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IEA forecasts Japan LNG worst-case

Japanese liquefied natural gas (LNG) demand could soar by nearly a third next year if the country fails to restart any nuclear reactors, says the International Energy Agency

Kwok W Wan, LONDON

And IEA gas analyst Hideomi Ito claimed on Tuesday that if a worst-case situation materialises, Japan would struggle to secure the LNG supplies it needs.

By May next year, Japan could shut down all 54 of the country’s nuclear units because of regulated routine maintenance. But since the meltdown at the Fukushima-Daiichi plant, the government has introduced stress tests before restarts, and no reactor that has fully shutdown since the March earthquake has yet resumed operations.

The IEA said Japan is already likely to import an additional 11 billion cubic metres (cm) of gas (8.4 million tonnes of LNG) this year to offset the loss of nuclear power generation, but this could jump next year. “We expect the worst-case scenario is 30 billion cm (22.8 million tonnes of LNG) of additional LNG required, but, I’m not sure where this would come from,” Ito told the LNG Global Congress conference.

“A potential supplier is Qatar. But I don’t know if even it can provide 30 billion cm,” he added.

The IEA forecast additional Japanese demand to be between 18 billion and 30 billion cm (13.7 million to 22.8 million tonnes) in 2012, depending on nuclear restarts, if any. The extra demand compares with consumption of 91.9 billion cm (70 million tonnes of LNG) in 2010, before the quake, and a global LNG market of nearly 300 billion cm (228m tonnes of LNG).

The scale of the IEA’s prediction falls in line with a Petroleum Economist forecast of a 25% increase in September 2011 LNG imports, which is slightly lower than record Japanese purchases in August.

Disappearing gas glut

Ito also forecast the global gas glut to disappear in the next four years. The world has been awash with natural gas since the US began exploiting its unconventional shale reserves. This meant all the LNG supply originally expected to be bought by the US was redirected to other countries.

“It could be before 2015, but it all depends on the financial crisis and the energy policies of the big energy-consuming countries, such as China,” Ito said. Global energy demand dipped during the last financial crisis in 2008, and the world could be headed for another meltdown as a result of the Eurozone debt crisis and slowing economies.

China’s 12th five-year plan (2011-15) aims to increase the country’s gas consumption to 8.3% of the energy mix – to 260 billion cm/y. This compares to the IEA’s forecast of 130 billion cm this year. Increasing Chinese demand would make up the lion’s share of global gas-demand growth, although additional consumption would be met by increasing pipeline imports as well as in the form of LNG.

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