KUALA LUMPUR: Tenaga Nasional Bhd (TNB) venture into the gas supply business is off to a profitable start.

The utility company, in a statement today, said it has secured a cheaper price for gas under an agreement with Shell Malaysia Trading Sdn Bhd (SMTSB).

This maiden liquefied natural gas (LNG) trial cargo will be delivered this month.

"The partnership between TNB Fuel Services Sdn Bhd and SMTSB has resulted in a real cost saving in terms of delivered gas price which is below the regulated gas price," TNB said in a statement today.

Under the deal, TNB Fuel will deliver 3.5 trillion British thermal units (TBtus) of gas to TNB’s Tuanku Jaafar Power Station in Port Dickson and TNB Connaught Bridge Power Station in Klang.

The gas from this LNG trial cargo is expected to be consumed fully by these two power plants within 14 days.

"The main objective of TNB bringing in its maiden LNG trial cargo is to test the third party access (TPA) arrangement via the regasification terminal in Sg Udang, Melaka and Peninsular Gas Utilisation (PGU) gas pipeline network owned by Petronas Gas Bhd ," it said.

At present, no other entity has ever brought in LNG cargo or delivered gas to the power generation sector except for Petronas.

The Gas Supply Act 1993 was amended in 2016 and came into effect on Jan 16, 2017 provided legal framework for the TPA system - where third parties can access gas facilities that they do not own or operate.

“This pioneering transaction also serves as a knowledge-sharing platform for all parties to gain experience for capacity building, and to provide feedback to all parties involved, especially Ministry of Energy, Science, Technology, Environment and Climate Change and the Energy Commission, on the robustness and governance of the TPA system,” TNB president/chief executive officer Amir Hamzah Azizan said in the statement.

He added that the deal with SMTSB also signalled TNB's serious intention to venture into the area of gas procurement.

TNB Fuel is the principal coal and fuel supplier to TNB and independent power producers.

The company is to procure and deliver fuel at optimal cost, taking into account the quality and reliability of supply.

As a non-profit oriented company, savings generated by TNB Fuel from the efficient and economic purchase of fuel are passed through to TNB and subsequently reflected in the tariff charged to consumers.