Japan plans to export liquefied CO2 to Malaysia for offshore storage, creating Southeast Asia’s first large-scale cross-border CCS network amid rising debate over its environmental and economic implications.
Japan is preparing to export liquefied carbon dioxide from its highest-emitting industries to offshore storage sites in Malaysia, a move that would create Southeast Asia’s first large-scale cross-border carbon capture and storage (CCS) chain and could reshape regional decarbonisation markets.
According to reporting by Arkansas Online and the Associated Press, Tokyo intends to capture CO2 from sectors such as power generation, oil refining, cement, shipping and steel, and ship the gas in specially designed vessels to depleted gas fields off the coast of Sarawak for permanent injection. Japan’s government sees CCS as a component of its emissions strategy and estimates that storage sites being developed abroad could contain about 20 million tonnes of CO2 a year by 2030, roughly 2% of the country’s current annual emissions.
Malaysia has moved rapidly to position itself as a regional CCS hub. Government legislation supporting the sector passed last year, and state oil company PETRONAS is leading multiple initiatives and partnerships to build the full value chain. PETRONAS has signed a land rental agreement for a Southern CCS hub in Pahang, targeting a first injection by 2029, and is developing a $1.1 billion offshore storage project intended to be the world’s largest by the end of the decade. The company has also formalised technical collaborations with Japanese and international partners , including JAPEX, Mitsui & Co., Shell and a Japanese consortium with JAPEX, JGC and “K” Line , and in February 2024 signed a Storage Site Agreement covering the M3 depleted field offshore Sarawak to allow feasibility studies and planning for pipelines and onshore terminals.
PETRONAS says the network of storage sites and hubs will serve heavy industries across Peninsular Malaysia and the wider Asia-Pacific, and could create new economic opportunities for local communities. The Malaysian Ministry of Economy has suggested, without publishing a detailed breakdown, that the sector might add as much as $250 billion to the national economy over 30 years.
Industry proponents argue cross-border CO2 logistics can deliver a practical pathway to remove hard-to-abate emissions from industrial centres while leveraging existing offshore reservoirs that have been well characterised by oil and gas operations. Petronas’ media releases emphasise technical maturation studies, assessments of capture volumes and monitoring methods, and the use of depleted reservoirs that are already understood by operators.
But the proposal has provoked strong criticism from environmental campaigners and independent analysts who warn CCS risks becoming a development that permits continued fossil-fuel use rather than an accelerant of deep decarbonisation. Rachel Kennerley, a carbon capture specialist with the Centre for International Environmental Law, said the plan “dangerously shifts the burden of climate change onto Malaysia rather than onto Japan.” Ayumi Fukakusa of Friends of the Earth Japan described the scheme as “carbon colonialism.” Campaigner Eqram Mustaqeem warned, “We’re spending high amounts of money on a technology that is under-delivering and unproven.”
Technical and economic uncertainties compound the political concerns. CCS requires reliable separation, liquefaction, ship transport, injection and long-term monitoring for leaks; each stage adds cost and complexity. The International Energy Agency regards carbon capture, utilisation and storage as a niche tool in its Net Zero pathway, projecting it will account for less than 5% of emissions reductions by 2050. Independent analysts at the Institute for Energy Economics and Financial Analysis have criticised the enthusiasm for CCS as a theoretical promise that may not deliver at scale.
There are also questions about accounting and incentives. Under the proposed model, Malaysia would be paid per tonne of CO2 stored and Japan would be able to deduct those quantities from its national totals. That accounting arrangement has raised equity concerns among NGOs, which say it enables major emitters to avoid domestic mitigation measures while transferring the burden of storage and potential environmental risk to exporting countries.
For industrial energy managers and decarbonisation strategists across the region, the Japanese–Malaysian initiative points to two concurrent trends. First, companies and national oil firms are accelerating efforts to develop CCS infrastructure and commercial arrangements that can serve cross-border customers. PETRONAS’ MoUs and storage agreements demonstrate the rapid establishment of project partnerships and commercial frameworks. Second, the debate underlines the continuing trade-off between investment in negative-emission infrastructure and direct deployment of renewable generation, grid upgrades and efficiency measures that reduce emissions at source.
If the projects proceed, they may provide a template for neighbouring states with subsurface storage potential such as Indonesia and Thailand. Yet they will also test regulatory regimes, monitoring regimes and liability frameworks for long-term underground storage, and will likely intensify scrutiny from investors, regulators and civil society over whether CCS complements or supplants more direct pathways to industrial decarbonisation.
Government agencies in Japan leading the initiative, including the Ministry of Economy, Trade and Industry and the Japan Organization for Metals and Energy Security, have not publicly responded to requests for comment in the reporting. PETRONAS’ statements detail project milestones and partnerships but stop short of publishing commercial tariffs or full environmental risk assessments. As plans move from feasibility to engineering, industry stakeholders will be watching for clear operational rules on cross-border CO2 transfers, robust monitoring and verification protocols, and transparent accounting so that CCS projects sit alongside , rather than in place of , aggressive emissions reductions.
- https://www.arkansasonline.com/news/2026/feb/22/japan-plans-to-ship-carbon-to-malaysia/ – Please view link – unable to able to access data
- https://apnews.com/article/b82fd0b245179dbdae14e5a057b9840b – Japan and Malaysia are collaborating on Southeast Asia’s first large-scale cross-border carbon capture and storage (CCS) project. Japan plans to ship liquefied CO₂ from its heavy-polluting industries to burial sites off Malaysia’s coast, particularly in Sarawak. Malaysia aims to establish itself as a regional CCS hub, with projections that this emerging industry could contribute up to $250 billion to its economy over 30 years. State oil company Petronas is leading a $1.1 billion offshore facility project, set to be the world’s largest by the decade’s end. However, CCS technology remains highly controversial, with critics arguing it offers a costly distraction from proven climate solutions like renewable energy and risks allowing major polluters like Japan to outsource their environmental responsibilities. Activists label the approach “carbon colonialism,” claiming it shifts the burden of carbon mitigation unfairly to less developed nations. Japan’s government projects CCS will help cut 2% of its emissions by 2030. Despite interest in the technology, experts from groups like the International Energy Agency and environmental NGOs doubt its large-scale efficacy, warning that it may hinder global climate goals.
- https://www.petronas.com/media/media-releases/petronas-acquires-land-carbon-capture-and-storage-hub-peninsular-malaysia – PETRONAS, through its subsidiary PETRONAS CCS Solutions Sdn Bhd (PCCSS), has signed a land rental agreement with Kuantan Port Consortium Sdn Bhd (Kuantan Port) to progress plans for its Southern Carbon Capture and Storage (CCS) hub in Pahang, Malaysia. The hub is expected to have its first injection by 2029 and will play a key role in reducing carbon emissions for hard-to-abate industries locally and internationally. The location of the hub is ideal for an integrated CCS value chain and future growth and is expected to create new economic opportunities and benefits for the surrounding communities. PCCSS Chief Executive Officer, Nora’in Md Salleh, stated that the establishment of a CCS hub is timely to provide a decarbonisation solution to industries such as steel, chemical, cement, power generation, and petrochemical in Pahang. This hub, with its abundant storage capacity, also serves to connect all the industrial areas in the west of Peninsular Malaysia and the Asia Pacific that are embarking on decarbonisation. Ultimately, this project signifies PETRONAS’ strong commitment to Malaysia in rolling out the implementation of the National Energy Transition Roadmap (NETR).
- https://www.petronas.com/media/media-releases/petronas-partners-japex-carbon-capture-and-storage-solutions – PETRONAS has signed a Memorandum of Understanding (MoU) with Japan Petroleum Exploration Co., Limited (JAPEX) to collaborate on carbon capture and storage (CCS) opportunities, including suitable carbon dioxide (CO₂) storage solutions in Malaysia. Under the MoU, PETRONAS and JAPEX will perform technical maturation activities to unlock potential CCS solutions, which includes evaluating optimal capture, storage, and transportation methods, as well as estimation of emissions, capture volumes, and monitoring methods of CO₂ stored underground. This joint study will cover consideration of methods to capture and transport CO₂ from the PETRONAS LNG Complex in Bintulu and from outside Malaysia as a future possibility. The MoU was signed by PETRONAS Executive Vice President and Chief Executive Officer of Upstream, Adif Zulkifli, and Head of CCS Enterprise, Nora’in Md Salleh, while JAPEX was represented by Representative Director and Executive Vice President, Kazuhiko Ozeki, and Vice President of Overseas Project Management Division, Dr Tomomi Yamada. The signing was witnessed by Japan’s Ministry of Economy, Trade and Industry representative, Takeshi Soda, and PETRONAS’ Head of CCS Enterprise Unit, Upstream, Nora’in Md Salleh. Adif Zulkifli stated, “We look forward to our partnership with JAPEX to position Malaysia as a leading CCS solutions hub in the region. This collaboration allows PETRONAS to leverage JAPEX’s experience in the Tomakomai CCS Demonstration Project, Japan’s first full-chain CCS project, conducted by Japan CCS Co., Ltd. We are confident that it will bring about valuable contributions in the Technical Maturation Study to unlock CCS potential in the country.”
- https://www.petronas.com/media/media-releases/petros-petronas-and-japanese-consortium-parties-sign-landmark-storage-site – Petroleum Sarawak Berhad (PETROS), PETRONAS, through its subsidiary – CCS Ventures Sdn Bhd (PETRONAS CCS Ventures), and Japanese Consortium Parties comprising Japan Petroleum Exploration Co., Ltd. (JAPEX), JGC Holdings Corporation (JGC), and Kawasaki Kisen Kaisha, Ltd. (“K”LINE) signed a Storage Site Agreement (SSA) for the M3 depleted field offshore Sarawak, Malaysia, on 26 February 2024. The SSA not only enables the feasibility studies of the CO₂ storage sites starting with the M3 depleted field (M3 CCS Project), but also the planning of relevant CO₂ storage site development, including onshore terminals and transportation pipelines, as well as assessment of its techno-commercial feasibility. This collaboration represents a significant advancement in the effort to reduce greenhouse gas emissions in the Asia Pacific (APAC) region, including Malaysia and Japan.
- https://www.petronas.com/media/media-releases/petronas-partners-mitsui-co-carbon-capture-and-storage-solutions – PETRONAS has signed a Memorandum of Understanding (MoU) with Mitsui & Co., Ltd. (Mitsui & Co.) for the conceptual and feasibility studies on carbon capture and storage (CCS) value chain, including the evaluation of carbon dioxide (CO₂) storage sites in Malaysia. Under the MoU, both parties will evaluate potential CO₂ storage sites offshore Peninsular Malaysia in line with PETRONAS’ aim to establish Malaysia as a CCS regional hub in the Asia Pacific. The scope of collaboration covers the evaluation of other CCS value chain, capturing and gathering strategy of CO₂ from various industries, competitive transportation of the CO₂ and emerging technology in direct air capture. PETRONAS and Mitsui & Co. will leverage the combined strength, network, and expertise of both companies to progress in these areas. Emry Hisham, Head of PETRONAS’ Carbon Management Division, stated, “Through this collaboration, PETRONAS can leverage on Mitsui & Co.’s experience in its CCS project in the United Kingdom, which is the first CO₂ appraisal and storage license issued by the United Kingdom’s Oil and Gas Authority. We are confident that the feasibility studies will bring about valuable contribution in unlocking CCS potential in Malaysia. This is one of the many efforts to establish Malaysia as a leading CCS solutions hub in the region.”
- https://www.petronas.com/media/media-releases/petronas-and-shell-collaborate-carbon-capture-and-storage-solutions-0 – PETRONAS has signed a Joint Study and Collaboration Agreement (JSCA) with Sarawak Shell Berhad (Shell) to explore opportunities and project collaborations in carbon capture and storage (CCS) to help provide carbon dioxide (CO₂) storage solutions in Malaysia and the region. Under the JSCA, PETRONAS and Shell will perform an integrated CCS Area Development Plan study to support the decarbonisation ambitions of both parties within selected locations offshore Sarawak. The scope of the agreement includes exploring the provision of decarbonisation service to Shell’s local and cross-border facilities, as well as to other potential regional customers. The outcome of the study will produce options in potential areas for further collaboration. The JSCA signing parties were Adif Zulkifli (left), PETRONAS Executive Vice President and Chief Executive Officer of Upstream and Ivan Tan (right), Shell Malaysia Chairman and Senior Vice President of Upstream Malaysia.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on 22 February 2026, reporting on a development that has been in progress since at least September 2023, when Japan and Malaysia’s state oil firm Petronas agreed to discuss exporting CO₂ to Malaysian storage sites. ([straitstimes.com](https://www.straitstimes.com/asia/se-asia/japan-petronas-to-discuss-exporting-co2-to-malaysian-storage-sites?utm_source=openai)) The most recent related development was reported on 6 February 2026, indicating that the article is relatively fresh. ([apnews.com](https://apnews.com/article/b82fd0b245179dbdae14e5a057b9840b?utm_source=openai))
Quotes check
Score:
7
Notes:
The article includes direct quotes from environmental campaigners and independent analysts, such as Rachel Kennerley of the Centre for International Environmental Law and Ayumi Fukakusa of Friends of the Earth Japan. These quotes appear to be original and not reused from other sources. However, without access to the original interviews or statements, the authenticity of these quotes cannot be fully verified.
Source reliability
Score:
6
Notes:
The article is sourced from Arkansas Online and the Associated Press. While the Associated Press is a reputable news organisation, Arkansas Online is a regional publication with a more limited reach. The article also references press releases from PETRONAS and Japanese companies, which may present a biased perspective. The reliance on a single source for the majority of the information raises concerns about the independence and reliability of the reporting.
Plausibility check
Score:
7
Notes:
The article discusses Japan’s plan to export CO₂ to Malaysia for storage, a development that aligns with previous reports from September 2023. ([straitstimes.com](https://www.straitstimes.com/asia/se-asia/japan-petronas-to-discuss-exporting-co2-to-malaysian-storage-sites?utm_source=openai)) The technical and economic challenges of carbon capture and storage (CCS) are well-documented, and the concerns raised by environmental campaigners are consistent with ongoing debates about the efficacy of CCS. However, the article lacks specific details about the logistics, costs, and regulatory frameworks involved, which are crucial for assessing the feasibility of the project.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article reports on Japan’s plan to export CO₂ to Malaysia for storage, a development that has been in progress since at least September 2023. While the Associated Press is a reputable source, the article relies heavily on press releases from PETRONAS and Japanese companies, raising concerns about the independence and reliability of the reporting. The quotes from environmental campaigners and independent analysts cannot be fully verified without access to the original statements. The article lacks specific details about the logistics, costs, and regulatory frameworks involved in the project, which are crucial for assessing its feasibility. Given these concerns, the article does not meet the necessary standards for independent verification.
