There’s an increasing concern about the high cost of Lng Malaysia. The price of oil is a key factor in the expense of living of Malaysia. As the nation relies heavily on petroleum products and crude oil exports, the high price of oil products and crude oil imports is felt by the Malaysian economy every day. The high price of Lng gas in particular is affecting the national transport sector. Many small and medium scale businesses are losing opportunities to tap into the Lng gas market as prices are soaring up because of the oversupply of this commodity in recent years.
The increasing cost of Lng gas is having an adverse effect on the competitiveness of the national energy industry. Domestic gas demand will deplete over time because of the rising cost of Lng. Industry players are looking for ways to decrease the cost of production. Over the last few years, the Government has produced numerous changes to the way Lng is generated, which have helped to improve competitiveness and decrease the expense of Lng.
The Government’s efforts to promote Lng production in Malaysia have led in many tax incentives for domestic production of Lng. In addition to tax rebates, State Governments has also offered various incentives to Lng industry as a means of promoting competition. These incentives cover research and development costs, infrastructure development costs and the price of maintaining a standard of production. Some of these rebates and incentives comprise the first point published in 2021, the extension of the current generation tax rate and the awarding of a 20 percent share of the whole price of Lng development to all stakeholders.
Given the price of lng in Malaysian market, it’s expected that the expense of lng in global market would also go up. This may result in the movement of Lng railroad cargo from Singapore to other Asian countries. If the trend continues, the expense of lng may become very high in Malaysia. In such situation, the export of Lng could become an extremely competitive advantage for Malaysia in the international level.
The transportation of Lng by rail freight has a lot of disadvantages. First, the expense of lng is high due to the increased cost of fuel. Secondly, the risk of accidents and the probability of accidents is high on the rail freight. The chances of a freight train accident are high on the open stretches of railway track where you will find little or no railroad traffic and the risk of an accident is increased in areas where the population is dense.
On the other hand, the expense of air freight to Lng Industry in Malaysia is relatively low due to the lack of government regulation and the absence of a railroad network. Additionally, the cost of air freight can be controlled since the cost of fuel is minimal. Moreover, air freight is fast means of transporting Lng from 1 location to another.
Due to the absence of a railway network, the cost of transportation by rail freight from and to Lng can be controlled. Air freight transport cost fluctuates from time to time according to the fuel cost as well as the destinations. Hence, the price of transport by air cargo can be predicted fairly well.
Both the methods of transport can provide the service of receiving and sending shipments to and from Lng by air or by rail. However, the expense of transport by air cargo remains high in comparison to that of rail freight. It’s important to remember that when the Lng Industries feels that the expense of transport by air cargo is high, they may reduce the quantity of shipments. This would result in the loss of revenue for the Lng Industry.