Japan to need $3 bil/month on extra oil, LNG in 2012 if nuclear output zero

Platts, 

16 November, 2011

The International Energy Agency has estimated that Japan would need to spend $3 billion per month on additional oil and LNG in 2012 if the country's nuclear power output falls to zero next year, the executive director of the International Energy Agency, Maria van der Hoeven, told reporters Wednesday.

Speaking to Platts in Tokyo, van der Hoeven said that Japan would need an extra 460,000 b/d of oil and 30 billion cubic meters of gas in 2012 if the country had no nuclear power output.

When asked about Japan's winter oil and gas demand outlook, Van der Hoeven declined to comment as the country's actual demand situation would depend on the country's nuclear output situation, which remained uncertain. 

Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.

Japan is about to enter its winter power demand season, which normally runs through December-March, and the weather and nuclear utilization rates have a direct impact on crude, fuel oil and LNG consumption for thermal power generation. 

Japanese power utilities have hiked their oil and LNG consumption to make up for their shortfall in nuclear output in the wake of the devastating March 11 earthquake, and subsequent nuclear outages across the country amid safety concerns. 

Only 11 nuclear reactors are currently operating in Japan with a combined capacity of 9.864 GW, representing 20% of the country's total installed capacity of 48.96 GW spread over 54 reactors, according to Platts calculations.

It is widely expected that none of the nuclear plants shut for scheduled maintenance would be allowed to restart any time soon because of stress test conditions imposed by the government in July.

If none of the nuclear reactors are allowed to restart in the coming months, Japan is scheduled to lose its nuclear output completely in April or May 2012 because of the Japanese regulation that requires nuclear power plants to carry out scheduled maintenance at their reactors at least once every 13 months. If this happens, it would be the first time Japanese nuclear power production has fallen to zero since it commenced in 1966. 

HIGH OIL PRICES

Speaking at a press conference in Tokyo, van der Hoeven expressed her concern over rising crude oil prices that will have "negative impact" on ailing economies in Europe and "poor developing countries."

"High prices will have a negative impact on economic recovery for those countries that are most affected by it," van der Hoeven told reporters.

"In Europe for example, high oil prices could endanger their economic recovery."

Van der Hoeven, however, named China and Russia as countries, which may not feel consequence of high oil prices given their own supplies.

When asked whether OPEC should raise output at its next meeting on December 14, van der Hoeven said: "Up to OPEC to decide whether they should raise their output in December. I am not OPEC. I am IEA ... Let's wait and see what they are going to decide."

A Platts survey of OPEC and oil industry officials and analysts last week estimated OPEC output at 30.05 million b/d in October.

The December OPEC meeting is the first formal conference since the acrimonious June 8 meeting when Iran, Algeria, Angola, Venezuela, Libya and Ecuador blocked a Saudi proposal, which had been backed by the group's other Gulf Arab producers, to raise actual estimated output from all 12 members by 1.5 million b/d.