You are here
Japan's nuclear reboot gathers pace, set to curtail LNG demand
[TOKYO] Japan's consumption of liquefied natural gas (LNG) is set to fall as the country's nuclear reactors restart, with output from atomic power set for its highest since the aftermath of the Fukushima disaster.
Kansai Electric Power will restart the 870-megawatt (MW) No. 4 reactor at its Takahama station later on Friday, a spokesman told Reuters.
The Kansai restart followed Kyushu Electric Power bringing back the 890-MW No. 2 reactor at its Sendai plant on Wednesday. Kyushu now has four reactors running.
Each returning reactor will cut demand for LNG by as much as 1 million tonnes a year, said Kosho Tamura, a gas analyst at Japan Oil, Gas and Metals National Corp.
The return of Japan's nuclear capacity should lead to lower imports of fossil fuels, especially LNG. While that is a positive for Japan's utilities, especially as LNG prices are near four-year highs in Asia, the loss of Japanese demand could undermine the demand outlook for the global market.
Japan is the world's biggest buyer of LNG.
"It's a good thing that the power utilities in western Japan have restarted nuclear plants, which is leading to the cuts in fossil fuel costs, primarily LNG, through the continued operations of nuclear plants," said Tomoko Murakami, manager of the nuclear energy group at the Institute of Energy Economics, Japan (IEEJ).
Kansai is Japan's second-largest utility by sales and was the most reliant on nuclear power before the March 2011 Fukushima disaster, when a nuclear power plant owned by Tokyo Electric Power suffered meltdowns after an earthquake and tsunami.
Before the disaster, Japan had the world's third-largest reactor fleet which provided about one-third of its electricity. But the plants were shut down for relicensing after Fukushima highlighted regulatory failings.
Kansai will have three units operating and expects to have another reactor at Takahama restarted in November after shutting it down earlier this month for maintenance and refuelling, its spokesman said.
Those three units will save about US$1.5 billion in fuel costs each year they are running, the Kansai spokesman said, declining to comment on what fuels it would substitute.
Operating Kyushu's nuclear units will save the company about US$2.2 billion in annual costs based on current LNG prices, its spokeswoman said.
With two more reactors likely to restart by the end of the year, when Japan enters its peak demand period, as much as 9 million tonnes of LNG demand could be replaced by nuclear operations.
The country's use of LNG in power generation has been declining this year as more reactors return. In June, LNG imports fell to the lowest monthly amount since May 2016 and for the year through to July are down 2.4 per cent.
The Fukushima disaster sparked the country's worst energy crisis in the post-war period, forcing it to import record amounts of LNG and driving prices to record highs. Utilities also turned to cheaper coal imports.