Malaysia a clear beneficiary of CCS hub plan

PETALING JAYA: Malaysia is seen as a clear beneficiary as a carbon, capture and storage (CCS) hub not only due to its local oil and gas (O&G) fields and industries but also strategic overseas emitters, especially in Japan and South Korea.

UOB Kay Hian Research (UOBKH Research) said South-East Asian nations like Indonesia and Malaysia are positioning themselves as storage hubs.

“Although carbon dioxide utilisation technologies are not as favoured compared with other CCS components, the CCS value chain is experiencing increasing deployments, stronger collaboration among emitters and governments and diverse CCS technologies preference across emitter sectors (although amine absorbents remain as the primary CO2 capture material),” it said.

It added that Japan chose three out of nine advanced CCS projects to be in Malaysia and out of these, only one was from the East Coast.

“If done right, Malaysia can gain substantially from potential CCS/carbon trading and tax markets.

“The surge in Malaysia’s storage site agreements with Japanese stakeholders (or emitters) is largely driven by the abundance of depleted O&G reservoirs and saline aquifers that enables Malaysia to be developed into a cost-effective storage hub,” the research house said.

It said another key project is the South Korea-Malaysia Shepherd CCS, which will use an unidentified storage site in Sarawak. The project saw the number of participating South Korean emitters doubling in 2023.

UOBKH Research has retained a “market weight” call on the sector. “The sector’s valuations up till the first half of 2024 had adequately priced in catalysts related to bullish oil price expectations and offshore vessel/manpower rates that may remain at current, all-time high levels.

“We believe 2024 will be an important year to evaluate Petroliam Nasional Bhd’s CCS milestone.”