IEA raises estimate of Japanese oil demand for power sector

 

London (Platts)--10Feb2012/623 am EST/1123 GMT


The International Energy Agency said Friday it has raised its estimate of the amount of additional oil Japan's power generation sector will buy in 2012 as a result of ongoing nuclear outages following last year's devastating earthquake and tsunami.

In its latest monthly oil market report, the IEA said incremental demand from Japan's power sector would average 320,000 b/d in 2012, 50,000 b/d more than the agency had calculated last August.

This new estimate assumes that nuclear plant output in Japan falls to less than 0.9 TWh in April and slowly recovers to 15 TWh by December.

If all nuclear plants remain offline after April, then incremental oil demand could reach 465,000 b/d, the IEA 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."

This additional demand offset falling oil consumption elsewhere in the economy and drove total Japanese oil demand up by 34,000 b/d, or 0.8%, to 4.49 million b/d last year, the IEA said.

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.

The IEA's latest update on Japan's incremental oil demand for power generation comes amid continued uncertainty over the timing of possible nuclear restarts in the country.

As reported by Platts in November last year, Japan's current winter oil demand is hovering around 500,000-600,000 b/d, the highest level in four years.

Even though Japan's current winter power demand season is expected to end in March, the country's oil demand for power is expected to remain steady beyond April as the country is scheduled to lose its total nuclear output by May.

Japan's current combined nuclear generation capacity stands at 3.138 GW from three nuclear reactors, which accounts for just 6.4% of the country's total installed nuclear capacity of 48.96 GW over 54 reactors.

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

Japan needs more crude and fuel oil as direct burning feedstock for power generation, at least in the short term, because none of the shut nuclear plants is expected to be allowed to restart soon in light of the stress test conditions imposed by the government in July last year.

If none of the currently shut plants is restarted, Japan could see all of its nuclear fleet off line by May because regulations require nuclear power plants to carry out scheduled maintenance at least once every 13 months, which could force the closure of the three reactors currently running.

--Takeo Kumagai, takeo_kumagai@platts.com

--Richard Swann, richard_swann@platts.com


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