Japan Signs Up With Malaysia’s Petronas to Secure LNG Supplies

A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan on Nov. 13, 2017. Issei Kato/ Reuters

The Japanese government has signed an energy agreement with Malaysia’s state oil and gas firm Petronas that includes supplying liquefied natural gas (LNG) tanks in the event of an emergency.

Japan’s Ministry of Economy, Trade and Industry signed a memorandum of cooperation (MoC) with Petronas at the LNG Producer-Consumer Conference in Tokyo on Thursday.

The memorandum includes consideration of joint upstream investment, technical cooperation on cutting climate-warming methane emissions, mutual assistance in fuel supply, and the emergency use of LNG tanks.

Both sides agreed to discuss ways to supply fuel to whichever side has a shortage, given that the countries’ peak consumption periods differ. Malaysia’s peak demand is in summer, while Japan’s is in winter.

Petronas also signed an MoC with the Japanese government on Monday to enhance cooperation in developing energy sources and technologies to achieve carbon neutrality by 2050. In addition, it signed a memorandum of understanding with the Japan Bank for International Cooperation, which will help it expand cooperation with Japanese companies on international projects, according to its statement.

“Japan has been our trusted and valued partner since the days of our first LNG exports in the early 1980s, and this partnership has expanded to include new areas of collaboration in the clean energy space,” Petronas President Datuk Tengku Muhammad Taufik said.

Reducing LNG Reliance on Russia

Japan has been considering measures to reduce reliance on Russia—one of its biggest LNG suppliers in 2021—and to avoid a power crunch during the winter season when heating demand is expected to surge.

Earlier in July, Prime Minister Fumio Kishida urged the Japanese trade industry minister to have nine nuclear reactors operational by the upcoming winter season as he warned of potential power shortages.

“There are concerns that [power] supply and demand will be tight again this winter. We must prevent such a situation at all costs,” Kishida said at a press conference on July 14.

The nine nuclear reactors are expected to cover about 10 percent of the total energy consumption. Kishida also ordered the government to secure 10 thermal power generation units to help stabilize Japan’s power supply.

Japan had only allowed 10 of the 33 operable nuclear reactors to restart after the 2011 Fukushima nuclear disaster. But rising energy prices and the threat of a power shortage during a heat wave have pushed the government to reactivate some nuclear reactors.

Energy Minister Yasutoshi Nishimura said last month that he will push for the revival of the remaining nuclear plants that have been taken offline since the 2011 disaster to ensure a stable electric power supply in the country.

Reuters contributed to this report.