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Air Products has signed a definitive agreement to design, build and operate an air separation unit at the Pengerang liquefied natural gas regasification terminal in Johor, Malaysia. The plant, being developed for PG Cold Energy 1 Sdn. Bhd., is expected to start operations by early 2027 and produce more than 600 tonnes of liquid oxygen, nitrogen and argon a day.
Announced on October 7, 2026, the project will use cold energy released as LNG is warmed and returned to a gaseous state. Air Products says the approach will improve energy efficiency and reduce production-related emissions. The facility is intended to supply industrial gas customers in southern and central Malaysia, including companies in electronics, petrochemicals, aerospace and manufacturing.
A new use for energy at the regasification terminal
PG Cold Energy 1 is a joint venture led by PETRONAS Gas Berhad through PG Energia and DIALOG Group through DIALOG Equity (Three). Under the agreement, Air Products will take responsibility for designing, constructing and operating the unit. The companies did not disclose the project’s investment cost, financing arrangements or the expected commercial terms of the gas supply.
At a regasification terminal, LNG is warmed so it can be sent out as natural gas. Air Products says the new facility will harness the LNG process’s cold energy to liquefy air, from which oxygen, nitrogen and argon can be separated. The company has described the Johor project as Malaysia’s first LNG-based air separation unit and its fifth of this type in Asia.
The distinction matters: PETRONAS Gas’ 2025 integrated report already lists an air separation unit at Pengerang with capacity to produce oxygen and nitrogen. The newly announced claim is specifically about an LNG-based unit that uses cold energy from regasification, not the first air separation facility of any kind at the site or in Malaysia.
Industrial customers are the intended market
The project is designed to serve the merchant market in southern and central Malaysia. Its planned products—liquid oxygen, nitrogen and argon—are industrial gases used across a range of manufacturing and processing activities. Air Products identified electrical and electronics, petrochemicals, aerospace and manufacturing as sectors the plant is expected to support.
The company did not identify particular customers, set out contracted volumes or specify how much of the planned daily output each industry might use. It also did not provide a breakdown of expected sales between the three gases. The announcement therefore establishes the facility’s planned capacity and target regions, but not its customer commitments or projected revenue.
Pengerang’s existing role in gas infrastructure
The plant will be located at PETRONAS Gas’ Pengerang LNG regasification terminal in Johor. PETRONAS Gas reports that the terminal began commercial operations in the fourth quarter of 2017 and has regasification capacity of 490 million standard cubic feet a day. Its 2025 integrated report also records the completion of an expansion of the terminal’s LNG storage facilities.
That established infrastructure provides the setting for the project’s energy-recovery design. Rather than treating the cold energy from warming LNG as a separate product, the proposed unit will use it in the air-separation process. Air Products said that should improve efficiency and lower emissions associated with production, but the announcement gave no quantified estimate of energy savings or emissions avoided.
Long-running relationship, with project details still outstanding
Air Products said it has operated in Malaysia since 1974 and that its relationship with PETRONAS Gas spans more than four decades. A document-exchange ceremony at the PETRONAS Twin Towers in Kuala Lumpur marked the agreement. Participants included PETRONAS Gas Managing Director and CEO Abdul Aziz Othman, DIALOG Executive Deputy Chairman Chan Yew Kai and Air Products Asia President Kurt Lefevere.
The project adds capacity for Air Products in a country where the company already operates production facilities and depots. The company reported fiscal 2025 sales of $12.0 billion across operations in approximately 50 countries. Those company-wide figures provide scale but do not indicate the expected financial contribution of the Malaysian project.
Air Products has put early 2027 as the expected start of operations. The announcement did not give a construction schedule, commissioning milestones or a more precise startup date. It also did not state whether the timeline depends on additional approvals or other conditions, leaving those details—and the project’s cost and contracted offtake—undisclosed.
