Liberalising Malaysia’s gas market for an energy-secure future

Malaysia is ready for natural gas to become its primary energy source, leveraging on its rich gas resources and highly accessible gas infrastructure 


AS MALAYSIA gears up in the transformation of its energy sector towards a lower carbon future, the reliability provided by natural gas is still needed and will continue to be a key part of Malaysia’s energy mix for the foreseeable future. 

For over 40 years, natural gas has been a significant contributor to Malaysia’s socio-economic growth since the 1980’s. 

Today, the gas industry contributes ~4% to Malaysia’s GDP and has created over 82,000 highly skilled jobs. 

Without a doubt, natural gas will continue to provide major fiscal sustainability and energy reliability to spur Malaysia’s recovery from the pandemic. 

Importantly, Malaysia’s gas industry has been identified as a key focus area in the recently launched National Energy Policy (NEP). 

The NEP has identified natural gas as the source of fuel to spur high-value downstream industries and industry clusters with sustainable competitive advantages to enhance regional socio-economic development. 

Malaysia is already ready for natural gas to become its primary energy source, leveraging on its rich gas resources and highly accessible gas infrastructure. For the natural gas industry to realise its full potential in Malaysia, the industry will need to continue maturing. 

To this extent, a full market liberalisation must take place, covering the power and non-power sectors. Progress has been achieved since 2017 whereby Third-Party Access was allowed, and market-based pricing was achieved in 2022 for the non-power sector. 

The final piece of the puzzle lies in achieving market-based pricing for the power sector, which forms the largest consumer of natural gas in the country. 

While challenging, it is a necessary next step for Malaysia’s gas industry to increase its attractiveness as an investment destination. 

This cannot be achieved if the power sector continues to be shielded from the real market prices. 

Petroliam Nasional Bhd (Petronas) has long been an avid supporter in the liberalisation of the domestic gas market, putting in necessary investments to ensure Malaysia’s gas infrastructure is ready for a liberalised market. 

For example, to realise Third-Party Access, where international suppliers can use the country’s gas delivery infrastructure to import and sell liquefied natural gas (LNG) — Petronas has established two regasification terminals (RGTs) in Sungai Udang, Melaka, and in Pengerang, Johor. 

These RGTs are essential to allow the importation of LNG into the country and provide an added layer of energy security for the nation, should there be insufficient 

indigenous gas supply.
Additionally, gas customers from the 
non-power sector today have the choice of selecting their preferred gas supplier that can offer favourable terms, on a willing buyer and seller basis. 

In time, and as the industry continues to transform, Petronas hopes this benefit can also be enjoyed by customers in the power sector. 

Moving forward, Petronas will continue to collaborate with industry players and another fellow Malaysians to raise awareness on the importance of natural gas in safeguarding the country’s energy security as the nation moves towards a lower carbon future. 

  • This article first appeared in The Malaysian Reserve weekly print edition