Natural Gas and LNG in Malaysia

Every time a power plant in Selangor fires up or a glove factory in Penang heats its ovens, the gas most likely began its journey hundreds of kilometres away, offshore Terengganu or across the South China Sea in Sarawak. Malaysia is at once a heavyweight gas exporter and, increasingly, a gas importer, and the pipes and terminals that reconcile those two facts are among the country’s most valuable energy assets.

How does gas get across Peninsular Malaysia?

The spine of the Peninsula’s gas system is the Peninsular Gas Utilisation (PGU) network. Owned and operated by PETRONAS Gas Berhad (PGB) on behalf of PETRONAS, it runs 2,623 km and can move up to about 3,500 million standard cubic feet per day (mmscfd) of sales gas to power stations, petrochemical plants, and industry, and it also delivers gas to Singapore.

The network draws on four entry points: Kertih in Terengganu, Pengerang in Johor, and Sungai Udang in Melaka on the Malaysian side, plus a fourth cross-border entry from Thailand. That redundancy matters because the Peninsula’s own gas fields are ageing.

Why is Malaysia importing LNG if it is a major exporter?

The paradox resolves geographically. Most of Malaysia’s gas, and nearly all of its LNG, comes from offshore Sarawak and Sabah in East Malaysia. Peninsular fields, by contrast, are in structural decline. Rather than pipe gas thousands of kilometres from Borneo, it is cheaper to buy LNG on the water and turn it back into pipeline gas near where it is used.

That is what regasification terminals do. Malaysia has two, both operated by PGB, giving the Peninsula a dual-gate import system:

Terminal	Location	Commercial start	Regas capacity
RGT Sungai Udang	Offshore Melaka	Q2 2013	500 mmscfd
RGT Pengerang	Johor	Q4 2017	490 mmscfd

Sungai Udang was Malaysia’s first LNG import terminal. Together the two terminals let the country balance falling domestic output against long-term contracts and spot LNG cargoes, feeding regasified gas straight into the PGU backbone.

What makes Bintulu one of the world’s biggest LNG plants?

The export side of the story is concentrated at a single site: the PETRONAS LNG Complex at Bintulu, Sarawak. It is one of the largest single-location LNG production facilities anywhere, built up over four decades across several plants.

Plant	Trains	Milestone
Malaysia LNG (MLNG)	Trains 1–3	First cargo shipped 1983
MLNG Dua	Trains 4–6	Second plant, from the 1990s
MLNG Tiga	Trains 7–8	Third plant, from the 2000s
PETRONAS LNG 9	Train 9	Added 3.6 mtpa

PETRONAS says Train 9 boosted the complex by 3.6 million tonnes per annum (mtpa) to approximately 30 mtpa across nine trains; the figure is commonly cited as about 29.3 mtpa. Either way it is one of the largest single-site LNG capacities in the world. The first cargo left Bintulu in 1983, bound for Japan, and Japan and other North Asian buyers have anchored demand ever since.

Where does Malaysia rank as an LNG exporter?

Comfortably in the top tier. In 2024 Malaysia was the world’s fifth-largest LNG exporter, behind the United States, Australia, Qatar, and Russia.

Rank	Country	2024 LNG exports (billion ft³/d)
1	United States	11.9
2	Australia	~10.2–10.7
3	Qatar	~10.2–10.7
4	Russia	4.4
5	Malaysia	3.7

Malaysia has held the fifth spot for several years. In 2023 it exported 26.75 million tonnes of LNG, roughly 7% of all LNG traded globally, according to the Malaysian Gas Association. That export revenue is a significant contributor to PETRONAS and, through it, to federal coffers.

How is industrial gas priced?

For most of Malaysia’s history, domestic gas was sold at heavily regulated, below-market rates. That changed with the Gas Supply (Amendment) Act 2016, which came into force on 16 January 2017 and introduced Third Party Access (TPA).

Under TPA, qualified third-party shippers, not just PETRONAS, can book capacity on three classes of facility on equal terms: regasification terminals, transmission pipelines, and distribution pipelines. The Energy Commission (Suruhanjaya Tenaga) regulates the system and sets the tariffs.

Two mechanisms drive the price an industrial buyer actually pays:

• The facility tariff. Set under an Incentive Based Regulation (IBR) framework, with base tariffs fixed for three-year regulatory periods starting January 2017. This is the regulated cost of using the pipes and terminals, and it is a relatively small slice of the delivered price.
• The gas molecule price. The larger component. It is benchmarked to the Malaysia Reference Price (MRP), which is derived from Malaysia’s LNG export value, essentially the ex-Bintulu free-on-board weighted average price, and is refreshed every three months. Changes in gas cost flow through to buyers via a Gas Cost Pass Through (GCPT) mechanism revised every six months.

The practical effect is that industrial gas in Malaysia increasingly tracks international LNG values rather than a fixed subsidised rate. When global LNG prices spike, Malaysian manufacturers feel it, which is why gas-price risk is a recurring concern for industry groups.

What’s next

Malaysia’s gas future turns on a balancing act: sustaining LNG exports from Sarawak while managing the Peninsula’s growing reliance on imports. Watch for the pace of new upstream discoveries in Sarawak and deepwater Sabah, the possibility of additional regasification capacity, and the handover of Sarawak gas rights to the state entity Petroleum Sarawak Berhad (Petros), which became Sarawak’s sole gas aggregator on 1 March 2025 under the Distribution of Gas Ordinance 2016, though PETRONAS and Petros were still negotiating the finer terms into 2026. On pricing, each new IBR regulatory period and MRP reset will keep setting the terms for industrial buyers. For anyone tracking Malaysian energy, the gas value chain, from Bintulu’s trains to the PGU’s four entry points, is the system to watch.