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Japan seen using more LNG after nuclear clearance delays
September 13, 2012 / 3:06 PM / 5 years ago

Japan seen using more LNG after nuclear clearance delays

* Goldman Sachs sees upside in 2013 spot LNG prices

* Demand boosted by post-Fukushima nuclear outages

* Fuel imports cause record trade defecit

LONDON, Sept 13 (Reuters) - Japan will consume a larger-than-expected 76.4 billion cubic metres of liquefied natural gas (LNG) this year, to keep up with energy needs following delays in getting its nuclear reactors back online, Goldman Sachs said on Thursday.

The bank said there had been hold-ups in the regulator clearing stress tests on the country’s plants following the reactor meltdown at Fukushima in 2011.

To make up for the inactive reactors, the world’s top LNG importer would need to consume 76.4 billion cubic metres (bcm) this year and 72 bcm in 2013, Goldman Sachs forecast.

Goldman’s previous expectations for Japanese LNG consumption in 2012 and 2013 were 75.5 bcm and 69.8 bcm respectively.

“A new nuclear regulatory agency is expected to be set up this autumn to replace Japan’s Nuclear and Industrial Safety Agency (NISA) and review all of its current nuclear safety standards,” the bank said.

“As a result, we now expect no new nuclear restarts until summer 2013 and consequently raise our 2012 and 2013 Japanese LNG consumption forecasts.”

Goldman said strong Asian demand ahead of the winter season as well as rising European competition for cargoes would likely lift spot LNG prices.

“Asia may face increased competition for spot LNG cargoes from Europe, as Northwest Europe approaches the start of the winter with below-average natural gas inventory levels, potentially requiring increased LNG imports,” it said.

The bank added it saw “particular upside from current levels” in 2013 spot LNG contracts.

Japan shut down all of its nuclear power plants after the Fukushima incident, and is only slowly beginning to connect reactors back to the grid.

As a result of the nuclear closures, Japan’s fossil fuel imports surged since March 2011, helping create a record trade deficit of 2.5 trillion yen ($32.10 billion) in the first half of 2012, five times greater than the deficit a year earlier.

Goldman Sachs said government targets for power savings of about 5 percent for LNG had helped prevent electricity blackouts.

“The saving targets have been remarkably effective, helping prevent blackouts this summer even though nuclear outages remain as high as 97 percent and the weather in August was 17 percent hotter than average,” the bank said. ($1 = 77.8700 Japanese yen) (Reporting by Henning Gloystein; Editing by Andrew Heavens)

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