Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

In this list
Electric Power | LNG | Natural Gas | Oil | Shipping

Japan's power supply tightened on low LNG stocks amid severe cold spells: METI minister

Commodities | Electricity | Energy | Nuclear | Energy Transition | Natural Gas | Oil | Crude Oil | Refined Products | Metals | Steel | Petrochemicals

Market Movers Europe, Feb 22-26: Platts London Energy Forum and IP Week at the fore

Electric Power

Platts Forward Curves – Gas and Power

Oil | Crude Oil | Coronavirus | Energy Transition | Macroeconomics

37th Asia Pacific Petroleum (APPEC 2021)

Electricity | Electric Power | Nuclear | Renewables

ERCOT lost almost half of generation capacity in storm, causing 20-GW load shed

Natural Gas

Insight Conversation: James Watson, Eurogas

Japan's power supply tightened on low LNG stocks amid severe cold spells: METI minister

Highlights

JERA, Kansai, Kyushu procuring extra LNG

Asia LNG spot price hits record high

J-Power to restart coal-fired unit on HSFO as emergency response

Tokyo — Severe cold spells and surging power demand are tightening Japan's power supply amid declining LNG stocks and low renewable output, Minister of Economy, Trade and Industry Hiroshi Kajiyama said Jan. 12, with utilities undertaking emergency fuel procurement.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"Amid severe cold weather, power demand is increasing significantly compared to levels in normal years," Kajiyama said at a press conference. "On the other hand, the power supply over demand has tightened nationwide amid reduced renewable power output because of bad weather and decreasing LNG stocks."

"Currently, power utilities are making efforts to ensure stable supply by utilizing various power plants including old thermal units," he said, adding that utilities are procuring power and supplying it to other utilities to ensure stable supply.

While western Japanese regions are experiencing tighter power supply, some utilities in the east are delivering their surplus power to the west, industry sources said.

Japan's main power utilities, including JERA, Kansai Electric and Kyushu Electric, said Jan. 12 that they are procuring additional LNG cargoes as their inventories run down amid strong power demand caused by cold weather.

In its effort to ensure LNG supply, Kyushu Electric has started buying 2,000-3,000 mt of LNG left from tankers after discharge in Asia as part of its emergency response, a company spokesman said, adding that it has also asked other Japanese utilities to supply their cargoes to the Fukuoka-based utility.

Soaring LNG

Amid surging power demand in Japan, the world's largest LNG importer, Asian LNG spot prices have hit record highs due to the cold snap. S&P Global Platts JKM for February was assessed at $28.221/MMBtu on Jan. 11, posting a record single-session increase of $6.768/MMBtu.

ExxonMobil sold an LNG cargo from Australia's Gorgon LNG project for Jan. 21-28 delivery in the low-to-mid $30s/MMBtu to Kyushu Electric, according to traders, who said two major power utilities were still seeking end-January and early-February cargoes. This is one of the highest prices paid for a spot LNG cargo on record.

In Japan, utilities were facing a shortage of LNG and reducing power generation as day-ahead power prices breached Yen 220/kWh, or $618/MMBtu, on Jan. 12, data from the Japan Electric Power Exchange showed.

The high prices stem from utilities cutting back sharply on output due to winter demand and shortages across fuel types, including gas and coal, with many expecting inventory shortages to persist through January or February, should supply issues worsen.

"Our inventory has also been going down after sending electricity to another region," a source at a Japanese power utility said. "Japan is in a very tough spot. I hear rumors about high transactions but haven't been completely keeping up with what is going on in the wider market because we are too busy with our internal inventory and power mix adjustments."

Related content:

Maximizing coal

While Japanese power utilities have maximized their LNG consumption for power generation, some are also maximizing their use of coal.

JERA, for instance, has boosted its coal-fired power generation at its 1.2 GW Hirono thermal power plant and its 2 GW Hitachinaka thermal power plant by 2.4 GWh/day above capacities since Jan. 2 in order to meet the increased power demand, a company spokesman said.

Kansai Electric has also increased its runs at its sole 1.8 GW coal-fired Maizuru thermal power plant as part of its drive to ensure its power supply amid a surge in demand as a result of lower temperatures since around mid-December, a company spokesman said.

Using oil

To make up for the power supply loss from the unexpected shutdown of the No. 2 500 MW coal-fired unit at its Matsushima thermal power plant in Nagasaki in the southwest on Jan. 7, J-Power intends to restart the unit at half of its 250 MW capacity on Jan. 14 by burning high sulfur fuel oil, a company spokesman said.

In its efforts to ensure oil supply, Kansai Electric has secured multiple coastal oil tankers from short-term charter and spot deals, the spokesman said. Kansai Electric currently runs the No. 1 600 MW crude/fuel oil unit and the No. 3 600 MW oil-fired plant at the Gobou power plant.

Japan's incremental oil demand for power generation, however, could be limited as JERA and Kyushu Electric do not have any immediate plans to restart their oil-fired units from their complete long-term planned shutdowns, spokesmen said.

In the face of power supply concerns, the Federation of Electric Power Companies of Japan recently made a rare request to the Petroleum Association of Japan and for emergency fuel supplies, according to FEPC and PAJ officials.