July 15, 2022

WWW.ENERGYINTEL.COM

Japan Aims to Restart Nuclear Reactors to Meet Winter Demand

Japan aims to restart four more nuclear reactors to meet expected power shortages this coming winter.

Japanese Prime Minister Fumio Kishida said he wants up to nine nuclear reactors to be operational this winter to help with an expected power crunch.

Sakhalin Risk

Kishida just emerged from a parliamentary election less than a week ago, which saw the ruling Liberal Democratic Party secure a majority of votes. This has emboldened the pro-nuclear party to push for nuclear restarts in the face of imminent power shortages and a heightened risk of disruption in Russian LNG supplies.

Japanese firms have committed to around 5 million tons per year in long-term contracts with the 9.6 million ton/yr offshore Sakhalin-2 project, whose operatorship will soon be handed over to a Russian-registered company,

The Tokyo government has asked utilities to seek alternative LNG supplies and is encouraging energy conservation in the power and city-gas sectors. Mothballed power plants are also expected to be brought back to service.

Year-to-date, Japan is already the world's number one LNG importer with 40.5 million tons, ahead of number two China at 34 million tons, according to Kpler.

Tenacious Efforts

Kishida said the nine reactors could cover around 10% of Japan's power consumption. He said "the national government will take the lead" on restarting these reactors, "making tenacious efforts to secure the understanding and cooperation of local governments and other stakeholders."

Trade and industry minister Koichi Hagiuda told a news conference Friday, "We would like to ensure the operation of a maximum of nine reactors, up from the current five operating now, by revising the construction and inspection periods for some of the nuclear power plants."

Japan’s latest call for more nuclear restarts marks a reversal of the country’s restrained position on nuclear since the 2011 Fukushima disaster. Politicians have always tried to keep a low profile on nuclear to avoid public backlash.

But Long Nuclear Road

Currently, 10 reactors have been restarted out of 54, which were operating before 2011, but only five are now in operation. Many reactors have been decommissioned or left idling as the 2011 Fukushima nuclear disaster has led many local residents to oppose the use of nuclear power. The Nuclear Regulation Authority (NRA) also imposes stringent rules and safety inspections on nuclear power operators, which are required to secure approvals from local residents before any restarts.

No details were given on how the government would revise the rules set by the NRA.
Clara Tan, Singapore

Gazprom Exports Fall on Reduced Nord Stream Flows

Restricted flows via the Nord Stream pipeline to Germany and the complete closure of the pipeline for maintenance on Jul. 11 led to a 61% fall in Gazprom's gas exports to Europe (including Turkey) and China in the first half of July.

Gazprom supplied just 3 billion cubic meters (200 MMcm/d) to Europe and China in the first 15 days of July, down from 7.6 Bcm in the same period of last year, Energy Intelligence calculates based on data released by Gazprom on Friday.

From Jan. 1 through Jul. 15 of this year, the Russian gas giant exported 71.9 Bcm to these markets, which was down 33.1% versus the corresponding period of 2021, Gazprom said.

Exports to China have been growing strongly this year, in line with a contractual ramp-up in delivered volumes.

But supplies to Europe have fallen sharply — partly because of lower demand as a result of high hub-linked prices under Gazprom's long-term contracts, but also because Gazprom appears to have limited flows for commercial and political reasons.

The lower volumes have helped Moscow to put pressure on Europe and benefit from high prices after the EU implemented sanctions against Russia following its invasion of Ukraine earlier this year.

Nord Stream Cuts

The Nord Stream pipeline from Russia to Germany is capable of carrying 170 million cubic meters per day, but Gazprom had been utilizing only about 40% of that capacity since mid-June.

And on Jul. 11 the pipeline was closed down completely for annual maintenance work, which is scheduled to last until Jul. 21.

Gazprom said it had to reduce Nord Stream flows because a turbine from a compressor station was stranded in Canada after undergoing maintenance there.

However, it's unclear whether the company will restore flows to full capacity, even after Ottawa granted a sanctions waiver for the turbine to be sent back.

Despite the big drop in Nord Stream flows, Gazprom did not step up shipments via Ukraine, which also remained well below capacity in the first half of July.

Gazprom has not been shipping any gas to Germany via the Yamal-Europe pipeline after Russia sanctioned the owner of the Polish section of the pipeline in May.

Low flows of Russian gas to Europe are making it difficult for the region to stockpile enough gas to take it through the winter.

As Europe's biggest gas market and its biggest importer of Russian gas, Germany has been hit particularly hard.


Russian Gas Pipelines to Europe

nc220711_Ukraine_Russia_Pipelines_map.svg


Staff Reports


In Brief

Taichung Expansion Project Breaks Ground

Taiwan's Taichung LNG receiving terminal, currently with an LNG import capacity of 6 million tons, has just broken ground on increasing that capacity to 10 million tons.

Two new 180,000 cubic meter storage tanks are being added to increase capacity. The upgrade is expected to be completed in 2026.

A CPC Taiwan spokesperson said the increase in the storage capacity of the Taichung receiving terminal will lower its currently high load factor and reduce its operational risks.

The additional supplies will go to meet the demand for more LNG supply in northern Taiwan, notably to fuel LNG-fired generators at Taipower's power plants at Tunghsiao and Taichung as well as IPPs and industrial users.

The supplies will also assist CPC's existing 10.5 million ton per year terminal at Yung-an in Kaohsiung City and its third receiving terminal now under construction in Taoyuan City.
Dennis Engbarth, Taipei

China’s Gas Production Increased

China’s domestic natural gas production increased in the first half of this year.

China’s domestic gas production increased 4.9% in the first six months, compared to the same period last year, to 109.6 Bcm, the National Bureau of Statistics said this Friday.

Expensive international LNG prices pushed China to reduce LNG imports in favor of increased pipeline gas imports and increased domestic production.

But the growth rate of domestic natural gas production slowed in June, creating a different picture.

In June, domestic natural gas production was 17.3 Bcm, a year-on-year increase of 0.4%, with an average daily output of 580 MMcm.

In June, imported natural gas fell to 8.72 million tons, a year-on-year decrease of 14.6%.
Dawn Lee, Beijing


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India38.9539.4239.0339.4138.6038.4339.8938.0739.8039.0638.2637.9838.36
Sodegaura, Japan39.6041.0241.0441.1339.5636.0540.6438.4640.5041.4838.8037.9339.77
Zeebrugge, Belgium22.4720.9720.6621.0322.0122.3321.6720.6121.5320.6222.1321.2822.22
Huelva, Spain29.9128.3728.0428.4429.4129.2129.0827.9228.9528.0129.4628.5129.49
Isle of Grain, UK19.6418.1617.8718.2219.2119.5018.9517.8118.7217.8319.3018.4819.40
Everett, US5.103.714.053.774.834.710.014.444.233.395.28----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback7. Feb21. Feb7. Mar21. Mar4. Apr18. Apr2. May16. May30. May13. Jun27. Jun11. Jul102030405060Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0042.250.3142.25
SW Europe0.0030.58-8.5430.58
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)0.427.026.606.03
NBP, UK (futures)-4.3223.6928.0130.22
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-7.1745.5952.7650.25
Zeebrugge (Belgium)--24.79--31.63
German NCG-5.3546.1051.4549.40
NBP (UK)-8.5420.4629.0020.70
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.286.586.866.40
Corpus Christi, Texas-0.156.536.686.14
Cove Point, Maryland0.126.095.975.09
Elba Island, Georgia------6.10
Nymex Henry Hub Futures
Near Month0.427.026.606.03
Second Mth0.426.936.515.97
Third Mth0.416.926.505.96
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaAug '21Sep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22020406080Energy Intelligence