Malaysia – an Energy Snapshot

Malaysia is one of the largest oil and gas producers in the Asia-Pacific region with an average daily production of more than 1.8 million barrels of oil equivalent (BOE) in 2021, more than two thirds of which was natural gas. Nearly 70% of its estimated proved reserves of more than 8.2 billion BOE are also natural gas.

Despite its rich natural resources, Malaysia has increasingly relied on imported coal over the past 10 years. Coal now generates 44% of its electricity needs compared to natural gas at 36% and hydropower the third significant source at nearly 17%.

Overall, coal forms 21% of the country’s primary energy mix compared to 35% for natural gas and more than 34% oil – adding up to a 91% dependence on fossil fuels.

Kuala Lumpur cityscape.

The country exports around 40% of its natural gas production, mostly as LNG, with the remainder used domestically for power generation, industry and by households. It exports 42% of its daily average oil production and the rest is used domestically, primarily for transportation.

Malaysia is seeking to reduce its coal use as it works towards meeting its Paris Agreement targets to reduce emissions by 45 per cent. The national oil and gas company, Petronas, has also announced it will achieve net-zero emissions by 2050.

Malaysia’s National Energy Policy 2022-2040, published in September 2022, sets out the country’s plan for energy transition and establishes a series of Low Carbon National Aspirations. Under the plan, the share of national gas in the country’s primary energy mix will be 39% in 2040, while coal and oil will be at 17% and 27% respectively. Renewable energy – hydropower, solar and biomass – will make up the remaining 17%.

“Malaysia is poised to move away from the coal imports it has relied upon for electricity generation over the past decade. The country’s energy planning documents underscore the importance of growing the share of natural gas in the energy mix to support increasing adoption of renewable energy.”

Paul Everingham, ANGEA CEO

Malaysia’s energy, in brief

  • One of the largest oil & gas producers in Asia
  • 91% of energy from fossil fuels
  • 44% of electricity comes from coal
  • Gas set to displace coal and support renewables

The Low Carbon Aspirations include 2040 targets of using LNG for 25% of maritime fuels, reducing the percentage of coal-fired plants in installed electricity capacity to only 18.6% and growing renewable energy capacity to 18,431MW. Alongside increased electric vehicle penetration and increased use of public transport, there is also an aspiration of “no new coal power plants” – although there are few details to accompany that.

A Natural Gas Roadmap (NGR) was expected to be published in 2021 setting out the pivotal role of natural gas – it remains outstanding but the National Energy Policy could be a trigger for it being delivered. Affordability, security and sustainability are expected to be key factors behind the new roadmap with gas taking a strategic balancing role, backing out high-carbon coal and filling in for renewables while technologies, projects and economics develop to establish it as a long-term solution.

A National Renewable Energy Road Map published late in 2021 not only highlights the potential for increasing renewable energy’s role in Malaysia but also the critical and ongoing importance of gas, in the short and longer terms. The Road Map targets an increase in renewable’s share of installed electricity capacity to 31% in 2025 and then 40% in 2035. The leading source of installed capacity in 2035 is set to be gas at 41%.

With the election of Prime Minister Anwar Ibrahim in November 2022, Malaysia is looking to reduce its reliance on coal. Malaysia signed its first cooperation framework on a “green economy” in partnership with Singapore in January 2023.

ANGEA is an industry association representing LNG and natural gas producers, energy buyers, suppliers and companies in APAC. Based in Singapore, it works in partnership with governments and societies across the region to deliver reliable and secure energy solutions that achieve national economic, energy security, social and environmental objectives and meet global climate goals.

Main photo by Meriç Dağlı on Unsplash