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Japan's winter oil demand for power may peak at 500,000-600,000 b/d

By Takeo Kumagai in Tokyo

November 25, 2011 - Japan's crude and fuel oil demand for power generation is estimated to be about 12 million kiloliters (410,000 b/d) over October 2011-March 2012, hitting a peak of around 500,000-600,000 b/d during its winter power demand season, industry sources and analysts told Platts.

Japan's winter power demand season normally runs over December-March.

The estimates compiled by Platts are based on widespread expectations that none of the shut nuclear plants in the country will be allowed to restart before the end of March 2012 because of stress-test conditions imposed by the government in July following the March 11 earthquake.

Nuclear capacity represents 21% of Japan's total installed power generating capacity of 228.479 GW.

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But Kansai Electric is scheduled to shut the 826 GW No. 2 reactor at its Takahama nuclear power plant in western Japan late November 25.

With this shutdown, only 10 nuclear reactors with a combined power generation capacity of 9.038 GW will be operating in Japan on November 26, representing just 18.5% of the country's total installed capacity of 48.96 GW at 54 reactors, Platts calculations showed.

Oil demand over Oct-Mar likely to be highest in 4 years

Japan's estimated oil demand for power generation during the October-March period, as well as peak winter demand, will likely be the highest in four years.

The country's 10 major power utilities consumed 13.8 million kl (474,000 b/d) of crude and fuel oil over October 2007-March 2008, with demand hitting a peak of 3.07 million kl (667,000 b/d) in February 2008, according to data compiled by the Federation of Electric Power Companies.

Fuel consumption and procurement by Japan's 10 major power firms: October 2007 - March 2008

Japan's winter oil demand spiked over December 2007-March 2008 as Tokyo Electric Power Company hiked its purchase and consumption of crude and fuel oil, following an automatic shutdown of its Kashiwazaki-Kariwa nuclear power plant in northwestern Japan in the wake of a strong earthquake in July 2007. (See related table: Fuel consumption and procurement by Japan's 10 major power firms: Oct 2010 - Mar 2010, Oct - Mar 2011).

It was also coupled with increased oil purchase and consumption by other local power utilities at the time because of a particularly cold winter that pushed up power demand elsewhere in the country.

The weather and nuclear utilization rates in the country have a direct impact on crude, fuel oil and LNG consumption for thermal power generation during the winter power demand season.

Japan's crude oil import prices: Sep 2010 - Sep 2011

Next page: Increased oil demand expected from major power companies

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