The history of natural gas utilisation in Peninsular Malaysia started with the commencement of the Peninsular Malaysia Gas Utilisation (PGU) project in 1984. The project was developed in three phases over a period of less than two decades covering almost the entire area of Peninsular Malaysia.

While the power sector will continue to drive the future growth of PGU gas demand, the demand from the gas based industries is also expected to increase rapidly in tandem with the growth of the national economy. In recent years, the role of natural gas is becoming more important as the existing and upcoming petrochemical industries rely heavily on the natural gas for the feed stocks to generate high value added products. Indeed, the PGU project acts as a catalyst to the power generation sector and other gas based industries providing significant contribution to the national economy.

Malaysia is endowed with abundant natural gas resources to support the long term development of the PGU project. In addition to the commitment to develop the discovered gas resources, PETRONAS through its Production Sharing Contractors (PSCs) is also committed to intensify exploration efforts to discover new gas resources.Prudent planning is therefore vital for ensuring a sustainable natural gas supply to the gas projects.

This paper will review the historical and future outlook of the gas industry in Peninsular Malaysia. Among others, the paper will cover topics on an overview of the PGU project and challenges in gas supply planning to meet demand. Prudent gas supply planning will result in an optimum gas supply and demand matching, sufficient excess capacity margin and optimisation in gas development and evacuation which in turn will improve companies’ bottom line as well as other benefits to all parties.


The continued rising of global crude oil price has caused many countries to turn to less expensive and environmentally cleaner natural gas. Like many other Asian countries, gas consumption in Malaysia where power producers are major users of natural gas is expected to increase relative to other fuel sources. The domestic gas consumption in Peninsular Malaysia is projected to rise by about 10% per annum to 2.5 Bscf/d by 2005 and 3.5 Bscf/d by 2010. The growth is mainly driven by a steady rise in gas utilisation for power generation where demand for power is forecasted to increase by 10% per annum with a gas utilisation mix forecasted to be at 70% for the long term.

The economic recovery of Asian countries including Malaysia from the recent crisis has brought a sigh of relief to the oil and gas industry. The demand for oil and gas which was badly hit by the economic crisis is on the upward trend in line with the improving economy. This trend also saw oil and gas companies returning to scout for opportunities to invest in the country.

The PGU system comprising a network of onshore transmission gas trunklines has and will continue to play a very important role in reaching the gas customers throughout Peninsular Malaysia. Being the back bone for the gas industry, this system has also been providing significant contribution towards the growth of other gas based projects.

In Malaysia, efforts are continuously being undertaken to enhance the value of natural gas hence creating spin-off effects to the downstream industries. The natural gas also provides the raw material required for the manufacturing of various petrochemical products feeding the two Integrated Petrochemical Complexes (IPCs) in Kerteh and Gebeng.

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