Malaysia LNG declares force majeure on supply to customers -Mitsubishi

A logo of Petronas is seen at their office in Kuala Lumpur, Malaysia, April 27, 2022. Picture taken on April 27, 2022. REUTERS/Hasnoor Hussain

TOKYO, Oct 6 (Reuters) - Malaysia LNG, majority owned by Petronas, has declared force majeure on liquefied natural gas supplies to its customers, including Japanese utilities, Mitsubishi Corp , which owns a stake in Malaysia LNG, said on Thursday.

The move came after Petronas declared force majeure on gas supplies to its LNG production and sales unit, Malaysia LNG, due to a pipeline leak, said a spokesperson at Mitsubishi.

The possible disruption comes at a time when Japan and many other countries in Europe are scrambling to ensure gas supply for the peak winter demand season as they face the threat of an energy cut-off from Russia amid the war in Ukraine.

The force majeure was due to a leak on the Sabah-Sarawak Gas Pipeline on Sept. 21, the Mitsubishi spokesperson said, adding it was assessing the impact from the action.

"We have already strongly requested that Malaysia LNG take all possible measures to examine and respond to the impact," he said.

"We will closely monitor the situation and provide full support to Malaysia LNG in order to minimize the impact on the Japanese market," he said, adding there would be limited impact on its earnings.

The spokesperson declined to give details such as the dates of declarations and volume of the supply that may be affected or how long the supply disruption could last.

Petronas did not immediately respond to a request for comment.

With a total LNG capacity of 25.7 million tons per annum, the Malaysia LNG project is one of the largest LNG facilities in a single location in the world, according to Mitsubishi.

The project's customers include Japan, South Korea, Taiwan and China.

Malaysia was the second biggest supplier of LNG to Japan in 2021, providing about 10 million tonnes, according to Japanese trade data. Malaysia delivered 50 cargoes to Japan from October through December last year, according to Refinitiv data.

European gas prices have already risen on the back of the force majeure declared by Petronas, analysts said.

"The developments could increase competition between Asia and Europe over uncommitted LNG cargoes," said Refinitiv analyst Yuriy Onyshkiv in a morning note.

The benchmark Dutch Title Transfer Facility (TTF) front-month contract gained 3.50 euros to 179 euros per megawatt hour (MWh).

Reporting by Miho Uranaka, Yuka Obayashi in Tokyo, Emily Chow in Singapore, Nora Buli in Oslo; Editing by Muralikumar Anantharaman, Peter Graff and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.