Japan's imports of liquefied natural gas surged 23% in April compared with the same month in 2010, after the March earthquake and tsunami shut down several of the country's nuclear reactors, according to data published late Monday by ship tracking service Waterborne.
Japan's imports of liquefied natural gas surged 23% in April compared
with the same month in 2010, after the March earthquake and tsunami shut down
several of the country's nuclear reactors, according to data published late
Monday by ship tracking service Waterborne.
Analysts said this elevated demand will continue this year and next, absorbing
all of the surplus LNG supply that consumers had hoped would keep down prices
in the other big LNG market--
Europe
.
"While a year ago some market commentators talked of the global glut of
LNG, we believe the focus for investors should be on the impending global LNG
shortage," Bernstein Research said in a note to clients.
The surge in Japanese LNG demand was "driven primarily by the shutdown of
a significant amount of
Japan
's
nuclear generating capacity," the report from Waterborne said. To replace
the lost nuclear energy,
Japan
had
little choice but to turn to oil- or natural gas-burning power plants fuelled
by seaborne imports.
Japan
imported 6.65 million metric tons of LNG in April, an increase of 1.247 million
tons on April 2010, Waterborne said. Most of the extra supply came from
Russia
and
Qatar
,
Waterborne said in a report.
"Based on recent announcements from the Japanese government to shut down a
number of nuclear plants that could be at risk for a major earthquake or
tsunami, Waterborne projects that LNG imports to
Japan
are
likely to continue to rise in 2011," the report said.
This means
Japan
is
likely to absorb all of the world's surplus LNG supply this year, analysts at
Barclays Capital said in a report. In 2012, LNG demand growth may exceed that
of supply, leading to even tighter markets, it said.
North America
is unlikely to be affected by this, because thanks
to the boom in shale gas production it doesn't need to import LNG, Barclays
said. However,
Europe
will probably see LNG imports
drop later this year, it said.
This will be a dramatic reversal because
Europe
had
been the chief beneficiary of abundant LNG supplies for the last couple of
years, notably from the world's largest LNG producer,
Qatar
.
Now
Qatar
is
promising extra LNG supplies to Japan, drawing supply away from
Europe
, said
Robert Johnston, director of Energy and Natural Resources at Eurasia Group. "This
diversion could tighten up
U.K.
markets this summer as the incremental Qatari cargoes heading to
Japan
probably would have otherwise ended up in the
U.K.
market," he said.
The U.K.'s largest gas supplier, Centrica PLC (CNA.LN), has already warned that
prices are rising, "in the wake of the natural disaster and subsequent
nuclear issues in Japan and unrest in North Africa and the Middle East."
"In the U.K., the forward wholesale prices of gas and power for delivery
in winter 2011-2012 are currently around 25% higher than prices last
winter," the company said earlier this month.
Higher
U.K.
prices will also have a knock-on effect in
Europe
. "The
U.K.
's LNG
import terminals have acted as a gateway for gas to reach Continental
markets," Barclays said.
Barclays expects the
U.K.
benchmark gas price, the National Balance Point, to rise 38% in 2011 compared
with 2010, and increase by another 17% in 2012. The NBP is closely correlated
to the main European gas benchmarks in the
Netherlands
and
Belgium
.
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