Japan to put its foot on the gas, report tips
- The Australian
- August 08, 2013
Japan is the world's largest LNG buyer but its utilities are straining under high import prices and volumes.
Utilities are trying to pressure sellers in Australia and elsewhere to decouple gas pricing from the oil price, arguing that shipments of cheap US shale gas will soon make this pricing mechanism redundant.
The effort to forestall this push by Australian producers will get a shot in the arm with the government-affiliated Institute of Energy Economics predicting the total value of fossil fuel imports will increase by Y=7 trillion ($80 billion) under a "middle scenario" studied by the institute.
The extra costs would be even higher under a "low" scenario for nuclear energy resumption that assumes checks on reactors take one year, rather than six months.
Most of Japan's energy imports are in the form of gas and, even under the "high" scenario, LNG imports are expected to increase.
The figures released by the IEE show gas imports (on volume) rising by 1.8 per cent in the year to March next year and 1.5 per cent in the year to March 2015 under the middle case scenario.
The middle case assumes that four to six of the 50 stalled reactors come on line by March next year and 16 are online a year later.
The low case assumes zero by March 2014 and four to six a year later, while the high case figures are 10 and 28 reactors.
IEE researcher Akira Yanagisawa said he could not predict which case was likeliest, but the outcome would affect negotiations of Australian LNG purchases.
"More nuclear generation supports the Japanese side rather than the Australian side of the negotiations," he said.
"LNG prices are so high that it's not sustainable.
"Shale gas can play a role but I am not sure to what extent this can affect things."
Before the Fukushima nuclear disaster, Japan generated about 30 per cent of its energy from nuclear plants.
In the aftermath, the shortfall has been made up by gas imports and demand reduction. Now that the Japanese economy is recovering, gas demand will continue to increase, according to the IEE, albeit not by as much as it did in the two years after Fukushima.
"Natural gas demand for industrial use is expected to increase because of a production recovery in the manufacturing industry and fuel switching," the report said.
"Demand for power generation use will not grow steeply as it did in the past two years as nuclear plants restart. However, the demand will remain firm because of natural gas' superiority in environmental-friendliness."
