High LNG Imports To Remain Even If Nuclear Returns
BMI View: In wake of the changing dynamics of the Japanese power sector, we have concluded that crude oil imports to Japan will continue to reduce while LNG imports will remain at the elevated levels seen throughout 2012 and 2013. BMI's Power analysts are anticipating nuclear restarts from 2014 with a gradual increase over our forecast period , however this is unlikely to affect the strong gas demand due to the amount of nuclear capacity expected to be permanently kept offline.
In light of the recent developments in the Japanese power market and following the complete shutdown of the country's nuclear power, we have taken a closer look at the impact of oil and liquefied natural gas (LNG) imports into the country. Over the last two years Japan has struggled with importing sufficient fuel to replace around 44GW of nuclear capacity that has come offline since the 2011 Fukushima disaster. The vast majority of the fuel imported to cover the nuclear shortfall has been oil and LNG, though more recently BMI's Power analysts are noting an increased use of coal for power generation. The surge in oil and LNG imports in 2011 and 2012 has had a significant impact on the country's balance of trade due to the high costs of additional energy imports. Due to this development Japan is experiencing its longest running trade deficit in over 30 years, which is being further undermined by a weak Yen.
From 2010 to 2011, LNG imports rose 12.2%, then soared again by another 11.2% as imports reached an all time high of 118.75bn cubic metres (bcm) in 2012. More recently imports have stabilised and slightly lower LNG purchases in so far in 2013 over 2012. Oil imports and its use in power generation also grew substantially in 2011 and sustained at a high level through 2012.
|Oil & LNG Spike Soothed By Coal|
|LNG, Coal And Crude Oil Consumed By Japanese Power Utilities 2007-2013, MT|