Bloomberg News

LNG Market May Tighten on Japanese Nuclear Shutdown, SocGen Says

October 05, 2011

Oct. 5 (Bloomberg) -- Kyushu Electric Power Co.’s nuclear shutdown may exacerbate tightness in the global liquefied natural gas market as demand for the fuel used in electricity generation has exceeded estimates, Societe Generale SA said.

Kyushu’s 1,180-megawatt No. 4 reactor at its Genkai atomic plant shut down automatically yesterday after a malfunction, according to the Ministry of Economy, Trade and Industry. Global LNG supply rose 14 percent in the first seven months of this year to about 140 million metric tons, compared with the bank’s full-year forecast of more than 10 percent growth, Thierry Bros, a Paris-based analyst for the bank, said.

“The closure is more bad news for the Japanese nuclear industry which looks to face even more difficulties restarting reactors after planned maintenance and/or automatic shutdowns,” Bros said. “Without approval to restart reactors down for maintenance, all of Japan’s reactors could be shut by May.”

The Kyushu shutdown left 10 reactors in Japan operational with a capacity of 8,684 megawatts, or 18 percent of the nation’s total, SocGen said. The shutdown of all reactors, with a loss of 275 million megawatt hours of electricity generation, may lead to additional demand for 40 billion cubic meters of LNG, according to the note. That’s equivalent to 29 million metric tons, or about 42 percent of the country’s LNG consumption last year, according to Bloomberg calculations based on customs data.

Japan increased spot purchases of LNG to fuel power plants in August to a 35-month high, according to data from the Ministry of Finance posted on its website.

--Editors: Paul Gordon, John Chacko

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net.


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