Japan's nuclear restarts this year to accelerate LNG import decline

Chugoku Electric Power Co

03/08/2023 12:29

By Katya Golubkova and Yuka Obayashi
       TOKYO, Aug 3 (Reuters) - Kansai Electric Power's
 9503.T  plan next month to relaunch the last idle reactor at
its flagship nuclear plant, capping a year-long series of
restarts, will mark an energy shift in Japan with the sharpest
drop in LNG imports since the Fukushima disaster.
    Japan, the world's top buyer of liquefied natural gas (LNG),
was forced to sharply increase its purchases of the
super-chilled fuel after the 2011 disaster, which led to the
shutdown of all 54 of its nuclear reactors.
    While LNG imports have ebbed from their peak in 2014, as a
smattering of reactors came back online and Japan boosted its
use of renewable energy, Kansai's latest plans - including a
reboot of the No.2 unit at its Takahama nuclear facility on
Sept. 15 - will help to accelerate the fall this year to nearly
10%, analysts say. The repercussions, moreover, will extend
beyond Japan.
    "Lower LNG demand due to the higher utilisation of nuclear
in Japan ... will provide downward pressure on LNG spot prices
in Asia," said Yoko Nobuoka, senior analyst for Japan power
research at Refinitiv.
    She estimates that Japan's LNG demand could drop by 6
million to 7 million metric tons in 2023, from last year's 72
million, of which some 3 million metric tons would be due to
nuclear restarts. The rest would be due to warm weather, energy
conservation and renewable energy development.
        The restoration of nuclear facilities, with one-third of
Japan's 33 remaining commercially available reactors now back
online, has also helped to boost some of Japan's utilities to
record first-quarter profits.
    Kansai Electric, Japan's top nuclear power operator,
restarted the No.1 reactor at Takahama last week, and a
spokesperson said the facility's last idle reactor, the
826-megawatt No.2 reactor, would restart on Sept. 15.
    With Takahama fully operational for the first time since
2011, Japan will have 12 reactors online with a combined
capacity of 11.6 GW. 
    Japan's LNG imports in the first six months of the year have
already fallen 13% from a year earlier, to 32.6 million metric
tons, according to Ministry of Finance data. 
    In 2024, Refinitiv's Nobuoka expects LNG demand to fall by
another 1.5 million metric tons on nuclear restarts alone, with
1 gigawatt of nuclear power equivalent to 1 million metric tons
of LNG annually.
    Tohoku Electric Power  9506.T  has said it plans to relaunch
its Onagawa No.2 reactor next February, while Chugoku Electric
Power  9504.T  and Tokyo Electric Power  9501.T  have said they
are awaiting regulatory approvals - for Chugoku's Shimane No.2
reactor and Tokyo's Kashiwazaki Kariwa No.7 reactor. 
    That would bring another combined 3 GW of nuclear capacity
online, based on the facilities' commercially available
capacity.
    Tohoku Electric and Chugoku Electric each told Reuters that
reactor restarts would allow them to save 80 billion yen ($560
million) on fuel costs per year. 
        Hokuriku Electric Power  9505.T , Shikoku Electric Power
 9507.T  and Hokkaido Electric Power  9509.T  also said that
nuclear power allows them to cut their use of fossil fuels - gas
or coal or both - but gave no figures for volume reductions.
        Kyushu Electric Power  9508.T , which is now operating
all four of its reactors, said it has cut use of both coal and
gas by equal amounts.
    And while Japan's declining LNG demand could pressure Asian
spot prices, that in turn could spur increased imports
elsewhere, analysts say.
    "When LNG spot prices drop below long-term LNG prices, we
see buying activity from utilities in other countries like
China, India, and other Asian countries," said Masanori Odaka,
senior analyst with Rystad Energy.  
($1 = 142.8900 yen)

 (Reporting by Yuka Obayashi and Katya Golubkova; Editing by
Edmund Klamann)
 ((ekaterina.golubkova@thomsonreuters.com;))