PETRONAS advances Malaysia’s Southern CCS Hub

Malaysia is moving closer to establishing a commercial-scale, cross-border carbon capture and storage (CCS) network, with state-owned energy company PETRONAS targeting a final investment decision on its Southern CCS Hub as early as 2028.

The project is designed to receive liquefied carbon dioxide from Asia Pacific including Japan and South Korea, and permanently store it in depleted offshore gas fields and saline aquifers. Construction is targeted for completion by 2030, with carbon dioxide injection potentially beginning in 2031.

If delivered as planned, the hub could underpin what PETRONAS aims to make Asia’s first CCS-as-a-Service (CCSaaS) business, providing transportation and storage services to industrial customers that lack suitable storage capacity of their own.

“CCS is part of the overall equation towards decarbonisation. It complements solar or other renewables. It plays a role in the energy transition,” PETRONAS said.

CCS captures carbon dioxide that would otherwise enter the atmosphere, transports it and injects it into deep geological formations for permanent storage. The technology is considered particularly important for hard-to-abate industries such as power generation, cement, steel, refining and petrochemicals, where direct emissions reductions remain technically difficult or costly.

For those industries, CCS can curb emissions while lower-carbon production technologies continue to develop and scale.

Malaysia’s geological advantage

Malaysia’s competitive case as a regional CCS hub, rests on a combination of geology, data and location.

Decades of natural gas production have left the country with depleted offshore fields that may be repurposed for carbon storage.

PETRONAS also holds extensive geological and reservoir data accumulated through years of oil and gas exploration, providing a foundation for assessing storage capacity, containment and long-term site integrity.

Malaysia lies outside the most seismically active parts of the Pacific Ring of Fire and experiences relatively few major earthquakes. Many prospective storage reservoirs are located more than 2,000 meters beneath the seabed, offering the depth needed for geological containment when combined with suitable sealing formations, well integrity and long-term monitoring.

Its proximity to major industrial economies including Japan and Korea is another advantage. Shorter shipping distances can reduce both the cost of transporting liquefied carbon dioxide and the emissions generated during transport.

Hydrocarbon basin assessments conducted to date by Global CCS Institute indicate that Malaysia has an estimated of 13.3 gigatonnes of CO2 storage capacity.

Of that amount, about 2.4 billion metric tons of storage capacity across depleted oil and gas fields and saline aquifers has already undergone validation and due diligence.

“The 2.4 billion metric tons is already sufficient to cater to Malaysia’s domestic requirements. And this number can grow as more saline aquifers are validated,” PETRONAS said, pointing to Malaysia’s potential to accept substantial volumes from overseas emitters.

From blueprint to investment decision

In Malaysia, the development of the Southern CCS Hub is underway, to be established in Pahang State on the eastern part of Peninsular Malaysia. The plan calls for establishing a liquefied CO₂ terminal near the Port of Kuantan and storing CO₂ in the depleted offshore gas fields and saline aquifers. PETRONAS has completed the project’s conceptual design and economic feasibility study and is now carrying out front-end engineering design (FEED).

The company expects to complete a detailed engineering and cost structure covering the full chain from marine transportation to permanent storage by the end of 2026, advancing towards first FID, prioritising cross-border opportunities where ecosystems are more mature, while progressively developing domestic capabilities to serve local emitters.

If the project remains on schedule, the hub would be completed by 2030. Injection could begin as early as 2031, subject in part to decisions and regulatory arrangements in the countries supplying the carbon dioxide. PETRONAS is progressing two offshore storage sites within the Southern CCS hub with initial storage of 5 million metric tons. By 2050, PETRONAS expects the total capacity of storage sites across Malaysia to grow to 40?80 million metric tonnes per annum, as additional storage sites are progressively developed.

Malaysia has also established a legal framework for commercial CCS development. The Carbon Capture, Utilisation and Storage Act 2025 was gazetted in August 2025 and took effect on October 1st of that year.

Building an end-to-end CCS value chain

Developing storage capacity alone will not be enough to establish a cross-border CCS business. PETRONAS is therefore building the shipping and capture capabilities needed to connect industrial emitters with Malaysian storage sites.

In June 2025, PETRONAS CCS Ventures, MISC Berhad and Japan’s Mitsui O.S.K. Lines established Jules Nautica Sdn. Bhd., a joint venture that will develop and ultimately own liquefied carbon dioxide carriers for CCS projects across the Asia-Pacific region.

The partners have completed FEED work for a 62,000-cubic-meter liquefied carbon dioxide carrier. The vessel design received DNV’s General Approval for Ship Application certification in December 2024.

Furthermore, PETRONAS is advancing CarbonStrikeTM, an initiative focused on the development and commercialisation of advanced CO₂ capture solutions. At its core is PETRONAS’ Membrane Box Contactor (MBC), a compact and modular carbon capture technology designed to efficiently remove CO₂ from industrial exhaust gases. MBC combines membrane-based mass transfer with proprietary solvent absorption to deliver high CO₂ capture performance while reducing the footprint and energy requirements typically associated with conventional capture systems. Its modular design also enables flexible deployment across a wide range of industrial applications, making it well suited for both new developments and space-constrained existing facilities. Through CarbonStrikeTM, PETRONAS aims to accelerate the deployment of scalable and cost-competitive carbon capture solutions as a key enabler of broader CCS projects.

As the Southern CCS Hub advances, opportunities are expected to emerge across the CCS value chain for technology providers, engineering firms and equipment manufacturers, particularly solutions in carbon capture, liquefaction, compression and monitoring.

An integrated CCS value chain will be particularly important for countries such as Japan and Korea, where industrial emissions are substantial, but domestic geological storage capacity is limited. For South Korea, CCS offers a practical pathway to decarbonise hard-to-abate sectors while preserving industrial competitiveness and supporting the country’s carbon neutrality ambitions. Access to secure cross-border storage solutions can help Korean industries accelerate emissions reductions without compromising energy security or economic growth.

PETRONAS pointed out, “If we accept regional ambition, their policy frameworks and financial structures support overall development.”

The company also expressed hope that more countries would join the initiative, increasing the volume of carbon dioxide available to the project.

“These volumes can support the scaling of infrastructure and improve overall project viability,” PETRONAS said.

A Korea partnership built over time

PETRONAS’ CCS engagement with Korea has developed over several years, moving from bilateral corporate studies to a broader industrial consortium and government-level policy coordination.

In December 2021, PETRONAS signed a memorandum of understanding with POSCO International and POSCO Engineering & Construction to explore CCS opportunities in Malaysia. The companies agreed to assess technologies and business opportunities covering carbon capture, transportation and storage.

PETRONAS expanded that cooperation in August 2022 by signing an agreement with six Korean companies: Samsung Engineering, now known as SAMSUNG E&A, Samsung Heavy Industries, SK earthon, SK energy, GS Energy, and Lotte Chemical.

The collaboration, known as the Shepherd CCS Project, was structured to examine a complete cross-border value chain. The concept involves capturing and aggregating carbon dioxide from industrial facilities in Korea, transporting it by ship and storing it permanently in Malaysia.

The participating companies brought complementary capabilities to the project. Korean energy and chemical companies focused on capture and aggregation, Samsung Heavy Industries contributed maritime transportation expertise, and PETRONAS and SK earthon worked on evaluating and developing Malaysian storage sites.

Korean and Malaysian officials agreed that a bilateral agreement would be needed to enable the cross-border transportation and storage of carbon dioxide. They also agreed to continue government discussions while taking into account domestic regulations and international rules.

Climate cooperation between the two countries has developed in parallel.

The Korea?Malaysia Climate Change Dialogue was established in 2023, with subsequent meetings addressing areas including international emissions-reduction projects and CCS. A third dialogue was held in Kuala Lumpur in August 2025, extending the government-to-government channel for climate policy coordination.

Together, those steps have begun to create the commercial, technical and regulatory foundation required before captured carbon can be transported across national borders and stored permanently in Malaysia.

PETRONAS plans to build on that record of cooperation with Korean companies and policymakers as it seeks to become a preferred provider of integrated CCS solutions in Asia.

“We recognise that delivering energy responsibly today must go hand in hand with preparing for a lower-carbon tomorrow,” PETRONAS said.