09-Dec-2024
RAM Ratings upgrades Bintulu Port Holdings to AAA

RAM Ratings has upgraded the corporate credit ratings of Bintulu Port Holdings Berhad's (BPHB or the Group) to AAA/Stable/P1 from AA1/Positive/P1. Bintulu Port Sdn Bhd, a wholly-owned subsidiary of BPHB, operates Bintulu Port, Sarawak's largest port and Malaysia's sole liquefied natural gas (LNG) export terminal.

The upgrade reflects anticipated stronger government support and improved business conditions stemming from BPHB's expanded role in the Sarawak State Government's (the State) agenda to restructure the port sector for greater competitiveness and efficiency.

Under RAM's support assessment for government-linked entities, we anticipate a very high likelihood of extraordinary support from both federal and state governments. Since our last review, substantial progress has been made towards the State assuming control of Bintulu Port, with Bintulu Port's transition to State ownership expected by year-end. This follows from Malaysia's parliamentary approval in July 2024 to repeal the Bintulu Port Authority Act 1981 and dissolve the Bintulu Port Authority (BPA).

Negotiations for a new Port Operation Agreement (POA) for Bintulu Port Sdn Bhd (BPSB), a wholly owned subsidiary of BPHB, are advancing with active involvement from the Group and the State's Ministry of Infrastructure and Port Development (MIPD). Currently, Bintulu Port operates under an interim arrangement, and the State plans to establish the Sarawak Ports Authority (SARPA) to consolidate oversight across all six state ports.

Looking ahead, Bintulu Port is poised to benefit from improving macroeconomic conditions in Sarawak, with stronger business prospects and operational efficiencies as its strategies increasingly align with the State's port policies. As the most prominent of Sarawak's six ports and a crucial hub for imports and exports - especially Liquified Natural Gas (LNG), Bintulu Port will likely capitalise on rising cargo volume

Business Impact: Opportunities and Challenges
Shift to Rival LNG Suppliers:
New projects in Alaska, western Canada, Malaysia, and Oman are gaining traction. These suppliers, though slightly farther than Sakhalin, offer geopolitical stability, making them attractive alternatives.

Is Japan Ready to Exit Russian LNG? The Shift to Cleaner Energy and Rival Suppliers
The global energy landscape is shifting, and Japan finds itself at a crossroads. With long-term LNG contracts from Russia's Sakhalin-2 project nearing expiration (between 2026 and 2033), Japan faces a pivotal decision: renew its reliance on Russian LNG or pivot to alternatives. This decision isn't just about energy—it’s about geopolitics, sustainability, and economic strategy.

Why Is This Crucial Now?
Japan, the world's second-largest LNG importer, sources 9% of its LNG from Russia, primarily through Sakhalin-2. While its geographical proximity gives Sakhalin a cost and time advantage, the geopolitical tension surrounding Russia's Ukraine invasion and G7 commitments to reduce dependence on Russian energy have shifted the narrative.
Moreover, Japan's domestic energy transition aims to slash LNG's share in power generation from 33% (2023) to 20% by 2030 while expanding renewable energy to 38%. This aligns with global calls for cleaner energy solutions but introduces supply chain challenges.

Oil demand in China, the world’s top crude importer, could peak as early as next year as the penetration of electric vehicles and LNG trucks is accelerating, state-owned China National Petroleum Corporation (CNPC) said on Tuesday.

At this time last year, CNPC expected a peak in oil demand coming to China by 2030.


Now, after a year of EVs and LNG-fueled trucks displacing some gasoline and diesel demand, respectively, the peak in China’s oil demand may occur five years earlier, in 2025, according to a report by CNPC economists carried by Bloomberg.




Russia’s Crude Oil Shipments Slump

China’s oil demand growth has been slowing down due to weaker economic performance and a shift to electric vehicles and LNG-fueled trucks, oil industry executives said at the APPEC conference in Singapore in September.

Although some of the weakness is attributable to weaker economic performance, the shift toward EVs and LNG trucks is removing some road fuel demand permanently, analysts say.

China’s shift toward EVs will bring about domestic gasoline demand peaking either this year or next, according to Vitol Group’s CEO Russell Hardy.

“Gasoline is likely to peak this year or next year in China — not because nobody’s moving, but simply because the fleet is slowly changing towards electric vehicles,” the top executive of the world’s largest independent oil trader told Bloomberg in an interview in September.

LNG, he said, is one of the activities using gas as feedstock.

"We have a lot of other derivatives from gas, for example, the methanol plant is one of them.

"As such, the port will no longer be just for LNG. There are a lot of by-products out of gas," he said.

The premier said the establishing of the supply base is an appropriate approach for the state government to help in regulating activities as a result of the state's gas reserves, both offshore and onshore Sarawak.

He noted that Sarawak has about 60 per cent of Malaysia's gas reserve offshore.

"There will be a lot of activities offshore because of the gas reserve and that exploration is still going on and there could be some new areaswhere we can explore and find more reserve," he said.

He said he believes that Bintulu Port will help to leapfrog the state's economy, not only in terms of supply base, but also for the export of products produced in the state.

KUALA LUMPUR (July 9): Malaysia’s liquefied natural gas (LNG) output and exports are poised for incremental growth, thanks to feed supply growth from new projects, according to BMI.

Projections indicate that Malaysia’s annual LNG production could rise to 32.5 million tonnes in 2024 from 31.3 million tonnes in 2023, the research unit of Fitch Solutions said in a statement. A key driver of the growth is the availability of feed gas for the Petroliam Nasional Bhd (Petronas) liquefaction plant in Bintulu, BMI noted.