Malaysia sourcing LNG for Japan after pipe leak curbed exports

MALAYSIA is working to replace several liquefied natural gas (LNG) shipments to Japan that the South-East Asian nation canceled after a pipeline leak.

Petroliam Nasional Bhd (Petronas) informed Japanese customers this week that it will likely be able to provide some alternative LNG over the next few months, according to traders with knowledge of the matter. The state-owned company had told customers that it would curb contracted deliveries through at least March after declaring a force majeure on supply earlier this month, the traders said.

The move is a shot in the arm for Japanese utilities preparing for tight global energy supply and limited available spot cargoes during the peak winter season because of Europe’s need to replace fuel from Russia. Petronas said in an emailed statement that it is exploring all avenues to minimise the impact on customers.

Japanese Trade Minister Yasutoshi Nishimura said a few weeks ago that the nation is “strongly appealing” to Malaysia’s government to tap projects unaffected by the pipeline leak. Still, it isn’t clear if Petronas will cover all of the lost volumes, the traders said.

Petronas aims to replace shipments to Japan by increasing output at gas fields unaffected by the pipeline leak that feed into the Malaysia LNG export plant, said the traders, who didn’t want to be named as they’re not authorized to speak to the media. They are also looking to tap supply from other projects in Malaysia or Australia, they added. – Bloomberg