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Japan's 2012 summer oil demand for power to hit 10 year high


By Takeo Kumagai in Tokyo, and Hector Forster in Singapore


June 6, 2012 - Japan's crude and fuel oil demand for power generation is estimated to be about 700,000-800,000 b/d during the peak summer season -- probably the highest level in at least 10 years, industry sources and analysts told Platts June 1.


Japan's summer power demand season normally runs July-September, when hot weather and, this year particularly, nuclear utilization rates have a direct impact on crude, fuel oil and LNG consumption for thermal power generation.


The estimates compiled by Platts are based on widespread expectations that a majority of nuclear plants would remain offline during summer this year. None of the country's 46.15 GW of nuclear capacity, spread over 50 reactors, is currently on line. That capacity represents 20% of Japan's total installed power generation capacity of 225.667 GW.


Japanese Prime Minister Yoshihiko Noda is now in the final process of making what he calls a "political decision" to allow restarts of Kansai Electric's Ooi No.3 and No.4 reactors. The units, with a capacity of 1.18 GW each, at the plant in western Japan, may be restarted after securing consent from local government authorities.


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After securing all necessary approvals, Kansai Electric is expected to restart the two reactors to ensure stable power supply during the peak demand season.


But Kansai Electric would need at least six weeks to restart the two reactors because it cannot start up both units at the same time, a company source said. It would need at least three weeks each to bring the reactors online after restarting the No.3 reactor first, the source added.


The restart of the two nuclear reactors would have minimal impact on overall oil consumption by Japanese power utilities during the summer as their capacity only accounts for 1.3% of the total installed capacity in Japan excluding nuclear reactors, according to industry sources.


Over July-September, Japan's fuel oil demand for power generation is estimated to be about 420,000-480,000 b/d, while the country's demand for crude for thermal power generation is expected to be about 280,000-320,000 b/d, industry sources said.


Japan's estimated oil demand for power generation during the July-September period will probably be the highest in at least 10 years, according to Platts tracking of data compiled by the Federation of Electric Power Companies.


It will likely be well over double the 330,000 b/d or so consumed by Japan's 10 major power utilities last summer, according to FEPC data. The highest level for power generation in the past 10 years was the 390,000 b/d of oil consumed in July-September 2008.


During the peak winter oil demand season this year, the major Japanese power utilities consumed as much as 730,000 b/d of crude and fuel oil in February as the largest monthly consumption in the season as a result of colder-than-last year temperatures and increasing nuclear outages in the country had boosted consumption of oil, according to FEPC.


Next page: Crude, fuel oil procurements by Japanese refiners and traders





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