GasX is an over-the-counter centralised dashboard to facilitate the trading of natural gas and LNGX is a platform of digital auction/tender for the importation of LNG into Malaysia.

By Shardul Sharma

Malaysia’s Asia Gas Exchange (AGH) plans to roll out the domestic natural gas marketplace, GasX, in June this year and LNGX, a digital auction for the importation of LNG, by the second quarter of 2024, Faris Mustaffa, managing director and CEO of AGH tells GasPathways.

GasX and LNGX are AGH’s solutions under the ‘Digital Gas Marketplace’ (DGM) platform that the company believes can help make the Malaysian gas market more accessible to more suppliers, and ensure gas is more readily available at transparent and competitive market prices. 

“This strengthens the sustainability of the market and security of supply,” Mustaffa says.

The DGM platform consists of GasX which is an over-the-counter centralised dashboard to facilitate the trading of natural gas and LNGX which is an independent and transparent platform of digital auction/tender for the importation of LNG into Malaysia.

Mustaffa said that these solutions will help provide easy access to the Malaysian market in a safe, fair and transparent way and create an independent alternative supply source at fair transparent competitive prices. They also help in developing a healthy liquid gas market where more players can participate including new entrants thus creating more competition.

He added that the DGM platform is a one-stop ‘coordinator/facilitator’ to make Third Party Access (TPA) policy more successful and would boost aggregation of demand and help manage end users’ gas supply-demand balance.

“Establishing a gas exchange in this region promotes the growth of the gas economy as gas will be accessible and readily available at fair transparent market prices and most competitive in the region thus attracting more investments, promoting market integration, increasing market efficiency and supporting the transition to a net zero carbon economy,” Mustaffa said.


AGH ties up with CG Hub for GasX

AGH has tied up with CG Hub, a trading platform for certified gas, to power GasX. It conducted an extensive study on the various global technologies available to deliver the GasX system which required various considerations such as business, customers, unique needs of the Malaysian gas market and knowledge of the commodities market.

“CG Hub emerged as our top choice based on their profound reputation and specialised skills sets and technical capabilities which include an intuitive interface and powerful delivery solution,” Mustaffa said.

“We believe with CG Hub’s experience and support team of professionals with an impressive track record and deep capabilities to adapt to our market shall help accelerate our journey towards establishing GasX in the Malaysian domestic gas trading market, and later on, the region,” he added.


Target groups

When it comes to signing up members for the exchange, AGH’s first target group is the major active shipper licensee holders. There are currently 15 shippers in the country although not all are active. The initial response from the industry has been great.

“The response has been very encouraging as we demonstrated how DGM can benefit the stakeholders and the domestic gas market ecosystem,” Mustaffa said. “We received valuable input and feedback on how our initiative can be executed efficiently and effectively and are currently in the process of onboarding them onto GasX. However, we know it takes a lot of effort and time as Malaysian gas market is still an infant in terms of liquidity and participants’ trading acumen.”


How can the government help create a gas hub in Malaysia?

AGH believes that a strong government push contributed to Malaysia’s global crude palm oil hub status and this experience could be leveraged for gas.

The government can help develop more infrastructure such as storage facilities, import terminals and pipelines. It can provide incentives such as tax breaks, investment allowances and other incentives to attract more investors.

The state can also ensure consistency of regulations and develop policies to support the gas hub such as assigning a portion of the imports to go via LNGX, and domestic gas production to be offered on the GasX exchange and allocating 10% of gas infrastructure capacity to the exchange.

Mustaffa said that the government can encourage collaboration between the gas industry players such as suppliers, importers, infra operators, traders, and storage providers to promote the creation of an integrated and interconnected gas hub.


Natural gas to remain important part of energy mix

Natural gas is expected to continue playing an important role in the energy mix for the foreseeable future despite competition from renewable energy sources. Mustaffa said that this is especially true in Asia where demand for energy is rapidly growing and the transition to renewable energy is still in its nascent stage.

“In Malaysia, natural gas constitutes 41% of the current energy mix and will remain a high 39% of the energy mix in 2040 to ensure meeting Malaysia's net zero 2050 target,” he said.

“Natural gas still continues to stay relevant due to its relatively low cost and abundance, plus it is the cleanest hydrocarbon compared to other fossil fuels making it a cleaner option. As a result, natural gas is seen as the transition fuel which helps reduce carbon emissions as the world moves towards a low-carbon energy system,” Mustaffa added.

Additionally, many Asian countries have invested heavily in natural gas infrastructure such as import and export terminals, pipelines and this investment still continues to grow as demand for natural gas is rising.

“Natural gas is complementary to renewables due to its intermittent issue which natural gas can overcome as it is the ‘quickest to grid’ source of energy.  As such, natural gas will still play a vital role in the energy mix of Asia,” Mustaffa said.

Download Report