BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X
Skip Navigation LinksHome|News & Analysis|News Features|News Feature Detail

Print


Low nuclear output in 2012 could raise Japan's demand for low sulfur fuel oil


By Jonty Rushforth in Singapore and Takeo Kumagai in Tokyo


March 9, 2012 - Japan could see demand for low sulfur fuel oil sharply increase again for thermal power generation in 2012 as it is expected to make up for the loss of almost all its nuclear output, a Platts analysis of customs and price data shows.


And such an increase in demand could push low sulfur premiums, which already touched record levels in 2011, higher still.


Since the Fukushima nuclear disaster in March and subsequent nuclear outages in the country last year, Japan has had to use more crude oil, fuel oil and gas to make up for the loss of power generation capacity from all but two of its 54 nuclear reactors at present.


Due to strict local regulations on emissions, most utilities, including the country's largest fuel oil consumer Tokyo Electric Power Company, use low sulfur fuel. Some use flue-gas desulfurization units in order to burn high sulfur fuel oil of up to 2.5% sulfur. But the bulk of demand is for LSFO.


Article continues below...


Request a free trial of: Power in Asia

Power in Asia
Power in Asia

Power in Asia is a fortnightly newsletter that provides incisive comment and analysis on the policies and projects that shape the electricity market in Asia, including:

  • Information on corporate activity and performance

  • Strategy and trends plus country-by-country news

  • market commentary

  • Statistics and results, with much more


Request a free trial to Power in Asia Request More Information

Tohoku Electric subsequently said on March 12 that radiation levels at Onagawa had surged.


In the second half of the year, July to December, the top ten Japanese power utilities consumed a total of 6.01 million kiloliters (205,000 b/d or 5.96 million mt) of fuel oil. That was already double the amount they used in the first half of the year.


Assuming that rate of consumption continues in 2012, the utilities would need more than 12 million kl (206,000 b/d or 11.9 million mt) of fuel this year. (See related chart: Fuel oil consumption by top 10 Japanese power utilities)


But the rate of consumption could well increase further due to two factors.


Firstly, the last two nuclear plants still in operation are due to come offline by May because regulations require nuclear power plants to carry out scheduled maintenance at least once every 13 months. None of the shut nuclear plants are expected to be allowed to restart soon in view of the stress-test conditions imposed by the government in July 2011.


Japan's current combined nuclear generation capacity stands at 2.268 GW over two nuclear reactors: Tepco's No. 6 1.356 GW Kashiwazaki-Kariwa nuclear reactor and Hokkaido Electric's 912 MW No. 3 Tomari nuclear reactor.


For Tepco, its Kashiwazaki-Kariwa nuclear reactor is scheduled to be shut in late March, however its incremental demand for oil-fired power generation this year could be limited as it has already nearly maximized its use of oi-fired output.


Hokkaido Electric's No. 3 Tomari nuclear reactor is scheduled to start maintenance programs in late April.


For the current fiscal year, ending March 31, Tepco now expects its total oil purchases to be about 8.26 million kl (142,000 b/d), Platts reported February 28. That would mark the highest annual total in three years, since the company bought 8.71 million kl for fiscal 2008-2009, according to Platts' analysis.


For Hokkaido Electric, it has a combined oil-fired capacity of 1.65 GW over three thermal power plants in Hokkaido, northern Japan. Of its total oil-fired capacity, the 1.4 GW capacity is for fuel oil-fired capacity, which can burn both low sulfur and high sulfur fuel oil, depending on its operations, a company official said. Its remaining 250 MW oil-fired capacity can burn both crude and fuel oil. It does not have any mothballed oil-fired power plants.


In order to replace 2.268 GW of nuclear output over the two running units with oil-fired generation, which tends to run at an efficiency of 38%, would require 52.3 tearaway hours of energy, or around 4.4 million mt of fuel oil, Platts analysis shows.


Japan has an installed nuclear capacity of 48.96 GW over 54 reactors, which represents 21% of Japan's total installed power generation capacity of 228.479 GW.


Return to top


Next page: Impact on Japan’s nuclear power sector will be profound






Copyright © 2017 S&P Global Platts, a division of S&P Global. All rights reserved.