Oil & Gas

Peninsular Malaysia’s oil and gas reserves have sharply declined over the past decade, with daily production dropping from 700,000 barrels to just 350,000 barrels, according to Economy Minister Rafizi Ramli. Speaking at the 13th Malaysia Plan Engagement Session with the Kelantan state government, Rafizi warned that the nation’s fossil fuel reserves are depleting at an accelerated rate, posing significant challenges for Malaysia’s future energy security. The minister stressed that without significant changes in energy consumption and production, the reserves could soon be exhausted even faster.

Despite Malaysia’s strong overall economic growth, Rafizi highlighted a disconnect between rising living costs and stagnant wages. He pointed out that although the country’s lifestyle has evolved—shifting from motorbikes to cars—wages have not kept pace with the increasing expenses. He cautioned that unless the country changes its economic practices and consumption patterns, it risks living beyond its means, which could worsen its financial stability in the long run.

The rapid depletion of oil and gas resources in Peninsular Malaysia also poses a challenge for the government’s ability to allocate energy resources across the country. Rafizi noted that 30% of the gas used in Peninsular Malaysia’s industries and power generation is imported, which increases the country’s dependency on foreign sources. He emphasized the need for corrective measures to reduce this reliance and ensure that Malaysia’s energy future is more self-sufficient.

Rafizi further discussed the complexities surrounding resource allocation between Peninsular Malaysia and East Malaysia, particularly in Sabah and Sarawak. While East Malaysia’s reserves cater to the energy needs of these two states, the oil and gas produced in the peninsula is often exported or tied to long-term contracts. The minister indicated that there are ongoing discussions about revising the revenue-sharing framework between Sabah, Sarawak, and the federal government to better address the challenges posed by the declining reserves in Peninsular Malaysia.