Gas Malaysia targets investment decision on Kedah LNG terminal by second half of 2027

KUALA LUMPUR, Oct 2 : Gas Malaysia aims to make a final investment decision on plans for its first regasification terminal by the second half of next year, with the facility due to come online by the end of 2030, its chief executive said.

The proposed terminal, first announced in March, is being jointly developed with Japan's Tokyo Gas and Dutch group VTTI at an estimated cost of between 2 billion ringgit and 3 billion ringgit ($490 million to $735 million).

Slated to be constructed in the Yan district of the northern state of Kedah, it would be the first liquefied natural gas (LNG) import facility in Peninsular Malaysia not built by state energy firm Petronas.

Petronas operates two regasification terminals in the peninsula’s south, with a third being developed in the western state of Perak. Sarawak's state-owned Petros has recently also announced plans to build an LNG import terminal in Sarawak with Norwegian firm Höegh Evi.

Gas Malaysia CEO Azli Mohamed told Reuters in an interview its facility is aimed at filling a gap in gas distribution in Malaysia’s northern region.

Malaysia, currently the world’s fifth-largest exporter of LNG, is expected to see an increase in domestic gas power demand, fuelled by a boom in data centre growth and broader economic expansion and amid a planned phasing out of coal-fired generation by 2044.

Azli dismissed concerns about potential overcapacity in the region, citing Malaysia’s plans to deploy 9 gigawatts of new gas-fired power generation capacity by 2032.

“If you do the math, there are definitely strong requirements and needs for importing LNG through various different terminals, and I think we fit into that equation," Azli said.

The project by Gas Malaysia, the country's sole supplier of reticulated natural gas in Peninsular Malaysia, is expected to be capable of producing up to 6 million tons per annum.

The firm plans to focus on LNG imports to strengthen energy security in Peninsular Malaysia for now, but does not rule out future pipeline gas exports to neighbouring countries like Thailand, Azli said.

He also noted expectations of a more liberalised gas market, after an agreement governing supply and pricing arrangements between Petronas and the power generation sector expires next year.

Market liberalisation would be a key step toward Malaysia eventually becoming a net LNG importer, which could happen within 10 to 15 years or even sooner, Azli said.

As the country's first market-determined LNG import facility, the terminal will allow Gas Malaysia, which currently sources its gas from Petronas, the option to purchase from other suppliers, he added.

Malaysia imported 2.42 million metric tons of LNG and exported 27.03 million metric tons in 2025, according to the government's statistics department.

Pricing policies for the power sector after 2028 are set to be crucial for Gas Malaysia.

Malaysia currently subsidises prices at which gas is sold to the power sector, while other industries pay market prices.

"The policy moving forward... would have an impact in terms of how we can be competitive throughout the value chain," Azli said.