said Chen.
Utilities like state-owned Tenaga Nasional Berhad (TNB) are honing in on the lowest-cost options to move towards renewable energy, said TNB chairman Abdul Razak bin Abdul Majid. "[To move away from coal,] in the last few months we have estimated that we will need to double up the gas volumes coming into the system in order to maintain 24/7 [power supply] without interruption."
Petronas has continued to invest heavily in exploration efforts. The firm on 30 November announced that it has recorded 19 exploration discoveries and two exploration-appraisal successes, equivalent to over 1bn bl of oil equivalent (boe) of new resources for Malaysia this year. More than half the discoveries were in the Sarawak basin, with notable discoveries being Gedombak-1, Sinsing-1, Machinchang-1 and Mirdanga-1 by Petronas Carigali, as well as Babadon-1 and Chenda-1 by Thailand's PTTEP.
"This significant exploration success validates our belief that there is more potential within the so-called matured Malaysia's basins," said senior vice-president of Malaysia Petroleum Management Mohamed Firouz Asnan.
Petronas also recently reported their third-quarter profits on 30 November, with profits falling during the quarter because of lower average realised prices for all products. But the firm's capital expenditure increased by 52pc on the year to 12.9bn ringgit in the same quarter, with the firm adding that the increased capex this year is mainly attributed to upstream and gas projects.
