In the wake of the disaster at Fukushima, Japan is faced with an immediate short term energy deficit, which may become a long term energy problem should public sentiment force the Government to reconsider its current nuclear program. One immediate solution appears to be a rapid increase in the use of LNG.
Indian Express, Mar 19 2011
As Japan does not have reserves of gas and crude oil, it imports more than 80% of its energy requirements.
It is expected that 60% of the shutdown power capacities will be substituted with coal-based capacities, while LNG-based capacities will make up for the rest. The 40% substitution with gas-based capacities to boost the gas demand by 6 to 8 million tonne per annum which represents around 11% of the total global spot LNG trade in 2009. This would in addition to Japan’s substantial LNG imports of 63.9 MTPA, which account for 35% of total LNG trade during 2009.
RI ready to add LNG supply to Japan
The Jakarta Post, /15/2011
BPMigas spokesman Gde Pradnyana said on Monday that Japan might turn to Indonesia to meet the surge in the country’s gas needs to generate electricity to compensate for the decline in the power supply from nuclear reactors.
He said that 20 cargoes of LNG from the Bontang Plant in East Kalimantan were still available for sale. At present, Japan is one of the main buyers of LNG produced at the Bontang Plant.
Tokyo Electric Power Corp. and other Japanese utilities may increase outputs of gas, oil and coal-fired power plants to replace production from the 11 nuclear reactors closed last week following the 8.9-magnitude earthquake that hit on Friday. About 30 percent of Japan’s power supply comes from 54 nuclear reactors.
“Japan lost around 25 percent of its power supply following the disaster. As the crude oil price is more expensive now, it will buy more gas to generate electricity,” he said, adding that the recovery of the nuclear plant was predicted to take a long time.
Indonesia is the world’s second largest LNG producer with most of its production coming from three plants — the Arun Plant in Aceh, Bontang Plant in East Kalimantan and Tangguh Plant in Papua.
Torbjoern Kjus, oil market analyst at Oslo-based bank DnB NOR, said “The immediate direct effect on incremental oil demand for power generation will probably be about 150,000-200,000 barrels a day,” consisting of light-sweet crude for direct burning and low-sulfur fuel oil, assuming the grid is still able to distribute power.
LNG prices jump after disaster
FT.com, March 14 2011
Natural gas prices have jumped as dealers are braced for Japan to step up its purchases to replace the large amounts of nuclear power capacity knocked out by Friday’s earthquake and tsunami.
Japan is the world’s largest buyer of liquefied natural gas, a form of super-cooled gas shipped in tankers from exporters such as Qatar and Algeria. Any abrupt change in its energy demand could therefore affect commodities markets.
The earthquake has shut down 9,700 megawatts of nuclear capacity, equivalent to about a fifth of the country’s total capacity. Analysts expect that Japanese utilities will scramble for crude, thermal coal and LNG as replacements. They fear that Tokyo may close more atomic reactors for inspections in coming months.
The cost of UK natural gas for delivery in a month, seen as an indicator of LNG as Britain is a large importer of super-cooled gas, rose on Monday by as much as 7.7 per cent, extending its gains since the earthquake to 12 per cent.
The contract traded as high as 64.5 pence per therm, a two-year high.
The other stop gap is of course our old friend coal. The Australian has an unusually (even by its standards) scathing attack on the situation in Japan. But then The Oz loves coal.