Japan LNG imports to hit another record in 2012
Monday, 07 May 2012 | 00:00
Japanese imports of liquefied natural gas will set another record high in 2012, climbing 9 percent to 85.5 million tonnes as Japan hits the limits of its capacity to import the fuel, a Reuters poll of analysts showed.
Japan, the world's largest liquefied natural gas (LNG) importer, has leaned heavily on the fuel to make up for the nuclear capacity lost after the March 2011 tsunami that disabled the Fukushima nuclear plant.
Subsequent fears about the safety of nuclear power have resulted in the shutdown, as of Saturday, of all of Japan's 54 nuclear reactors.
In 2012, Japan will continue to rely heavily on LNG to fill the gap in power capacity, but will be limited by the nation's capacity to import the fuel.
However, in 2013, the expected restart of those nuclear reactors will push LNG demand down to 82 million tonnes, according to the Reuters poll.
Japan's total terminal capacity is actually around 185 million tonnes per year (mtpa) - well above last year's imports of 78.5 mtpa, according to the International Energy Agency (IEA).
But not all of that capacity is usable due to limits in other infrastructure such as berths, pipelines from the terminals to the utilities, and the placement of the terminals relative to where gas-fired plants are located.
"The reason for the limits on Japanese LNG imports is bottlenecks in other infrastructure besides the terminals themselves," Stephen Thompson, an analyst at Poten & Partners in Perth, said.
"This is exacerbated by the poor power and pipeline connectivity between the various regions in Japan."
NUCLEAR SLOW TO RETURN
Although some nuclear capacity is likely to come back online this year, experts say strong public resistance to nuclear power will mean very slow reactor restarts and less nuclear reliance long term - both of which mean stronger Japanese LNG demand.
The IEA expects some nuclear plants to come back in August, with the most likely candidates two reactors at Kansai Electric Power Co's Ohi plant in western Japan and one reactor at Shikoku.
"I'm assuming a trickle of a recovery in nuclear capacity in the second half of this year ... even once a reactor is authorised (to restart), it will probably be three months to actually get it going again," Tony Regan, an analyst with Tri Zen International in Singapore said.
The nuclear crisis has spurred a flurry of long-term LNG deals and an increase in plans for gas-fired power plants as both utilities and trading companies anticipate the increased role of LNG in the nation's power mix.
"I would expect the new energy policy which should be introduced in late summer will suggest long term reliance on LNG in an increasing manner," CLSA analyst Penn Bowers said.
"Importantly it will likely involve a shift from traditional supplying nations in Asia - which now want to consume more of their production - to Australia and North America," Bowers said.
The most recent of these is Mitsui & Co and Mitsubishi Corp's announcement earlier this week that they would buy a 14.7 percent stake in Woodside Petroleum's Browse LNG for $2 billion, as well as 1.5 million tonnes of gas a year.
Last week, Japanese trading house Sumitomo Corp and Tokyo Gas Co Ltd said they were in talks for LNG supplies from U.S.-based Dominion Resources Inc.
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