Japan’s JERA has signed a supply contract for the supply of liquefied natural gas with Malaysia’s state major Petronas for a period of 20 years, starting in 2028.
“Amid growing uncertainty in the international energy situation, cooperation with Malaysia, a stable supplier of LNG to Japan, is becoming increasingly important,” Japan’s Prime Minister Sanae Takaichi said after a meeting with Malaysia’s Premier, Anwar Ibrahim and the announcement of the deal, as quoted by Reuters.
Japan is one of the most energy import-dependent countries in the world, with a lot of its oil and gas previously coming from the Middle East. The war-related disruption in export flows has prompted Japan to rush to secure alternative supplies.
The Petronas deal is for 2 million tons of liquefied gas annually, adding to earlier supply deals agreed by JERA. The company, which is the largest buyer of liquefied natural gas in the world, last year presented plans to triple its purchases from the United States alone to as much as 5.5 million tons annually. That would have been a 10% increase on its current imports from the U.S., making up a third of its total LNG purchases.
As for Malaysia, it is Japan’s second-largest supplier of liquefied natural gas after Australia, contributing 15% of the country’s total LNG imports, Reuters reported earlier in the day. Japan’s energy demand is currently on the rise despite prices, as summer temperatures drive demand for air-conditioning. Per Reuters, the country may face an LNG crunch unless it manages to secure supply, or boost coal generation further.
Japan has already been forced to ramp up coal generation because of the Middle East gas supply tightening, as have other Asian nations, as they found themselves unable to secure enough LNG cargoes at affordable prices. Morgan Stanley earlier this week said LNG prices could hit $25 per million British thermal units amid summer demand growth and the EU’s storage refill efforts.
By Irina Slav for Oilprice.com
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