en.Wedoany.com Reported - Japan's JERA (the world's largest liquefied natural gas buyer) has signed a 20-year supply agreement with Malaysia's Petronas, delivering 2 million tons of LNG annually starting in 2028.
The agreement was announced following a meeting between Japanese Prime Minister Sanae Takaichi and Malaysian Prime Minister Anwar Ibrahim. Under the deal, Petronas will supply LNG steadily to JERA from 2028 to 2048. Takaichi noted that cooperation with Malaysia, a stable LNG supplier to Japan, is becoming increasingly important amid growing uncertainty in the international energy landscape.
Japan, one of the world's most energy-import-dependent countries, has long relied on Middle Eastern suppliers. Geopolitical tensions have heightened volatility in global energy markets, with recent disruptions tightening gas supply and pushing LNG spot prices to levels that are difficult for buyers to compete with. This has led to higher costs and supply risks for nations unable to meet demand through domestic energy production. Summer heatwaves drive up electricity consumption due to air conditioning use, and Japan must secure sufficient gas to cover peak periods.
Analysts point out that if Japan fails to lock in adequate supply, it faces the risk of LNG shortages. The agreement with Petronas guarantees 2 million tons annually, reducing JERA's exposure to spot market fluctuations. Stable gas supply provides grid operators and policymakers with room to phase out coal-fired power, avoiding the possibility of turning to coal generation due to electricity shortages.
JERA holds significant influence in the global energy market, and its procurement decisions have wide-ranging impacts. The company has already planned to purchase up to 5.5 million tons of LNG annually from U.S. suppliers, a 10% increase over current import levels, accounting for about one-third of its total LNG procurement. These moves reflect a strategy to diversify supply risks across multiple sources. Malaysia is already Japan's second-largest LNG supplier, accounting for approximately 15% of Japan's total LNG imports, with both sides having established infrastructure foundations and commercial trust.
The agreement between JERA and Petronas covers 2 million tons annually over 20 years, extending a key trade relationship and adding long-term certainty in an increasingly volatile market. For Japan, this is part of a broader diversification effort to reduce reliance on Middle Eastern energy by securing stable supply from partner countries such as Malaysia and the United States. Stable gas supply also alleviates pressure on Japan and its regional neighbors to expand coal-fired power generation.
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