New Vision for China-Malaysia Energy Cooperation:"Positive Energy" Deliverers

For years, the bilateral cooperation between China and Malaysia in economic and trade exchanges, investment and engineering contract and so on has been deepened. Both China and Malaysia have abundant energy and also high demands for consuming energy. The two countries have their respective advantages in energy sector, which have laid the foundation for advantageous complementarities and balanced development. Driven by the two governments, their cooperation in energy sector has become more active. More Chinese and Malaysian enterprises established energy partnership and an increasing number of energy cooperation projects are written into the annals of history for bilateral friendship and cooperation.

Energy from Malaysia

Liquefied natural gas is plentiful in Malaysia. In 2006, Shanghai Liquefied Natural Gas (LNG) Co., Ltd. has signed the Sale and Purchase Agreement with Malaysia LNG Tiga Sdn. Bhd., a subsidiary of Petronas, making itself become Petronas' first Chinese customer. The cooperation is not only a reflection of close economic and trade relations between China and Malaysia, but also a very good start for bilateral cooperation in the field of energy.

Malaysian government attaches great importance to the development of renewable energy. From October 7th to 10th, 2013, the former Malaysian Prime Minister Abdullah Ahmad Badawi visited Sunshine Kaidi New Energy Group Co., Ltd. in China and signed the agreement on bio-fuel cooperation. Abdullah Ahmad Badawi hoped that through this project, new energy cooperation between China and Malaysia would be a step forward. Chen Yilong, chairman of Sunshine Kaidi New Energy Group said, due to the shortage of China’s raw materials such as straw and rice husks in the past, their productivity of biomass power projects failed to reach the expectations. The abundant palm waste from prosperous palm oil industry in Malaysia will guarantee their adequate raw material supply. In the future, the raw materials will be shipped from Malaysia to China via cheap and convenient shipping way, and the project will continue to import Malaysian raw materials.

The insertion project on Malaysian offshore pipelines was performed by Aerosun Corporation, which subordinated to China Aerospace Science and Industry Corporation. The project passed acceptance inspection in November 2013 with a total value of more than millions of U.S. dollars. As a part of Malaysian oil pipeline replacement projects, the insertion project on Malaysia’s 17 kilometers reinforced thermoplastic compound pipelines was used to replace the original 12 inches diameter steel pipelines. In 2012, Aerosun Corporation and Petronas signed the non-metallic pipeline marine technology research and application demonstration pilot projects. After the study, Aerosun Corporation offered extensive design reports, analysis results and test reports and received the acceptance of Malaysian oil experts. Compared with steel pipes, new material greatly reduces the laying costs for offshore pipeline, shortens construction period and ensures the oil production.

Energy is Profitable for Both Sides

China and Malaysia are companions in the path of development of energy industry. Rimbunan Hijau Group (RH Group) is one of Malaysia's largest companies engaging in multiple investment. In 2007, it was the first time that the RH Group participated in China's exploitation of continental petroleum resources. In November 2007, a contract was signed by China National Petroleum Corporation with Kingworld Resources Ltd., a subsidiary of RH Group on the cooperative development and production of oil resources at Block 1 of Fuyu in the Songliao Basin, Jilin province in China, covering an area of 254.9 square kilometers. As the difficult-to-produce heavy oil reserves in the block, the area is expected to be solved by introducing advanced technologies from Malaysia.

Malaysia has large reserves of oil and natural gas, which are hotly contested among energy giants all over the world for energy development projects, such as Exxon Mobil, Shell and BP (British Petroleum). Chinese enterprises will inevitably face a variety of challenges when they step into Malaysia. Challenges are often accompanied by opportunities. When participating in Malaysian energy projects bidding, Chinese enterprises may be under intense pressure from strong foreign opponents. Therefore, Chinese enterprises should make safe investment and show their strengths and confidence at the same time.

In 2008, China National Electric Equipment Corporation (CNEEC) successfully signed the contract for Sabah Thermal Power Plant Project in Malaysia. The installed capacity will be 84MV and the total value will reach 1 billion ringgit. The Senior Vice President of Malaysian Tenaga Nasional Berhad believed that CNEEC stood out because it has advantages in technology, quality and price and so on. Zhao Ruolin, president of CNEEC also said that Malaysian government could provide Chinese enterprises larger projects so as to fully display their technical capabilities.

Power Construction Corporation of China and Malaysia have cooperated on several projects. In 2013, Power Construction Corporation of China and Malaysia's Tenaga Nasional Berhad signed the project for Connaught Bridge Gas Power Plant. Located in Klang, Selangor, the plant has 380 MW single-shaft combined cycle gas-fired power. It is the nearest plant to Kuala Lumpur as well as one of the most important power plants in Malaysia. With 28 months' contract period, the project included design, procurement, construction, installation and commissioning and so on. So far, the total number of completed and ongoing projects in Malaysia conducted by Power Construction Corporation of China reached 38 and the total value amounted to more than 2 billion U.S. dollars. Among them, the completed Bakun Hydroelectric Power Station, which is known as Southeast Asia's "Three Gorges Project", has established the brand for Power Construction Corporation of China and exerted a huge influence in Malaysia’s economic development. Also, Malaysia has become a grand stage for China's energy enterprises to show their strengths.

China and Malaysia still can achieve a number of breakthroughs in the field of energy cooperation. Mustapa Mohamed, Minister of International Trade and Industry of Malaysia stated, as China's economy is developing fast, Malaysia maintains a close relationship with China in politics and diplomacy, which will create more opportunities for bilateral cooperation.

Work Together and Plan for a Prosperous Energy Future

In the future, the energy cooperation between China and Malaysia will be another focus. The development advantage of new energy industry is obvious. However, the earning cycle for new energy projects will be relatively long due to the financial pressure, shortage of talents, market demand and so on.

Nuclear industry in Malaysia has great advantage and potential. Malaysian government may take 10-15 years to plan, establish and debug their nuclear energy projects, which also will be a big challenge to them. Meticulous planning is needed before exploring the nuclear projects. Upon completion, the operation and maintenance of projects are also required to be well taken care of. Through years of efforts, China has established a complete industrial chain on nuclear energy. In particular, China has laid good foundation and accumulated rich experience in nuclear fuel production, professional and technical personnel training, manufacturing for core equipment of nuclear power and major construction projects of nuclear power. On the one hand, Malaysia is China's future potential partner of nuclear energy project. On the other hand, for Malaysia, China has great advantages in cost and operation.

With abundant light resource, the photovoltaic market in Malaysia has great potential. In 2013, Yingli Green Energy Holding Company Limited of China supplied 10 MW of solar modules for Malaysia's largest single-site solar

project. In 2014, Yingli announced that it would supply 2 MW of solar modules to Maqo Technologies (M) Sdn. Bhd., which would generate enough electricity for approximately 500 typical Malaysian homes. As of 2013, Yingli has already had 12 MW of panels installed in Malaysia, taking up 9% of Malaysian market share. It will be able to generate 12 million clean electric power per annum for nearly 3000 Malaysian families.

In this regard, Tan Sri Peter Chin Fah Kui, former Malaysian Minister of Energy said that by the year of 2020, Malaysia will gradually improve the unbalanced structure of energy and increase the proportion of solar energy, small scale hydropower and biomass energy. The new energy subsidies in Malaysia come from consumers. And the photovoltaic industry gets the highest subsidies. Hence, it is expected that more Chinese photovoltaic enterprises come to Malaysia.

Since the establishment of diplomatic ties 40 years ago, China and Malaysia have worked together and created a number of influential and successful projects in many fields, which offered abundant experience for energy cooperation between two sides. Their cooperation in energy sector meets the need of development of two countries and is conducive to the common interest of both sides. Through actively exploring and effectively advancing, China and Malaysia will achieve more pragmatic progress in the energy field. In the future, the energy cooperation also will be the highlight for friendly cooperation between the two sides.