Malaysia sees advance towards becoming regional CCS hub
SUMMARY
The country has taken steps to form partnerships with major industrial players in Asia for the purpose of developing its many depleted oil and gas fields into huge CO2 storage sites.
By Gary LakesPOSTED IN:
In recent years Malaysia’s Petronas has signed a number of agreements with other Asian companies and global operators designed to explore and develop the country’s potential as a regional hub for carbon capture and storage (CCS). Companies from Japan and South Korea, Shell, Total and ExxonMobil are among those now partnering in projects that will come into operation mid-decade and assist with the transition to net-zero.
Geological surveys of Malaysia's offshore areas reveal numerous underground rock formations thousands of feet beneath the seabed where CO2 could be safely and permanently stored as international companies make gains in successfully sequestering CO2 from their industrial emissions. Storing CO2 away deep inside the bowels of the Earth is considered to be a major option to reduce the amount of CO2 in the atmosphere and ultimately reach a state of net-zero emissions.
Malaysia has taken steps to form partnerships with major industrial players in Asia for the purpose of developing its many depleted oil and gas fields into huge CO2 storage sites. Recent events have seen Japanese and South Korean companies sign on to two big projects in the Malaysian offshore with the state-owned oil and gas company Petronas. The companies will bring their expertise into the mix. Major Western energy firms are also working with Petronas to get carbon capture and storage (CCS) rolling in Southeast Asia.
Late last year, project leader Petronas endorsed the final investment decision (FID) for the Kasawari CCS project – a $1bn undertaking off the coast of Sawawak, Borneo, where Petronas has engaged in a huge study with the participation of a number of Japanese companies. Shortly after the FID, Petronas awarded the Malaysia Marine and Heavy Engineering (MMHE) with AN engineering, procurement, construction, installation & commissioning (EPCIC) contract. Services and equipment have already been placed under order, including a giant gas compressor from Japan’s Kawasaki Heavy Industries.
Value chain crucial
The Kasawari study encompasses the various aspects of identifying suitable sites for carbon storage. It is also undertaking technical evaluations, exploring the procedure of carbon capture and transport of CO2 from the Bintulu LNG complex in Malaysia, and assessing the potential for transporting CO2 from sources outside Malaysia, particularly Japan.
Four Japanese companies earlier this summer signed a memorandum of understanding (MoU) with Petronas regarding the CCS project, which is due to come into operation in 2026. Japan Petroleum Exploration Company (JAPEX), JGC Holdings Corporation, Kawasaki Kisen Kaisha (K LINE), and JFE Steel Corporation signed up with an agreement to evaluate the creation of a CCS value chain that begins in Japan and sees the transfer of CO2 to the Kasawari facility.
The Japanese firms have approached a number of other companies in Japan that emit large amounts of CO2 as possible users of Kasawari. MOU partner JFE Steel is a candidate as it is aiming to reduce its huge carbon emissions. JFE is focused on transporting CO2 in liquid form by tanker to the carbon storage site. The study undertaken by the group will evaluate the resources, infrastructure and cost of carrying out such an operation.
Operations at Kasawari will see gas extracted from the Bintulu field and separated in a CO2-rich steam (called a permeate) and hydrocarbon gas. The gas will be pumped to Petronas’ onshore LNG facility and the permeate will be routed to an offshore CCS platform for further CO2 separation and compression. The CO2 will then be transported through subsea pipelines to depleted gas fields for storage. The CCS platform, where at least three new injection wells will be installed and from where a 135-km subsea pipeline is to be constructed, is scheduled to start operations in 2026. Slated as the largest CCS project in the world, it is designed to accept 3.3mn tonnes of CO2 annually.
South Korean firms seek Malaysia CO2 storage
South Korean industries are also joining up with Petronas to study CCS and to establish a value chain that will enable Korean firms to reduce CO2 emissions. This summer Shell Gas & Power, Hanwha, Korea National Oil Corporation (KNOC) and Air Liquide Korea signed an MoU related to a project that was created a year ago when six South Korea firms and Petronas agreed to pursue conceptual and feasibility studies that would lead to the establishment of a full CCS value chain.
Similar to the Petronas-Japan project, the Koreans are pursuing the Shepherd project, which will identify suitable storage areas in the Malaysian offshore and then proceed to set up a chain that will lead to the CO2 being stored underground. The plan calls for Korean firms to capture and transport by ship the CO2 emitted from their domestic industrial operations.
The project already includes South Korea’s Samsung Engineering, Samsung Heavy Industries, SK Earthon, SK Energy, GS Energy Corporation and Lotte Chemical, which signed the MoU in August 2022. The Korean firms will pursue different aspects of the project along the value chain.
Also this summer, Petronas signed a development agreement with TotalEnergies Carbon Neutrality Ventures and Japan’s Mitsui and Company to work jointly on CCS projects within Malaysia. The agreement follows an MoU signed by the three companies last year. The companies will evaluate depleted fields and aquifers for storage, and will identify potential customers. The group will also engage in setting up the necessary commercial and legal frameworks required by Malaysia to establish CCS operations. Other agreements have been signed with a number of companies looking into CCS including DNV, Technip Energies, Shell and ExxonMobil.
Japan, Korea pursue domestic CCS
Besides Malaysia, Japan and Korea are participating in other CCS projects elsewhere in the region, notably in Australia, and both are working on domestic projects.
Itochu Corporation, Mitsubishi Heavy Industries, INPEX Corporation and Taisei Corporation earlier this year launched a study meant to evaluate CO2 separation, capture, ship transportation and storage from hard-to-abate industries in Japan. Nippon Steel and Taiheiyo Cement have joined the project as emitter companies. The group is currently searching for suitable subsea storage sites and intend to have the project in operation by 2030.
South Korean companies have been engaged in CCS projects for several years. Korean National Oil Corporation (KNOC) and Hyundai Engineering & Construction have been involved with developing a CCS demonstration project at the Donghae gas field. The project is due to begin in 2025 and run until 2030.
This summer the Seoul government launched a CCS research and development project in the Ulleung Basin in the East Sea near the Korea Strait. KNOC, SK Group and POSCO Group. The CO2 storage capacity of the basin is estimated at 193 million tonnes. The Donghae project is located in the same basin. Korea has set a carbon emission reduction target using CCS at 11.2mn tonnes in 2030.
