Japan shops for fresh LNG sources amid rising demand

09 November 2012, Sweetcrude, LONDON – JAPAN’s thirst for liquefied natural gas, LNG, is set to soar, following the country’s plans to phase out nuclear power by 2040.

The move is largely a reaction to public pressure in the wake of last year’s Fukushima disaster, the worst atomic accident to occur in a generation.The Japanese government announced in September this year that Tokyo will strive to cut its use of nuclear energy to zero.

This means that Japan will have to permanently shut down a string of nuclear reactors that once provided the country with around one-third of its energy.

A research paper published July 3 by the Institute of Energy Economics Japan, IEEJ, reveals that out of the 50 nuclear power stations in the country that ceased operations this year, only the Ohi Nuclear Power Station Units 3 and 4 of Kansai Electric Power Company will be restarted.

According to a published article in the Reuters Energy Review released in September, the two nuclear power stations operated by Kansai Electric were given special approvals for restart as the power shortage problem is especially acute in Osaka.

“Kansai Electric had relied on nuclear power for 40 percent of its electricity generation, the highest of any power company. The consequence of a blackout due to a power shortage would be fatal for Osaka,” the review stated.

An Overview of Japan’s LNG Import Structure

Japan is the largest importer of LNG in Asia, with the country’s total import volume at 83 million tonnes last year, according to an address made by Tokyo Gas’ Deputy General Manager for LNG Contracts, Yasushi Sakakibara, at an October gas summit held in Singapore.

Before the Japanese government unveiled its revised energy policy this year, industry watchers were expecting Japan’s long-term LNG import volume to remain consistent, or even see a slight decline due to the expiration of existing supply contracts.

However, Japan’s LNG import landscape changed dramatically after it became apparent that Tokyo will favor natural gas-fired thermal power generation as an alternative to using a nuclear power, Sakakibara said. The Japanese government has also set a mandate for Japanese power plant operators to boost their usage of renewables – energy that comes from natural sources – in the longer term.

“Although new energy policies in Japan have not been finalized, it is clear that Japan’s nuclear capacity will decrease,” Sakakibara said.

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  • We hope this gives added impetus to Nigeria’s beleaguered quest to expand LNG production capacity. As the global economy grows, the world would definitely deepen the search for dedicated sources of energy supplies and the countries that expect to benefit would require to consciously grow capacity. Nigeria must act with some measure of single minded determination to grow capacity. This is the way to go.