Malaysia is the second-highest producer of petroleum and other liquids in Southeast Asia and the fifth-highest exporter of liquefied natural gas (LNG) globally in 2023. Malaysia is strategically located in the South China Sea and borders the Malacca Strait, both of which are important maritime routes for energy trade.1
Malaysia’s oil and natural gas production is expected to peak at 2 million barrels of oil equivalent per day (BOE/d) in 2024, according to national oil company Petronas.2 This would be an increase of just over 200,000 BOE/d from the 1.79 million BOE/d produced in 2023.3
Malaysia’s national oil company Pertonas, with Enilive and Euglena, will build Petronas’s first biorefinery. The biorefinery, which will be located at the Pengerang Integrated Complex, will produce 12,500 barrels per day (b/d) of sustainable aviation fuel and biodiesel. Construction will begin at the end of 2024, and commercial operation is slated to start in 2028.4
According to Malaysia’s National Energy Transition Roadmap, Malaysia plans to achieve a 70% share of installed electricity generation capacity for renewable energy by 2050. The government estimates it will need $143 billion in investments to meet its target. To help develop its renewable sector, Malaysia lifted its ban on renewable energy exports that it initiated in 2021.5 The increase in demand for renewable energy from foreign markets will prompt development of domestic renewable generation capacity on a larger scale to meet the higher demand.
In 2023, Malaysia had proved oil reserves of 2.7 billion barrels—the second-largest oil reserve in the Southeast Asia. Although reserves have declined since 2022, there were 19 new discoveries in 2023, which could add over 1 billion barrels of oil equivalent, according to Petronas. Of these discoveries, 16 are located in the Sarawak state, and 3 are in the Sabah state.7
Following the Malaysia Bid Round 2023 (MBR 2023), six production sharing contracts and one discovered resource opportunity (DRO) were awarded. A DRO is an opportunity where a company can obtain the rights to an undeveloped discovery from a government to invest in its development. All offshore blocks for MBR 2023 in Sarawak and Northwest Sabah Basins are now licensed as a result of this bid round.8
In the 12th Malaysia Plan (2021–2025), the government outlined its plan to reduce carbon intensity economy-wide by 45% from 2005 levels against gross domestic product (GDP) and to achieve net-zero greenhouse gas emissions by 2050. To support these goals, Petronas plans to cap operational emissions at 49.5 million metric tons of CO2 equivalent in its Malaysian operations by the end of 2024. Petronas and its subsidies has also targeted a 50% reduction from 2019 levels in methane emissions from its natural gas value chain by 2025.9
| Block name | Company |
|---|---|
| Block PM342 | Petronas; E&P Malaysia Venture |
| Block PM428 | Jadestone Energy; Petronas |
| Block SK330 | Petronas; E&P Malaysia Venture; Petroleum Sarawak E&P |
| Block SK510 | Petronas; INPEX Malaysia E&P; Pertamina; Petroleum Sarawak E&P |
| Block 5E | Shell; Petronas; Petroleum Sarawak E&P |
| Block SB403 | Petronas; E&P Malaysia Venture; SMJ Energy |
| Bamabazon Cluster | E&P O&M Services |
| Data source: World Oil | |
From 2024 through 2026, Petronas expects more than 25 wells (oil and natural gas) to be drilled per year. The Penisular Malaysia and Sarawak will be the focus of shallow water wells, and deepwater wells will be in Sabah.10
Malaysia’s petroleum and other liquids production declined from 2017 to 2023—to 597,000 barrels per day (b/d)—due to maturing fields.11
After a dip in 2020, Malaysia’s petroleum and other liquids consumption returned to pre-pandemic levels in 2022, driven mainly by a rebound increased gasoline demand.12
Malaysia had a refining capacity of 997,000 b/d in 2023.14 By 2034, proposed projects could add an additional 181,000 b/d of capacity.15
| Name of site | Company | Crude oil refining capacity (thousand barrels per day) |
|---|---|---|
| Kemaman | Kemaman Bitumen | 30 |
| Port Dickson | Hengyuan Refining Company | 156 |
| Kerteh | Petronas | 121 |
| Melaka (PSR-1) | Petronas | 100 |
| Melaka (PSR-2) | Petronas | 170 |
| Pengerang | Petronas | 300 |
| Port Dickson | San Miguel/Petron | 85 |
| Total | 997 | |
| Data source: FACTS Global Energy, Asia Pacific Databook 2: Refinery Configuration, Spring 2024 | ||
At the end of 2023, Malaysia had proved natural gas reserves of 32 trillion cubic feet (Tcf).16 Although lower than the 2014 peak of 101 Tcf, reserves have increased since 2018 as a result of new discoveries.17
Malaysia’s natural gas production increased in 2022 to an all-time high of 2.7 Tcf,18 which was the result of developing both brownfield and greenfield projects.19
The Jerun gas field, located off the shore of Sarawak, northwest of Bintulu, was brought online by SapuraOMV in 2024. According to SampuraOMV, the project will reach peak production in 2030 at 550 million cubic feet per day (MMcf/d) of natural gas and 15,000 b/d of condensate. The project will supply the Petronas LNG complex in Bintulu via a 50-mile pipeline.20 The complex consists of MLNG Satu, MLNG Dua, MLNG Tiga, and MLNG T9.
Shell operates the Timi natural gas project, which is located in Sarawak. Shell expects the project to produce 300 MMcf/d at peak production. The natural gas will support a production hub, located off the shore of Sarawak, via a 50-mile pipeline. Commercial production is slated to start in 2025.21
The Malaysia-Thailand Joint Development Area is located in the Gulf of Thailand and overseen by the Malaysia-Thailand Joint Authority; each country has 50% ownership of the area’s resources. The area produced natural gas for both Malaysia and Thailand and is linked to Malaysia via the Peninsular Gas Utilization (PGU) pipeline network.22
The industrial sector’s natural gas consumption share surpassed the power sector’s share in 2017 and has remained the top natural gas-consuming sector since that year. The Malaysia natural gas pipeline network, which has helped the manufacturing sector grow, is a major supplier for industrial natural gas consumption. Residential, commercial, and transportation sectors together have accounted for less than 1.5% of natural gas consumption per year from 2013 to 2022.23
Malaysia has one of the most extensive natural gas pipeline networks in Asia. Much of the natural gas pipeline network is located in Peninsular Malaysia and is known as the Peninsular Gas Utilization (PGU) pipeline network. The PGU is 1,630 miles long and can transport 3,500 MMcf/d. The network transports processed natural gas to the power sector and to non-power end-use sectors and exports natural gas to Singapore. The four entry points into the PGU are in Kertih, Pengerang, Sungai Udang, and Thailand.24
A floating liquefied natural gas (FLNG) vessel called ZFLNG is under development off the shore of Sabah. The facility’s liquefaction capacity is 2 million metric tons per year, and its completion is set for 2027.25
Petronas and MISC Group signed an agreement in October 2023 that will convert a 4.9-million-cubic-foot LNG shipping vessel into floating storage for the Pengerang LNG terminal. The conversion is scheduled to be completed by 2025.26
Malaysia has limited coal resources. Its reserves were 249 million short tons in 2022.27 Nearly 99% of the reserves are located in Sarawak, and the remainder is in Sabah.28
In 2022, coal made up 21% of Malaysia’s primary energy consumption.29 Under the National Energy Policy 2022–2040, Malaysia’s goal is to reduce coal’s share of primary energy supply to 17% by 2040.30
Malaysia’s coal production decreased 4% in 2023. This came after an increase of almost 20% the previous year, from 3.4 million short tons in 2021 to a record 4 million short tons in 2022.31
Malaysia’s electricity generation increased 8% from 2021 to 194 terawatthours in 2022. Fossil fuels made up 81% of all electricity generated in 2022, and non-hydroelectric renewables made up less than 2%. Although total generation increased in 2022, the increase was dispersed evenly across most generation sources.32
In 2022, Malaysia pledged not to build any new coal power plants after 2040. In 2021, they created a phase-out plan to reduce existing coal capacity by 50% by 2035 and completely by 2044.33 Currently, 5 coal-fired power plant projects are under development, which are slated to come online by 2031 and will add 11.7 gigawatts (GW) of capacity.34
In April 2024, Malaysia’s government announced its intention to create the Energy Exchange Malaysia (ENEGEM) to export electricity from renewable sources to other Southeast Asian countries. ENEGEM aligns with the Association of Southeast Asian Nations (ASEAN) goals of an integrated power grid among Southeast Asian countries.35
Malaysia’s installed electricity capacity remained relatively flat in 2022; it increased less than 1% from 2021 levels. All added capacity came from growth in solar installations.36
Malaysia’s crude oil and condensate exports decreased by 14% in 2023 from 2022. The largest declines by importing countries were China and India, which represent a combined decrease of 29,000 b/d.37
Virtually all of Malaysia’s crude oil and condensate exports in 2023 went to the Asia Pacific region. Southeast Asia was responsible for 52% of imports.38
Malaysia imported almost 1.2 million b/d of petroleum product imports in 2023, a 3% increase from the previous year. Asia was the source for 58% of all petroleum product imports.39
Fuel oil (28%) accounted for the largest share of petroleum product imports in 2023, followed by diesel (25%) and gasoline (20%).40
Malaysia also exported 1.3 million b/d of petroleum products in 2023, a 7% increase from the previous year. The Asia Pacific region was the destination for 79% of all petroleum product exports.41
Diesel (24%) accounted for the largest share of exports in 2023, followed by fuel oil (20%) and biodiesel (19%).42
In 2023, Malaysia exported 85 billion cubic feet (Bcf) of natural gas to Singapore via pipeline.43
Malaysia’s LNG exports declined 7% from 2022 to 1.3 Tcf in 2023. Although Japan still receives the largest share of Malaysia LNG exports, in 2023, Japan imported approximately 90 Bcf less than in 2022.44
Malaysia’s electricity exports significantly increased after 2016. The increase was driven by a power trading project established in 2016, between Sarawak Energy Berhad and Indonesia’s state utility Perusahaan Listrik Negara. The power is exported through the 275 kV Sarawak-West Kalimatan Interconnection. In October 2021, Malaysia banned the export of renewable energy which may account for some of the decrease in exports in 2021 and 2022. The ban was lifted in May 2023 to attract more development in its renewable sector.45
In 2023, Malaysia’s coal imports increased almost 10% from 2022 to 42 million short tons. Most imports came from the Asia Pacific region (91%). Malaysia increased its imports of Indonesia’s coal to 31 million short ton in 2023, up approximately 3 million short tons from 2022.46
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