Malaysia’s upstream oil and natural gas industry registered encouraging developments in the second quarter of 2025, with crude oil and condensate production showing early signs of recovery. Although natural gas output contracted more sharply, the overall results point to a sector slowly regaining stability after several quarters of volatility.
According to the latest industry data, crude oil and condensate production totalled 45.2 million barrels, while natural gas output stood at 640.9 billion cubic feet. The narrowing contraction in crude oil and condensate signals improved resilience, even as global price trends and demand shifts continue to pose challenges.
Malaysia’s oil industry has faced multiple headwinds in recent years, from fluctuating demand during the pandemic recovery to weaker benchmark prices in 2024. The Q2 2025 results suggest that conditions are beginning to stabilise.
- Crude oil production recorded a smaller decline of -2.2%, compared to a steeper -6.5% in Q1.
- Condensate production also improved, with output down -1.2%, better than the -2.4% contraction in the previous quarter.
These improvements are significant when viewed in context. In the same quarter of 2024, crude oil output had fallen more sharply amid weaker demand and maintenance shutdowns. The Q2 2025 figures therefore represent not just a quarter-on-quarter improvement, but also a signal that Malaysia’s oil producers are adapting more effectively to market conditions.
Industry observers highlight that operational efficiency and steady demand from Asian partners are helping to cushion the sector from deeper declines. If this trend continues, Malaysia’s crude oil and condensate production could move back into positive growth territory in the second half of 2025.
In contrast, the natural gas segment faced steeper challenges. Production fell by -8.0% year-on-year, amounting to 640.9 billion cubic feet, compared to 781.9 billion cubic feet in Q1.
This decline was sharper than the -2.2% contraction recorded in the first quarter of 2025. Several factors contributed to this downturn:
- Weaker LNG demand from some of Malaysia’s key markets in Asia.
- Increased competition from other LNG exporters, particularly the United States and Qatar, which ramped up supply in 2025.
- Price volatility, with buyers negotiating lower contract prices amid ample global supply.
The sharper decline underscores the vulnerability of natural gas to external conditions, especially as LNG plays a central role in Malaysia’s export profile. While LNG remains a strong revenue generator, the Q2 performance shows that the segment faces pressure to remain competitive in a crowded market.
Malaysia’s revenue from oil and gas is heavily influenced by international price movements. In Q2 2025, the Weighted Average Lifting Price (WALP) for crude oil and condensate dropped to USD70.4 per barrel, compared to USD76.4 per barrel in Q1.
This decline followed global benchmark trends:
- West Texas Intermediate (WTI) averaged USD64.6 per barrel (Q1: USD71.8).
- Brent crude fell to USD68.0 per barrel (Q1: USD75.8).
The weaker prices were driven by slower economic growth in China and Europe, cautious demand in emerging markets, and higher-than-expected supply from OPEC+ producers.
For Malaysia, the decline in WALP translates into lower export revenues, even if production stabilises. This highlights the sector’s reliance on both volume performance and global price cycles to maintain healthy earnings.
Export Performance
Exports continued to play a central role in Malaysia’s oil and gas strategy, though values fluctuated in line with global demand.
- Crude petroleum and condensate exports reached RM6.3 billion.
- Australia was the top destination (RM1.9 billion or 29.7%).
- Thailand followed with 26.8%.
- Japan accounted for 14.6%.
- Refined petroleum products recorded exports worth RM22.7 billion, down from RM24.3 billion in Q1.
- Indonesia remained the largest buyer at 21.9%.
- Singapore followed at 20.0%.
- Australia accounted for 17.2%.
- LNG exports fell to RM10.4 billion, compared to RM15.5 billion in Q1.
- Japan continued to dominate, taking 35.3%.
- The Republic of Korea imported 24.5%.
- China followed with 23.4%.
These figures highlight Malaysia’s strong trade links with Asia-Pacific economies. While export values were lower, consistent demand from neighbouring countries remains an anchor for the sector’s long-term resilience.
Import Patterns
Malaysia also imported significant volumes to balance domestic supply and support refinery operations.
- Crude petroleum and condensate imports stood at RM12.9 billion, slightly lower than RM13.6 billion in Q1.
- Saudi Arabia was the main supplier (38.5%).
- UAE contributed 20.0%.
- Sudan accounted for 7.2%.
- Refined petroleum product imports totalled RM22.0 billion, down from RM23.2 billion.
- Singapore supplied the largest share at 38.0%.
- China provided 13.5%.
- The Republic of Korea followed at 13.2%.
- LNG imports were valued at RM1.5 billion, compared to RM1.9 billion in Q1.
- Australia supplied 82.4%.
- Trinidad and Tobago accounted for the remaining 17.6%.
These numbers show Malaysia’s reliance on both Middle Eastern crude suppliers and regional partners for refined products, reflecting the interconnected nature of the country’s energy trade.
When compared with the second quarter of 2024, the latest data offers a more optimistic picture for crude oil and condensate. A year ago, both segments recorded deeper contractions due to lower output and weaker global demand. The narrower declines in Q2 2025 therefore suggest improved operational conditions and more resilient demand from key trading partners.
Natural gas, however, has taken a sharper downturn compared to 2024 levels, when output was relatively stable. This contrast highlights a shifting balance in Malaysia’s upstream sector, with crude oil and condensate leading recovery while natural gas lags behind.
Looking ahead, Malaysia’s oil and gas sector faces a dual challenge: sustaining recovery while preparing for the global shift toward cleaner energy. Several key factors will shape the outlook:
- Global demand recovery in China, Japan, and ASEAN economies will be critical to sustaining export levels.
- Price stability in Brent and WTI benchmarks will directly influence Malaysia’s export earnings.
- Operational efficiency in upstream production could help offset external price volatility.
- Energy transition policies, as Malaysia gradually diversifies into renewables, will impact long-term reliance on oil and gas revenues.
The government’s efforts to balance fossil fuel development with sustainability goals will also determine how the sector evolves over the next decade.
The second quarter of 2025 highlighted a sector in transition. Crude oil and condensate output showed narrowing contractions, pointing to recovery momentum, while natural gas production faced deeper challenges amid global competition and weaker demand.
Trade performance underscored the importance of regional partnerships, with Australia, Thailand, Japan, and Singapore remaining key players in Malaysia’s energy flows. Meanwhile, the fall in WALP and global benchmarks showed how closely Malaysia’s earnings are tied to international price cycles.
Overall, the Q2 results signal that Malaysia’s oil and gas industry is moving toward stability, even as uncertainty persists. If the recovery in crude oil continues, the second half of 2025 could mark a turning point for the sector, provided that global demand strengthens and natural gas finds firmer footing.
For more detailed statistics and quarterly updates on Malaysia’s oil, gas, and energy performance, please visit the Department of Statistics Malaysia (DOSM) official portal.
Shahriena Shukri is a journalist covering business and economic news in Malaysia, providing insights on market trends, corporate developments, and financial policies. More about Shahriena Shukri.
