LNG’s Cold Energy Will Liquefy Air in Malaysia
LNG’s Cold Energy Will Liquefy Air in Malaysia
Malaysia Turns LNG’s Cold Energy Into an Industrial Resource
Air Products will develop an LNG-based air separation unit at Malaysia’s Pengerang terminal, recovering cold energy to produce liquid oxygen, nitrogen and argon.
Malaysia is preparing to put the extremely low temperatures associated with liquefied natural gas (LNG) to productive use through a new industrial gas project in Johor.
On October 8, 2026, Air Products announced a definitive agreement with PG Cold Energy 1 Sdn. Bhd. (PGCE1), a joint venture led by PETRONAS Gas Berhad and DIALOG Group Berhad. Under the agreement, Air Products will design, build and operate an LNG-based air separation unit (ASU) at the Pengerang LNG regasification terminal.
The facility is designed to produce more than 600 metric tonnes per day of liquid oxygen, nitrogen and argon. Operations are expected to begin in early 2027.
The project’s defining feature is its use of cold energy recovered during LNG regasification. Instead of allowing this energy resource to go unused, the facility will use it to support the cooling and liquefaction processes required to produce industrial gases.
How LNG Cold Energy Works
LNG is natural gas cooled to approximately −162°C so that it becomes liquid and can be transported efficiently by ship. At an import terminal, the LNG must be warmed and converted back into gas before it can enter the natural gas supply network.
This process is known as regasification. Because LNG arrives at an extremely low temperature, warming it releases a substantial amount of cold energy.
In conventional arrangements, much of this cold energy may not be put to productive use. Recovering it creates an opportunity to support other industrial processes that require refrigeration or extremely low temperatures.
An air separation unit separates the components of atmospheric air. Air is first processed to remove impurities and moisture, then cooled and separated into products such as oxygen, nitrogen and argon. Producing these gases in liquid form requires substantial refrigeration.
By integrating the air separation process with LNG regasification, the Pengerang facility will use recovered cold energy to support air cooling and liquefaction. This can reduce the need for some of the energy that a conventional air separation process would otherwise require.
More Than 600 Tonnes of Liquid Industrial Gases Daily
The new facility is designed to produce more than 600 metric tonnes per day of liquid oxygen, nitrogen and argon. These gases serve a wide range of industrial applications.
Liquid oxygen is used in industrial processes, metal production and other applications that require oxygen enrichment.
Liquid nitrogen is widely used for industrial cooling, freezing, inerting and temperature-sensitive applications.
Liquid argon is used in specialist manufacturing, welding and other processes that require an inert atmosphere.
Air Products plans to supply industrial gas customers across southern and central Malaysia, including businesses in the electronics, petrochemical, aerospace and manufacturing sectors.
Reliable access to these gases is important for industrial operations where product quality, controlled atmospheres and precise temperature management are essential.
The project will also strengthen Air Products’ existing industrial gas network in Malaysia, where the company has operated since 1974.
PETRONAS Gas and DIALOG Join Forces With Air Products
The project brings together an LNG infrastructure operator, an industrial gas specialist and an established Malaysian energy and engineering group.
PGCE1 is the project joint venture. PETRONAS Gas Berhad participates through PG Energia Sdn. Bhd., while DIALOG Group Berhad participates through DIALOG Equity (Three) Sdn. Bhd.
Air Products is responsible for designing, building and operating the air separation unit. This arrangement combines access to the LNG terminal and its cold energy with Air Products’ industrial gas production expertise.
The location at Pengerang is particularly relevant because the facility can connect industrial gas production with existing LNG regasification infrastructure. Integrating these processes may create efficiencies that would be more difficult to achieve at a standalone air separation plant.
The project is also Air Products’ fifth LNG-based air separation unit in Asia, extending the company’s experience with this type of energy integration.
Why Energy Recovery Matters for Industrial Efficiency
Industrial gas production can require significant amounts of energy, particularly when air must be cooled to very low temperatures and converted into liquid products.
Recovering LNG cold energy offers several potential advantages.
Lower refrigeration energy requirements
Using available cold energy can reduce the additional refrigeration work needed for air separation and liquefaction. The actual savings will depend on plant design, operating conditions and the amount of cold energy available.
Potential emissions reductions
Lower energy consumption can reduce emissions associated with electricity or other energy inputs. The size of the reduction will depend on the plant’s energy mix, operating efficiency and the performance of the integrated system.
Better use of existing infrastructure
Integrating air separation with an LNG terminal creates an additional industrial use for infrastructure already involved in natural gas supply. This can improve the overall utilization of energy resources at the site.
Support for Malaysian manufacturing
A dependable supply of industrial gases can support manufacturing activity in sectors such as electronics, petrochemicals and aerospace. Local production and distribution can also strengthen supply-chain resilience for industrial customers.
These benefits are expected outcomes of the project design rather than verified operating results. Actual energy savings and emissions reductions can be assessed once the facility is operating.
Pengerang’s Role in Malaysia’s Industrial Development
Pengerang, in Johor, is an important location for Malaysia’s oil, gas and petrochemical industries. Integrating an LNG-based air separation unit into the area’s existing infrastructure illustrates how energy facilities can support additional industrial activities beyond their primary function.
The project also reflects a wider industrial trend: recovering energy that would otherwise be wasted and using it to reduce the resource requirements of another process.
Similar approaches can be considered at LNG import terminals elsewhere, provided that the available cold energy, nearby industrial demand, engineering requirements and project economics make integration practical.
For Malaysia, the Pengerang facility could provide a model for linking LNG infrastructure with industrial gas manufacturing while improving the productive use of energy.
What Happens Next?
The facility is expected to begin operations in early 2027. Its performance will depend on the integration of the air separation unit with the LNG regasification process, as well as the reliability of the terminal and the demand for industrial gases.
Once operational, the project will demonstrate how LNG cold energy can be incorporated into an industrial production system at commercial scale.
The central opportunity is straightforward: LNG must be warmed during regasification, while industrial gas production requires cooling. Connecting these processes allows one facility’s cold energy to help meet another facility’s energy needs.
If the project delivers its intended efficiency benefits, it could strengthen the case for cold-energy recovery as part of the design of future LNG terminals and industrial gas facilities.
Sources
Air Products / PR Newswire: Air Products to Supply Malaysia’s First LNG-Based Air Separation Unit for PETRONAS Gas Berhad-Led Joint Venture
Pipelines & Gas Journal: PETRONAS-led venture selects Air Products for LNG-based air separation unit
Energies / MDPI: Techno-Economic Evaluation of Cold Energy from Malaysian Liquefied Natural Gas Regasification Terminals
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