Malaysia to launch National Gas Roadmap by Q3, says economy minister

Malaysia is set to unveil its National Gas Roadmap by the third quarter of 2025, Minister of Economy Rafizi Ramli said during the Malaysian Gas Symposium on Feb. 13.

"Most of the biggest decisions that will influence the gas market for the next five to 10 years will be made in the next six months," Rafizi said.

According to Rafizi, the roadmap will aim to articulate the government's stance on critical regulatory issues and outline strategies to address existing barriers while identifying opportunities for developing a robust gas infrastructure that will ensure Malaysia's long-term supply.

Key components of the plan will include expanding regasification terminals and pipelines, which will create technical job opportunities and sustain the industry's socio-economic landscape.

In Q3 2023, Malaysia launched the National Energy Transition Roadmap, which underscores the essential role of natural gas in the country's energy future. Currently, natural gas accounts for 43% of Malaysia's total primary energy supply, with projections indicating an increase to 56% by 2050.

Given the rising demand and the concurrent decline in natural gas reserves, Rafizi stressed the importance of proactive planning, saying, "Inevitably, this means preparing Peninsula Malaysia and Sabah for LNG imports."

Pricing

During his address, Rafizi highlighted the necessity for Malaysia to develop a liberalized and competitive gas market in light of growing demand. However, pricing remains a significant barrier.

"The price differential for imported LNG makes it ineffective to participate in gas-to-power," he said.

Rafizi also emphasized the significance of cost benchmarking to accurately reflect actual costs, thereby facilitating an economic environment that aligns more closely with market structures.

He cited the implementation of the cost pass-through mechanism for electricity tariffs as an example of the extensive effort required to achieve this alignment.

The Malaysia Reference Price -- commonly used in the downstream gas sector and representing the weighted average price (WAP) of LNG on an FOB basis exported from Malaysia -- was recorded at MR39.78/MMBtu, equivalent to approximately $9/MMBtu in October 2024, official data showed.

Meanwhile, the Platts-assessed Southeast Asia Marker, which reflects the value of cargoes delivered to Southeast Asia with Thailand as the basis, was assessed at $13.397/MMBtu for October 2024, S&P Global Commodity Insights data showed. This indicates a notable price gap of more than $4/MMBtu.

Nonetheless, it is also essential to highlight the downward trend in prices for the forthcoming years. The JKM derivatives for Singapore close were $13.900/MMBtu for 2025, $11.875/MMBtu for 2026 and $10.175/MMBtu for 2027 on Feb. 13.

Third-party access

Rafizi also highlighted the need to improve infrastructure to ensure sufficient capacity for third-party access.

Malaysia first introduced third-party access in 2017, allowing licensed importers and shippers to access gas facilities and distribute and supply natural gas and LNG within the country.

Despite the issuance of LNG import and shipping licenses since 2019, these licensees have not actively imported LNG until now.

In August 2024, one of the licensees, E&H Energy, secured a long-term LNG supply agreement with Mexico's Amigo LNG, a subsidiary of Singapore-based LNG Alliance. The 20-year agreement, set to commence in Q3 2027, involves a supply of 3.6 million mt/year of LNG, marking the first long-term LNG agreement signed by licensed importers.