State-owned Petronas has started construction on Malaysia’s third floating LNG (FLNG) facility to better help it capitalize on stranded natural gas assets amid failing production from other fields.
The design and construction of the nearshore facility “is expected to be simpler, and upon completion, has the potential for improved production uptime as it will be located within a protected bay area” versus an offshore liquefied natural gas facility in the open seas, management said in a statement.
Malaysia is struggling with declining output from its upstream assets. Its first two operating FLNGs have helped unlock the country’s gas reserves in remote and stranded fields, which were previously considered uneconomical for conventional exploration and production.
The third FLNG, known as ZLNG, would have access to East Malaysia’s Sabah gas reserves. As part of a government strategy, a percentage of ZLNG’s production are expected to be distributed to the country’s industrial users. ZLNG would be moored at the Sipitang Oil and Gas Industrial Park and is expected to attract new investments to the area.
ZLNG is expected to produce up to 2 million tons (Mt) of LNG annually. It is slated to start-up by the second half of 2027. The facility would increase annual LNG production from Malaysia’s FLNG facilities to 4.7 Mt from 2.7 Mt.
“Our third floating facility is our latest advancement in FLNG technology and the culmination of expertise that we have gained from PFLNG Satu and PFLNG Dua,” Petronas CEO Adnan Zainal Abidin said. The two operating FLNGS exported 38 cargoes of the super-chilled fuel last year.
PFLNG Satu, launched in 2017, was the first FLNG facility to produce LNG from two remote gas fields. It was relocated from the offshore Sarawak Kanowit gas field to its current site at the Kebabangan gas field offshore Sabah.
PFLNG Dua started production in 2021. Petronas’ second facility is located in the South China Sea, 87 miles off the coast of Kota Kinabalu in Malaysia’s Sabah state.
Malaysia was the world’s fifth largest LNG exporter last year, although total exports of the super-chilled fuel were marginally lower at 26.96 Mt, compared to 27.98 Mt in 2022, according to Kpler data. Japan, China and South Korea remain the three top importers of Malaysian LNG.
Malaysia is aiming to increase LNG capacity to 55 Mt/year by 2030, with Petronas spearheading plans to expand domestic projects and find new supply sources abroad.
Petronas and Argentina's state energy company YPF started the front-end engineering and design study for a land-based facility in Argentina.
The project would allow Petronas to export up to 30 Mt of Argentine gas each year, Petronas Senior Vice President of LNG Abang Yusuf said last month. YPF expects to achieve a final investment decision on the first phase of the Argentine export project in 2025.
Petronas also has a 25% stake in the LNG Canada export project, which is expected to enter service next year.
