Japan utilities flag supply concerns as Mideast tensions rise (updated)

Tohoku Electric Power, Incorporated

19/04/2024 10:21

(Adds background throughout, Tohoku Electric president comments
in paragraphs 10-11)
    By Yuka Obayashi
       TOKYO, April 19 (Reuters) - Japanese utilities have
"strong concerns" over escalating tensions in the Middle East as
any supply disruption in the region will have a big impact on
fuel supply and prices, the head of an electric power industry
group said on Friday.
     Israel launched an attack on Iranian soil on Friday,
sources said, in the latest tit-for-tat exchange between the two
countries, whose decades of shadow war has broken out into the
open and threatened to drag the region deeper into conflict.
     Oil prices jumped on Friday as reports that Israel had
attacked Iran roiled markets and sparked concerns that Middle
East oil supply could be disrupted.
    "We have strong concerns," Kingo Hayashi, chairman of
Japan's federation of electric power companies, told a news
conference.
    "If the Strait of Hormuz were to be blocked, it would
significantly impact our fuel procurement in terms of both
volume and price," said Hayashi, also the president of Chubu
Electric Power  9502.T .
    The Strait of Hormuz runs between the Persian Gulf and Gulf
of Oman and provides a key route for shipping. 
    Japan relies heavily on Middle Eastern crude, importing more
than 95% of its oil from the region, but the resource-poor
country has significantly reduced oil-fired power plants, though
it still relies heavily on coal- and gas-fired power generation.
    Higher oil prices will likely lead to soaring prices of gas
and other energy, Hayashi said, adding Japan's procurement of
liquefied natural gas (LNG) from Qatar could also be affected in
the event of disruption of the Strait of Hormuz.
    Tohoku Electric Power  9506.T , which buys LNG from Qatar,
also expressed fears over the heightened Mideast tensions.
    "We are deeply concerned about rising fuel costs and the
inability to procure fuel when we want, which could disrupt
stable supply of electricity," Tohoku Electric President Kojiro
Higuchi told reporters.
    "We are also worried higher oil prices could bolster coal
prices," he said.
    If LNG supplies from the Mideast were to be disrupted,
Tohoku Electric will have to consider buying spot LNG and
exercising its option to increase the volume from other LNG
suppliers with whom it has long-term contracts, he said.
    "If that is still not enough, we will shift to coal," he
said.

 (Reporting by Yuka Obayashi in Tokyo. Editing by Jacqueline
Wong and Jane Merriman)
 ((Yuka.Obayashi@thomsonreuters.com; +813-4563-2761;))