Prospects for a major Russia-Japan joint-venture liquefied
natural gas project receiving a final go-ahead have improved as a consequence
of Japan's earthquake and nuclear disaster, the head of one of the companies
involved said Thursday.
"It will accelerate our LNG project with Russia," Osamu Watanabe, president
of oil and gas explorer Japan Petroleum Exploration Co., told Dow Jones
Newswires.
Japan is the world's biggest buyer of LNG, and since the March 11 quake,
government and company executives have been lining up additional short-term
supplies to feed thermal generators, to make up for shortfalls in electricity
supplies caused by nuclear reactor damage and closures. They are also working
on plans to ensure sufficient gas imports in the decades ahead.
In the financial year that began April 1, Japan's LNG demand will rise by
roughly 10 million metric tons because of increased gas-fired electrical
generation, the Institute of Energy Economics Japan said in a recent report.
A Japanese consortium including Japex agreed in April with Russian gas firm OAO
Gazprom to go ahead on a feasibility study for a 10
million-metric-ton-a-year LNG export project based at Russia's Pacific coast
port of Vladivostok, aiming to complete this by end-2011.
"We were in a pre-feasibility-study stage well before the March
earthquake. But now, Russia is very enthusiastic. I expect the project will
move on faster than previously thought, given that it's easier to make an
investment decision thanks to rising energy prices," Watanabe said.
The business environment for fossil fuel upstream developments had benefited
from doubts about nuclear energy as spot LNG prices and oil prices had already
risen, and now Japanese utilities are rushing to buy to make up for lost
nuclear output in Japan, he said.
The rising trend in LNG and oil demand--and prices--is likely to last for years
as construction plans for new nuclear power stations have been delayed, Watanabe
said.
Tokyo Electric Power Co., the operator of the stricken Fukushima Daiichi
nuclear power plant complex, has bought 3 million metric tons of LNG for the
use in summer months.
Chubu Electric Power Co. (9502.TO), which shut its Hamaoka nuclear power plant
after government requests following the Fukushima disaster, has secured 1.6
million tons, and is working on buying another 1.6 million tons, all to be used
this fiscal year ending in March 2012.
Right after the quake, Japanese utilities suspended construction work on four
new reactors. Now, roughly half of Japan's 54 reactors are offline, with
utilities unable to restart reactors idled for routine maintenance at a time
when anti-nuclear protests in Japan are on the rise.
"We are also looking into several LNG project candidates in different
areas," the Japex official said.
He didn't specify possible partners or countries, but noted that while
previously the global LNG market had been oversupplied, after the March 11
disaster, it's been tightening.
State-owned Qatargas has said that it is ready to meet any increase in Japanese
demand for LNG, and Chief Executive Sheikh Khalid Al-Thani said late March that
the company foresees a 36% increase in LNG demand by 2025.
Japanese officials have been in Indonesia to try to arrange additional
near-term deliveries, and several of the nation's power utilities are in talks
on more long term supplies from Australia, which has a raft of LNG projects in
the development stage.
Japex, a former state-owned gas and oil producer, used to focus on development
of Japan's tiny domestic gas and oil reserves.
But in its new business plan covering the five years started on April 1, Japex
said it aims to allocate some 60% of its Y280 billion planned investment in
overseas businesses compared with roughly 30% in the previous plan.