Sabah acquires 25% stake in PETRONAS ZLNG facility for $3.1bil.

The Sabah government has signed a head of agreement with PETRONAS LNG to acquire a 25% equity stake in a $3.1bil nearshore floating LNG facility in Sipitang. The facility is expected to commence operations in H2 2027. The partnership aims to promote industrial growth, enhance energy security, and create new opportunities to drive Sabah's progress. The Sabah government will strengthen its economic resilience and ensure the benefits of its natural resources contribute to the well-being of its people.

The Sabah government, through SMJ Energy Sdn Bhd, has signed a head of agreement (HoA) with Petronas LNG Sdn Bhd to acquire a 25% equity stake in the US$3.1 billion (RM13.17 billion) nearshore floating liquefied natural gas (ZLNG) facility in Sipitang. The facility, currently under construction, is expected to commence operations in the second half of 2027 [1].

The partnership aims to promote industrial growth, enhance energy security, and create new opportunities to drive Sabah's progress. Chief Minister Datuk Seri Hajiji Noor noted that the ZLNG facility, with a capacity of two million tonnes per annum (MPTA), represents a significant addition to Malaysia’s LNG landscape. This project complements Sabah’s growing LNG footprint, alongside two other floating LNG facilities - PFLNG1 (1.2 MTPA) and PFLNG2 (1.5 MTPA) - currently operating in Sabah waters [1].

The Sabah government also announced its intention to acquire a 40% participating interest in PFLNG1 through SMJ Energy, with due diligence scheduled to begin in the second half of 2025. SMJ Energy’s growth trajectory since the signing of the commercial collaboration agreement (CCA) with Petronas in December 2021 has been rapid. The company now holds 50% equity stake in the Samarang production sharing contract (PSC) oil production asset, 10% equity in LNG9, 25% equity in the Sabah Ammonia Urea (SAMUR) petrochemical complex, and full ownership of Sabah International Petroleum (SIP), which operates both Floating Production Storage and Offloading (FPSO) and floating storage and offloading (FSO) assets [1].

SMJ Energy chief executive officer Datuk Dr. Dionysia Kibat stated that the entry into ZLNG is part of the company’s strategic plan to further diversify and strengthen its position in the upstream, LNG, and petrochemical sectors. She noted that this opportunity aligns with the company’s mandate to generate long-term, stable cash flows from high-quality, cash-generating assets [1].

Sabah’s downstream ambitions are also advancing rapidly. Sabah Energy Corporation (SEC), the state’s gas aggregator and distributor, plays a crucial role in ensuring a stable domestic gas supply for Sabah’s industries. One of the landmark projects involves supplying gas to E-Steel’s RM31 billion green steel plant at the Sipitang Oil and Gas Industrial Park (SOGIP), a key investment supporting Sabah’s move toward industrial diversification [1].

This acquisition is a strategic move by the Sabah government to strengthen its economic resilience and ensure that the benefits of its natural resources directly contribute to the well-being of its people. The partnership between SMJ Energy and Petronas is expected to foster further collaboration and investment in the state’s energy sector.

References:
[1] https://www.thestar.com.my/business/business-news/2025/07/17/sabah-to-acquire-25-equity-in-petronas-zlng-facility
[2] https://www.freemalaysiatoday.com/category/highlight/2025/07/17/sabah-to-acquire-25-equity-in-us3-1bil-zlng-facility-in-sipitang