Petronas plans to export more liquefied natural gas to China to meet the country's soaring demand for clean energy and industrial upgrade, senior executives of the Malaysian State-owned energy group said, amid a renewed push for green and innovation-led growth by the world's second-largest economy.

China's efforts to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060, as well as the tangible growth brought on by the Regional Comprehensive Economic Partnership and surging demand for high-end lubricating oil by automotive firms, present several new opportunities for the nation.

The rapid expansion of China's natural gas market is particularly impressive, said Shamsairi Ibrahim, vice-president of the LNG marketing and trading unit at Petronas, adding that LNG imports had increased from around 800,000 metric tons in 2006 to about 67 million tons in 2020.

Petronas' natural gas production reached nearly 30 million tons in 2022, of which 7.5 million tons were exported to China. This accounted for around 10 percent of the company's total exports to China last year.

Petronas is the third-largest LNG supplier to China after energy groups in Australia and Qatar, and the Kuala Lumpur-headquartered group started to ship the fuel to China in 2009.

It had delivered over 1,100 LNG shipments to the country by the end of 2022, serving more than 20 receiving terminals across China.

Faced with challenges like geoeconomic fragmentation and tight international LNG supplies, China imported 63.44 million tons of LNG in 2022, down 19.5 percent year-on-year, data from the General Administration of Customs showed.

"China's market capacity is vast, and the overall energy demand is fairly high. With the ongoing urbanization process, more people are expected to move to cities in the future, further driving up the country's energy consumption," Shamsairi said.

China's demand for LNG is expected to gradually recover and grow further this year, he said, adding these factors have made Malaysia optimistic about China's natural gas market.

Petronas aims to achieve annual LNG production capacity of 55 million tons by 2030, he said, even as it intensifies efforts to construct floating LNG facilities, primarily focusing on the development and liquefaction of marginal and stranded gas fields. The strategic emphasis is on expanding its supply to the Chinese market, Shamsairi said.

Hezlinn Idris, managing director and group CEO of Petronas International Lubricants, also expressed optimism about China's fast-growing auto market, particularly its new energy vehicle sector. She said that due to the distinct differences between the oil used in NEVs and traditional vehicles, the oil change intervals for NEVs are relatively longer.

"We plan to invest in China this year, focusing on the research of oil technology for new energy vehicles," she said.

These research endeavors will be conducted in a decentralized manner, by collaborating with local manufacturers to develop specific oil technologies, Hezlinn said.

Shanghai and Weifang, Shandong province, are the locations that have been chosen for the project.

Petronas, which entered China in 2003, has established six offices and three production bases in cities including Shanghai, Guangzhou, in Guangdong province, Zibo, in Shandong province, and Beihai, in Guangxi Zhuang autonomous region.

The group supplies various products, including LNG, petrochemicals, crude oil, petroleum products and lubricants to the Chinese market.

China will lead Asian natural gas demand to return to modest growth of around 3 percent this year, the highest among all regions worldwide, the International Energy Agency said in a report on the gas market in June.

As growth momentum is being restored across sectors, demand for natural gas, a relatively clean fossil fuel as well as an important bridge for China's dual carbon goals, is on course for a rebound, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.