London (Platts)--11Mar2011/829 am EST/1329 GMT
The temporary shutdown of 20% of Japan's nuclear capacity due to the massive earthquake there will boost demand for fuel oil and spot LNG to make up shortfalls in power generation, Bernstein Research said Friday. The scale of the damage to the country's nuclear power plants may also trigger a rethink of the government's plan to build out new nuclear capacity, the consultancy said in a research note. "The alternative to nuclear is LNG. If the 10GW nuclear expansion is curtailed, it could beenfit Australian LNG exporters," it said. Australian LNG exporters stand to benefit from increasing demand for the fuel in Asia, given the relatively short shipping distances involved, compared with the greater cost associated with shipping the fuel from producers in the Atlantic Basin or the Mideast. Four nuclear plants have been taken offline since the quake struck, prompting the government to declare a "nuclear emergency" warning after a cooling system failed at one plant. Although short-term LNG demand will increase, one uncertainty is the damage to LNG receiving terminals on Japan's east coast, close to Cosmo Oil's damaged 222,000 b/d Chiba refinery, which could create supply bottlenecks. A fire broke out at the Chiba refinery after a 8.9 magnitude earthquake struck northeastern Japan Friday, off the main Honsue island. The Tokyo Bay area also includes several major LNG import terminals, including Tokyo Electric Power's 16 million mt/year Futsu terminal, 14.7 million mt/year Higashi Ogishima terminal and 10 million mt/year Sodegaura terminal. There have as yet been no reports of damage to terminal infrastrucure.--Oleg Vukmanovic, oleg_vukmanovic@plattts.comSimilar stories appear in LNG Daily. See more information at http://bit.ly/LNGDaily