Why Does Malaysia Import Oil & Gas?

 

Malaysia exported RM170 billion worth of O&G products across three categories: crude petroleum and condensate, refined petroleum products, and liquefied natural gas (LNG). Meanwhile, the country imported RM152 billion worth of O&G products, making it a net exporter by RM18 billion.

 

Image via Dialog Group (Facebook)

Malaysia produces high-quality crude oil, also known as light sweet crude, specifically Tapis Blend, which has lower sulphur content and commands a higher price in global markets. Instead of refining all of it locally, Malaysia often exports this premium crude to countries willing to pay more for it, while importing cheaper heavy crude oil, also known as sour crude oil for its higher sulphur content, which is better suited for domestic refineries.

Both sweet and sour crude oil produce similar end products, except that sweet crude yields high-value fuels such as gasoline and jet fuel. Over the years, declining domestic reserves and rising demand have meant Malaysia also needs to import certain petroleum products and crude oil to meet both domestic consumption and export commitments.

Ultimately, it comes down to business, trading to maximise profits while ensuring refineries receive the types of crude oil they are designed to process. There is no pride in keeping "premium" products for domestic use if it means earning less and affecting the country's GDP. Global oil prices still affect Malaysian fuel prices despite being a net exporter by RM18 billion (this is for petroleum products including gas). However, since 2022, we are net crude oil importer (but net exporter with LNG and petroleum products). 

According to the Malaysian Investment Development Authority (MIDA), the country has six oil refineries located in: 

·              Port Dickson, Negeri Sembilan

·              Kertih and Kemaman, Terengganu

·              Tangga Batu and Sungai Udang, Melaka

·              Pengerang, Johor

The country also has two naphtha crackers, two ethane gas crackers, and six LNG facilities, including two floating ones.

Meanwhile, Malaysia has about 20 active drilling rigs, making up roughly half the regional total, placing it among Southeast Asia's leaders in exploration and production (E&P) activity.

Malaysia has a refining capacity of approximately 1.03 million barrels per day, while producing (drilling from the earth) slightly over half a million barrels per day.
Most Malaysian refineries are configured to process heavier sour crude oil, which is typically imported from countries such as Saudi Arabia, the UAE, and Oman. The only local refinery dedicated to processing sweet crude oil is PETRONAS Penapisan in Terengganu, the company's first refinery in Malaysia, which processes about 49,000 barrels of sweet crude oil. 

So, we have sufficient capacity to process sour crude, the Strait of Hormuz will matter to us. Why? The war with Iran will drive prices up – above USD100 per barrel and have inflationary forces unleashed.

Reference:

Explained: Why does Malaysia import oil & gas despite producing its own? Says.com, 12 March 2026