The value beyond gas

FOR a pioneer rubber glove maker like Top Glove Corp Bhd, Malaysia’s industrial infrastructure has been an important part of its growth.

Like many manufacturers, Top Glove depends on infrastructure ranging from highways and ports to reliable electricity and, crucially, piped natural gas connected directly to its factory.

Malaysia’s gas story goes back to the development of offshore fields on the east coast of Peninsular Malaysia.

As domestic gas production grew, national oil company Petroliam Nasional Bhd (PETRONAS) embarked on the Peninsular Gas Utilisation (PGU) project, building the network in stages to move processed gas from the east coast to the country’s growing industrial and power centres.

Today, its subsidiary PETRONAS Gas Bhd operates the 2,623km-long PGU.

While power plants and some very large industrial users receive gas directly from the PGU, many industries rely on the downstream “last mile” network – the Natural Gas Distribution System (NGDS), operated by Gas Malaysia Bhd.

Just as other key infrastructure sectors have been opened up for broader use, such as telecommunications and more recently the electricity grid, the gas transmission and distribution pipelines have also been liberalised.

The framework for this began under the third-party access (TPA) system back in 2017, and by 2022 the gas network had been opened more fully to competition.

According to the Energy Commission (EC) website, there are now 15 registered gas shipping licensees, which gives these companies the right to sell natural gas to industrial users across Peninsular Malaysia using the PGU and NGDS pipelines.

Access fees for using that infrastructure are regulated by the EC.

Surprisingly, among the 15 licensees are units of PETRONAS and Tenaga Nasional Bhd, indicating that these energy giants are also keen to take part in this last-mile sector.

Other players include units of Shell Malaysia and listed companies such as Uzma Bhd, Destini Bhd and Reservoir Link Energy Bhd.

The majority of these gas shippers also hold licences to import liquified natural gas into the country’s regasification terminals, but based on checks, none are actively doing so yet, instead sourcing gas from the PGU for now.

Of the 15 registered gas shippers, only a handful are actively supplying customers, with Gas Malaysia still the dominant player.

Industry sources say a few of the new entrants are competing aggressively on commercial terms to establish themselves in the market.

Industrial gas contracts typically run for one to three years, and each renewal gives shippers an opportunity to win customers from rivals.

Price remains an important consideration for industrial customers, particularly as energy costs directly affect manufacturing competitiveness.

However, the choice of gas supplier increasingly involves a broader assessment of value.

Alongside competitive pricing, customers also consider factors such as security and reliability of supply, the financial and operational capability of the supplier, flexibility and responsiveness, given that any disruption in gas supply could have significant consequences for manufacturing operations.

Reliable supply essential

Gas Malaysia operates through two key units in the industrial gas supply chain.

Gas Malaysia Distribution Sdn Bhd (GMD) runs and manages the NGDS last-mile pipelines. Another unit, Gas Malaysia Energy and Services Sdn Bhd (GMES), is the incumbent gas shipper, arranging the supply of gas through the network to industrial customers.

GMES chief executive officer Syahril Nizam Datuk Mohd Hashim tells StarBiz 7 that its market share today is around 83%. This means the new players have secured around 17% of the market.

But competing in the gas shipping business involves more than just buying and supplying gas molecules, according to Syahril Nizam.

“A shipper needs to secure reliable and competitive gas supply, manage transportation and distribution arrangements, forecast and balance customer demand, manage credit and contractual exposure, and build a sufficiently diversified customer portfolio.”

He adds that competition is ultimately about more than the price of gas.

“For industrial customers, the value lies in having a reliable supply that keeps production running, with flexibility and support when demand or operating conditions change.”

That reliability, however, comes with a cost for shippers.

Many industrial gas contracts contain take-or-pay provisions, under which customers commit to buying a minimum volume over a specified period.

If actual demand falls below that commitment, the shipper still has to manage the resulting volume and financial exposure.

In other words, a shipper that overestimates demand could be left carrying excess gas, while underestimating demand could make it harder to meet customer requirements.

Syahril Nizam says a diversified customer portfolio can help shippers manage fluctuations in demand, as different industries have different consumption patterns.

This allows variations in demand to be managed across the wider portfolio, making scale, demand forecasting and portfolio management important in the gas shipping business.

For Top Glove, reliable gas supply has an economic value of its own. Its joint managing director Ng Yong Lin tells StarBiz 7 that while price remains an important consideration, given energy is a significant operating cost for manufacturers and directly affects competitiveness, it must be weighed against reliability and security of supply, quality, flexibility, responsiveness and technical support.

“Reliable gas supply is essential to manufacturing operations. A significant disruption can affect production schedules, plant utilisation and customer deliveries, including our commitments to export markets.

“These consequences affect the efficiency of sales, price and quality of gloves.

“These consequences can outweigh the savings from a cheaper gas offer,” Ng adds.

Among listed companies, Uzma has emerged as an active player in the TPA gas market.

The oil and gas services firm had yet to get back to StarBiz 7 queries at the time of writing.

In its financial year 2025 (FY25) annual report, the company said it had entered the domestic natural gas market under the TPA regime, with inaugural supply to an industrial customer.

Uzma said it has introduced “differentiated supply models, competitive alpha pricing and flexible nomination rights”, giving customers greater flexibility to adjust the amount of gas they nominate for delivery according to their requirements.

More recently, the company secured an additional industrial customer in the second quarter of FY26 (2Q26), with revenue from its TPA pipeline gas supply contracts beginning to be recognised in the 3Q26.

Uzma is said to be pursuing new TPA natural gas contracts, “whereby up to RM10bil pipeline may be available for the market”, according to UOB Kay Hian in a report this week.

Data centres add a new dynamic

Data centres (DCs) may emerge as a significant new source of gas demand.

In a parliamentary reply in July this year, the government said it was encouraging DCs to generate electricity based on their own requirements rather than relying entirely on the grid.

Such on-site gas generation is already used in China, for example. However, industry observers say such installations locally would be subject to the relevant regulatory requirements.

Meanwhile, the GMD continues to expand the NGDS where there is sustainable demand and a sound economic case.

In 2025, the network exceeded the 3,000km milestone.

As the market matures, Syahril Nizam expects competition to hinge increasingly on customer support, technical expertise and supply management.

“A successful liberalised market should ultimately provide customers not just with more suppliers but with better choices across price, reliability, flexibility, services, and long-term energy solutions,” he adds.