Hydrogen and Carbon Capture (CCUS) in Malaysia

Off the coast of Bintulu, a platform the size of a small town now strips carbon dioxide out of natural gas and pumps it back under the seabed. A few hundred kilometres inland, engineers are designing plants meant to ship Sarawak’s hydropower to Japan and Korea in the form of ammonia and hydrogen carriers. Together, these are Malaysia’s bet that the molecules of the energy transition — clean hydrogen and buried carbon — can become the next export industry after LNG and palm oil.

The bet is real, but it is also early, and 2025 delivered a reality check.

Why is Malaysia chasing hydrogen and carbon storage at all?

Malaysia already sells energy to the world. The pitch for hydrogen and carbon capture, utilisation and storage (CCUS) is that the same geography — abundant Sarawak hydropower, depleted offshore gas reservoirs, and existing export terminals — can be repurposed for a decarbonising Asia.

The national frame is the Hydrogen Economy and Technology Roadmap (HETR), launched in 2023 and led by the Ministry of Science, Technology and Innovation (MOSTI). It sets ambitious economic targets: MOSTI’s own HETR document puts hydrogen-related revenue at roughly RM12.1 billion by 2030, scaling past RM400 billion (about RM409 billion) in revenue and more than 200,000 jobs by 2050. Widely reported MOSTI figures for the near term add a GDP contribution of up to RM61 billion and 8,000 to 45,000 jobs by 2030.

CCUS is the companion play. Malaysia’s gas fields are unusually CO2-rich, which is a problem for LNG buyers who want lower-carbon cargoes — and an opportunity to build permanent offshore storage that could one day take carbon from third parties too.

What exactly is the Kasawari CCS project?

Kasawari is the flagship, and the furthest along. Operated by PETRONAS Carigali in Block SK316, it sits about 200 km off Bintulu, Sarawak, in around 108 metres of water. The Kasawari gas field carries a high concentration of CO2, so instead of venting that carbon, the project separates it and reinjects it into the depleted M1 reservoir through a subsea pipeline running roughly 138 km.

The headline design figure is a reduction of about 3.3 million tonnes of CO2 per year, with roughly 71 to 76 million tonnes to be reinjected into the M1 field over the project’s life, according to NS Energy. The final investment decision came in November 2022, with Malaysia Marine and Heavy Engineering (MMHE) awarded the main engineering, procurement, construction, installation and commissioning contract.

Gas production from the field began in August 2024, at an initial rate of about 200 million standard cubic feet per day. The carbon-storage side is the harder part — and in early 2026, PETRONAS signalled it wants to accelerate it, seeking to bring first CO2 injection forward to as early as 2027, ahead of an earlier 2029-2030 expectation. NS Energy describes Kasawari as one of the largest offshore CCS projects in the world.

What are H2biscus and H2ornbill?

On the hydrogen side, the action is in Sarawak’s Hydrogen Hub, developed by state-owned SEDC Energy with international partners. Two projects lead:

• H2biscus — a clean-ammonia project targeting 150,000 tonnes per year of ammonia (NH3) for export to Korea. SEDC Energy names its partners as Samsung E&A, Lotte Chemical and Korea National Oil Corporation (KNOC); Free Malaysia Today’s reporting additionally lists Posco among the consortium.
• H2ornbill — a project targeting 88,000 tonnes per year of methylcyclohexane (MCH), a liquid hydrogen carrier, with Japanese partners ENEOS and Sumitomo Corporation, per SEDC Energy. (Free Malaysia Today has separately described the project in terms of about 90,000 tonnes/year of clean hydrogen — a different product and metric.)

The logic is elegant on paper: Sarawak has cheap, low-carbon hydropower; electrolysers turn that power and water into hydrogen; and the hydrogen is bound into ammonia or MCH so it can be shipped safely to Northeast Asian buyers who lack their own renewable resources.

How do the flagship projects compare?

Project	Lead / partners	Product	Target capacity	Buyer / market	Status
Kasawari CCS	PETRONAS Carigali; MMHE (fabrication)	CO2 storage	~3.3 Mt CO2/year reinjected	Offshore Sarawak (own fields)	First injection targeted as early as 2027
H2biscus	SEDC Energy; Samsung E&A, Lotte Chemical, KNOC (SEDC list)	Ammonia (NH3)	150,000 t/year	Korea	Scaled down 2025; ~2029 target
H2ornbill	SEDC Energy; ENEOS, Sumitomo	Methylcyclohexane (MCH)	88,000 t/year	Japan	Scaled down 2025; ~2029 target

What went wrong in 2025?

The elegant paper case ran into buyers. In 2025, SEDC Energy reduced the planned production capacity of both H2biscus and H2ornbill, citing uncertainty over securing offtake deals and weak demand signals from prospective customers. In plain terms: the plants were sized for exports that no one had firmly committed to buy.

The wider Sarawak green-hydrogen programme — a set of projects once talked about for late-decade start-up — has slipped, with commissioning now generally pointed at around 2029. High transport and logistics costs for shipping hydrogen derivatives across the sea remain a persistent drag on the economics.

None of this is fatal, and it is worth keeping perspective: Sarawak is still described as the most advanced state in Malaysia for hydrogen project implementation. But the episode is a useful correction to the hype — export hydrogen lives or dies on long-term offtake contracts, and those have been slow to materialise across Asia, not just in Malaysia.

Is anywhere else in Malaysia in the game?

Sarawak dominates the headlines, but the national roadmap points to a bigger map. Beyond Sarawak, Malaysia’s hydrogen ambitions include very large concepts elsewhere — the Green Hydrogen Organisation profile references a 10 GW green-hydrogen hub concept in Sabah with a 250,000-tonne annual hydrogen capacity, alongside solar-powered hydrogen ideas in Peninsular Malaysia.

These are far less mature than Kasawari or the SEDC Energy projects, and should be read as aspiration rather than commitment. The pattern across all of them is the same: Malaysia has the renewable resource, the gas geology and the export infrastructure — what it needs next is firm demand and financeable contracts.

What’s next

Watch three things. First, whether Kasawari actually starts injecting CO2 by 2027 — a successful, at-scale offshore storage operation would be among the first of its kind in the region and the foundation for any future carbon-storage-as-a-service business. Second, whether SEDC Energy converts its Japanese and Korean partnerships into binding offtake agreements; without them, the redesigned H2biscus and H2ornbill plants stay on the drawing board. Third, whether Malaysia’s HETR translates into policy that closes the cost gap — carbon pricing, blending mandates, or export incentives — because at today’s economics, clean-hydrogen exports need help to compete.

For readers tracking Malaysia’s energy transition, the honest summary is this: the infrastructure ambition is real and, in Kasawari’s case, physically being built — but the hydrogen export industry remains a promise waiting on customers.