Malaysian state energy firm Petronas signs 20-year deal to supply liquefied natural gas in Japan

Malaysian state energy firm Petronas will supply Japan's biggest power generator JERA with 2 million metric tons of liquefied natural gas (LNG) annually under a 20-year agreement, the countries' leaders said on Wednesday.

The deal, which will begin in 2028, comes as Japan looks to beef up its energy reserves to cope with a global LNG crunch linked to the war in Iran.

"Amid growing uncertainty in the international energy situation, cooperation with Malaysia, a stable supplier of LNG to Japan, is becoming increasingly important," Japanese Prime Minister Sanae Takaichi said at a press conference following a meeting with her Malaysian counterpart Anwar Ibrahim.

Anwar is on a three-day working visit to Tokyo, where he has been meeting with government and industry officials.

Petronas LNG Ltd, a subsidiary of Petronas, will supply the LNG using its new-generation carriers, which have a capacity of 174,000 cubic metres, the company said in a statement after the announcement.

The agreement will help JERA, Japan's largest LNG buyer, secure stable supplies given rising geopolitical risks and better respond to fluctuations in LNG demand, a company spokesperson said. JERA is a joint venture of Tokyo Electric Power 9501.T and Chubu Electric Power 9502.T.

JERA currently buys 360,000 tons of LNG annually from Malaysia. It aims to maintain around 10% of its LNG supply from Asia, including Indonesia and Papua New Guinea, and the new deal will support that strategy, the spokesperson said, declining to provide further details of the contract.

In February, JERA signed a 27-year LNG supply agreement with QatarEnergy for 3 million tons per annum starting in 2028 from the North Field South, the second phase of a massive expansion project,

However, the war in Iran has heightened concerns over geopolitical risks in the region and the security of future LNG supplies.

Japan imports about 15% of its LNG from Malaysia, its second-largest supplier after Australia, according to Japanese government trade data.

Japan and Malaysia also agreed to work together to ensure stable supplies of fertiliser feedstocks and strengthen critical mineral supply chains, Takaichi said, without providing further details.

The two countries will seek to boost trade in ringgit and yen, and cooperate on artificial intelligence, semiconductors, nuclear energy, defence, and maritime security, according to a joint statement.

-Reporting by Danial Azhar and Rozanna Latiff in Kuala Lumpur, Tim Kelly, John Geddie, Kantaro Komiya and Yuka Obayashi in Tokyo; Editing by David Stanway and Sherry Jacob-Phillips/Reuters