Japan's nuclear reboot gathers pace; set to curtail LNG demand

By Osamu Tsukimori and Aaron Sheldrick

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 restarted the 870-megawatt (MW) No. 4 reactor at its Takahama station 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 tons 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 $1.5 billion (1.15 billion pounds) 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 $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 tons of LNG demand could be replaced by nuclear operations. Japan’s electric power utilities burn less LNG as reactors return.

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 percent.

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.

© (c) Copyright Thomson Reuters 2018.

©2018 GPlusMedia Inc.

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Really great news. Electricity prices will definitely come down now, and Japan doesn't have to rely on foreign nations for all its energy.

-2 ( +7 / -9 )

If you are one of those people who believe climate change threatens the very existence of mankind, bringing online more nuclear power must be a dream come true.

-1 ( +3 / -4 )

Mych confidence, yet forgetting the faulty reactors and recent catastrophic events..

1 ( +4 / -3 )

Ganbare Japan, what makes you think they will reduce electricity prices?

5 ( +7 / -2 )

“Robbing Peter to pay Paul.” They are Just replacing one evil with another to save money. Gawd forbid they should actually show some initiative and invest in alternative energies. That would make too much sense.

2 ( +3 / -1 )

Is there some profit to start paying for dismantling the surplus plants?

0 ( +1 / -1 )

Better to start up those NPPs only who came through the stress tests but spreading your energy sources is of course a good thing.

Utility prices are low compared to some EU nations as a single household just have to spend ¥10000 [ ¥8000 budget] a month [june 2017].

-1 ( +0 / -1 )


As the prices from nuclear plant are lower than LNG

-3 ( +0 / -3 )

See the facts, how much Fukushima is costing to clean all that radioactive garbage, and LNG costs double price of USA just to be transported by ship here in Japan. Why not Russia Siberia? It's 1/10 of distance from USA. And Northern Territories will be a much easier table talk for Japan's future.

0 ( +0 / -0 )

Carl, you may be right, but you forget how the Japanese cartels operate. When some sort of negative thing happens, they'll quickly raise prices, passing the price along to the consumer and shrugging with a snide "shoganai."

When said crisis passes, or economic conditions change so that the negative is now a positive for Japanese consumers, the cartels.... do nothing. They'll collect the heftier profits, grinning all the way to the bank.

Remember a few years ago, when gas prices were much higher than they are now? Many companies raised prices because of the 'unavoidable' increase due to transportation costs. When fuel prices went down, did the companies lower their prices? Of course not.

So no, the supposedly lower production costs will not be passed along to consumers. What reason to the electricity cartels in Japan have to do so?

1 ( +1 / -0 )

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