With the fifth largest oil reserves in the Asia-Pacific region, the Malaysian economy has historically relied on its oil and gas reserves to fuel its growth. While the sector represents 20% of the Malaysian economy, according to investment promotion agency InvestKL, greenfield investment monitor fDi Markets shows that between 2003 and 2014, the coal, oil and gas sector attracted the largest amount of capital investment into the country, worth $25.92bn.

Although Malaysia, which has more than 4 billion barrels of proven oil reserves, according to the Oil & Gas Journal, relies on the offshore Malay basin in the Malay Peninsula for its reserves, as well as the Sarawak and Sabah basins on the island of Borneo, Kuala Lumpur has also played a key role in the industry by establishing itself as a hub for energy trade.


South-east Asian hub

While the bulk of upstream beneficiation (including gas extraction from the country’s offshore fields), as well as downstream activities such as crude oil refining and natural gas processing and purification, occurs outside of the country’s capital, InvestKL and Kuala Lumpur’s local government have made significant progress in positioning the city as a marketing and distribution hub for oil and gas firms.

Pointing to the decision by Petronas, the country’s state-owned oil firm and the world’s 19th largest oil firm by revenues, to base its headquarters in Kuala Lumpur, Zainal Amanshah, InvestKL’s CEO, is confident that Kuala Lumpur will emerge as south-east Asia’s leading trading hub for natural resources.

“As a capital city, Kuala Lumpur has clearly emerged as a hub for certain sectors, including oil and gas,” says Mr Amanshah. “If we look at the results, they show that there is a lot of activity centred around the oil and gas sector [in Kuala Lumpur], which is driven by the presence of Petronas, as well as the presence of a very supportive local ecosystem. You find that multinationals come [to our city], put a headquarters here and cleverly partner with our local champions.”

Growing and growing

For its efforts, Kuala Lumpur has attracted $107m-worth of greenfield FDI into the oil and gas sector between 2003 and 2014, according to fDi Markets. Moreover Aric Carlisle, the general manager for Asia-Pacific at US-based oil and gas services firm Cameron, which is operational in the city, says that the continued success that foreign firms have experienced through establishing a presence in Kuala Lumpur means it will continue to emerge as south-east Asia’s leading energy hub.

“Kuala Lumpur was recently selected as one of the world’s energy cities, which is a significant milestone and achievement,” says Mr Carlisle.

“From an oil and gas industry perspective, this tells a story of continued growth. Companies here can enjoy ease of access to the market in Malaysia, as well as the rest of the Asia-Pacific region. We came here because we see Kuala Lumpur becoming the energy capital of south-east Asia. Additionally, we have a lot of customers and suppliers that have located here, creating an environment very conducive to doing business in this industry.”