Trade Resources Industry Views Japan LNG Demand Expected to Fall by 2020 on Nuclear Restarts, Renewables

Japan LNG Demand Expected to Fall by 2020 on Nuclear Restarts, Renewables

Restart of nuclear reactors in Japan, growing renewable sources of energy and a slow economy are expected to push down the country's LNG consumption by 2020 by as much as 10.5% from 2014 levels, Eclipse Energy said this week.

Japan's LNG demand is expected to drop to 77 million mt by 2020 from a record 86 million mt reached in 2014, according to Eclipse, an analytics unit of Platts.

In 2015 itself, Japan bought 3 million mt less LNG in the first 10 months compared with a year earlier.

Kyushu Electric restarted its two 890 MW nuclear reactors at Sendai in August and October, ending Japan's 23 months of nuclear-free period since September 2013.

Kyushu Electric's LNG consumption in September dropped to the lowest level since May 2011, data from the Ministry of Economy, Trade and Industry showed.

From September to November, Kyushu Electric received seven cargoes at its Tobata terminal, down from 13 in the same period last year, according to Platts ship trade-flow software cFlow. Near this terminal is the 1.8 GW Shin Kokura gas-fired station.

Kyushu Electric's Oita LNG terminal, adjacent to its newer 2.295 GW Shin Oita gas-fired power station, received nine cargoes over September-November, the same number of vessels as last year, cFlow showed.

Eclipse estimates that if Kyushu Electric's two 1.18 GW Genkai nuclear reactors start up, it would replace up to around 3-4 LNG cargoes a month. US LNG EXPECTED IN WINTER

By 2019, five more nuclear reactors are expected to restart, including Shikoku Electric's 890 MW No. 3 Ikata reactor, Tohoku Electric's 1.1 GW No. 1 Higashidori reactor, Hokkaido Electric's 912 MW No. 3 Tomari reactor, Hokuriku Electric's 1.206 GW No. 2 Shika reactor and Chugoku Electric's new 1.373 GW No. 3 Shimane reactor.

Summer LNG imports are expected to fall post 2017 because of a growth in renewables capacity in Japan.

Meanwhile demand is expected to drop over the next four years amid a slower economy, and Japan is expected to see an increase in LNG imported through long-term contracts rather than spot, Eclipse said.

Its contracted volume is expected to grow from 82.3 million mt in 2017 to 88.2 million mt in 2019 and 84.8 million mt in 2020, while Japan's LNG demand is projected to drop from 78.2 million mt in 2017 to 77.2 million mt in 2020, according to Eclipse.

"Our forecasts suggest that US-sourced LNG is only called on during the winter peak season at least until 2020," it said.

Japan has so far contracted to buy around 17 million mt/year of LNG from US Freeport, Cameron and Cove Point projects. Eclipse projects just 20-25% utilization of the Japanese tolling contracts in 2018-2019 but a steady increase early in the next decade rising to about 50% utilization.

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Topics: Metallurgy