Q: Which is the only one of the world's biggest economies which saw its GDP shrink in the fourth quarter of 2011 but is nonetheless witnessing higher oil demand than a year ago?
A: Japan
Japan's economy contracted by 0.6% in Q4, on a quarter-on-quarter basis, and shrank by a much bigger 2.3% on a year-on-year basis, according to official data. Oil consumption, however, has been moving in the opposite direction this year due to exceptional demand from the power generation sector.
Japanese companies are importing big volumes of oil (and also natural gas in the form of LNG) as fossil fuel power plants fill the gap left in the generation mix by the shutdown of most of the country's nuclear fleet in the wake of last year's devastating tsunami.
According to the International Energy Agency's latest monthly report, released late last week, this additional demand for oil from the power sector is likely to boost demand by an average of 320,000 b/d over the whole of 2012. If nuclear restarts are delayed, this figure could reach 465,000 b/d, the agency said.
The IEA said Japanese power plants consumed 560,000 b/d of crude and residual fuel oil in December, "470,000 b/d more than would have been assumed in pre-tsunami Japan."
And demand seems to have risen even further in January, when the country's top 10 utilities imported 640,000 b/d of crude and fuel oil, according to a Platts analysis of data released by the Federation of Electric Power Companies.
According to IEA estimates, this additional demand is offsetting falling oil consumption elsewhere in the economy, and helped drive total Japanese oil demand up by 34,000 b/d, or 0.8%, to 4.49 million b/d last year. In 2012, the agency expects the country's total oil demand to rise by a further 42,000 b/d, or 0.9%, to 4.53 million b/d.
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