Malaysia to promise Japan maximum possible LNG and naphtha supplies
- Deal expected to be formalized at a Tokyo summit on Wednesday
- Japan faces a possible LNG supply crunch due to Iran-linked tensions
- Both sides expected to step up cooperation on economic security, rare earths, nuclear energy and AI talks
Malaysia's Prime Minister will agree to provide Japan with the largest possible supplies of liquefied natural gas (LNG) and naphtha as Tokyo seeks to diversify its sources of energy and petrochemicals, the Nikkei newspaper reported on Wednesday.
Japanese Prime Minister Sanae Takaichi and Malaysian Prime Minister Anwar Ibrahim, currently visiting Tokyo, are expected to formalize this pledge in a joint statement at a summit later on Wednesday, the report added.
Japan faces a potential LNG supply crunch due to tensions linked to the Iran conflict, as air-conditioning demand in the country rises heading into summer.
Global LNG markets are already under pressure from conflict-linked supply disruptions and constrained flows through the Strait of Hormuz, a key route for about a fifth of global crude oil and LNG shipments.
Japan imports about 15% of its LNG from Malaysia, its second-largest supplier after Australia, according to the newspaper.
Malaysia and Japan will also seek to work together on economic security with China's export restrictions on rare-earth elements in mind, the article said.
Japan and Western governments have been seeking to diversify critical mineral supply chains away from China, the world’s largest rare earths producer.
In May, Japan signed an agreement with Australia to strengthen cooperation on energy and critical minerals, while public broadcaster NHK reported in April that Tokyo and Paris had agreed to bolster rare earth supply chains.
Additionally, the Japanese and Malaysian prime ministers are expected to discuss cooperation in nuclear energy, with Japan sharing its expertise in power plant technology and site selection, the report said.
The summit also includes plans for discussions on AI policy, aimed at joint applications in agriculture, mobility and education, Nikkei added.
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