KUALA LUMPUR (May 31): Malaysia is among the hubs in the Asia Pacific (Apac) region rapidly emerging as key players in the carbon capture and storage (CCS) sector, according to Rystad Energy.

In a statement on Thursday, the Oslo-based consulting firm said Asian countries are intensifying their decarbonisation efforts, despite challenges for a number of countries in the region, such as unsuitable geological conditions for carbon capture, utilisation and storage (CCUS).

Rystad Energy's research highlights Australia, Malaysia and Indonesia as emerging hubs in the Apac region, driven by the carbon dioxide (CO2) storage potential in their depleted oil and gas reservoirs and stricter environmental regulations, despite recent improvements and updates in policy.

The firm said the increasing recognition of the potential of these reservoirs, combined with the urgency to reduce emissions spurring demand for CO2 storage, positions the region to attract a substantial portion of the up to US$15 billion (RM70.56 billion) in anticipated investment in CCUS across Apac, which is expected over the next decade.

Rystad Energy said Southeast Asia emerges as a promising contender in the region, offering some of the most cost-effective CO2 storage options across the Apac region.

It said this attractiveness has prompted countries like Japan and South Korea, eager for cross-border solutions, to forge alliances with counterparts such as East Asian companies, as well as Southeast Asian and Australian players.

Notable among these are Malaysia’s Petroliam Nasional Bhd (Petronas), Indonesia’s Pertamina and Australian companies like Santos and Woodside Energy.

This growing regional collaboration is fuelled by the high population density and constrained domestic infrastructure in certain Asian nations, compelling them to explore storage solutions beyond their borders.

Rystad Energy said momentum is already building on policies in Australia, Malaysia and Indonesia to address regulatory gaps and pave the way for them to become key CO2 storage hubs in the region.

It said the availability of depleted oil and gas fields, combined with ample storage capacity, infrastructure viability and supportive regulations, further incentivises CO2 storage initiatives in these countries.

Rystad Energy senior analyst Sohini Chatterjee said the race is on for CO2 mitigation leadership in Apac.

“Policymakers are taking steps to close regulatory gaps to fully unlock the CCS value chain and create a friendly investment environment through project incentives.

“Ultimately, the region with the most cost-effective solutions and a clear path for CO2 storage will win.

“Strong government action, encompassing financing and establishing a standardised CCS framework, will also be vital,” said Chatterjee.