Home / Shipping News / International Shipping News / Delay in compliance with nuclear security regulations to boost Japan’s LNG imports

Delay in compliance with nuclear security regulations to boost Japan’s LNG imports

Japan’s LNG imports are projected to recover in 2020 and 2021 as nuclear plants are unlikely to meet the deadlines of the new anti-terrorism nuclear regulations.

Japan’s LNG demand is expected to revive from mid-2020 and increase until 2022 as the operators of the country’s nuclear reactors will fail to meet the deadline of the nuclear regulation authority’s new anti-terrorism regulations. This will force Japan to fall back on LNG and coal for electricity generation and dent the country’s long-term plan to increase the share of nuclear power to above 20% by 2030 in the energy mix.

In order to avoid meltdowns in nuclear reactors in the event of a terrorist attack or a natural disaster (such as the 2011 Fukushima disaster), the new regulations mandate operators to construct by stipulated dates separate buildings that include backup power and water pumps, as well as an emergency meeting room for workers. As seven of the recently restarted reactors are likely to miss their deadlines, they will face shutdowns, further delaying the ramp-up of nuclear power generation in the country.

In fact, around 11 gigawatt of nuclear power will have to be shut down if the deadlines are not met, creating demand for an additional 2.3 mtpa of LNG in 2020 and 2021. However, with the country’s nuclear reactors expected to meet the deadlines by the end of 2021, and with renewable energy projects coming online demand for LNG will fall once again.

Prospect of nuclear plant shutdown brings cheer to LNG shipping

The probable shutdown of nuclear plants comes as good news for the global LNG market which has been oversupplied this year and will remain in a glut until 2022. The additional demand from Japan will bring some balance to the market and will also benefit the LNG shipping sector.

Japan’s LNG imports peaked in 2014 and have declined since due to the surge in LNG prices and restart of nuclear reactors (after the 2011 Fukushima disaster) which were shut for mandatory safety inspections and testing.

Before the 2011 disaster, there were 54 nuclear reactors in the country which supplied around 30% of the electric power. However, in July 2013, the government set stringent standards that would enable the plants to withstand earthquakes and tsunamis. As most of the operators are unable to comply with the new safety standards, 21 reactors including Fukushima will be decommissioned.

Of the remaining 34 reactors, nine at five plants have met the new standards and have thus resumed operations. Several others had also restarted operations only to be shut down again on orders by the local courts.

When the nuclear power plants resumed operations in 2018, Japan’s LNG imports started to fall, and in 1H19, they shrank 8% to 38.9 million tonnes from 42.1 million tonnes in 1H18. The drop in LNG imports was in line with Japan’s efforts to reduce the share of natural gas from 40% to 27% by 2030 and increase the share of nuclear and renewable sources in its energy mix by 2030. Japan’s LNG demand is projected to fall between 8% and 10% in 2019 but we expect it to increase again from 2021 as the nuclear reactors temporarily go offline.
Source: Drewry

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping