Japan Oil, Gas Imports Likely Up Post-Quake
13th March 2011
Japan will likely need more imported oil and natural gas due to closures of nuclear reactors caused by Friday March 11th, 2011 earthquake and tsunami, but volumes can't be calculated accurately as it is unclear how much industrial output has been affected by the disaster and how long power nuclear and thermal power plants will remain closed.
Based on previous closures of quake-hit reactors in Japan, energy imports will have to rise, and for a sustained period, and this will underpin prices in an already highly volatile energy market.
In July 2007, Tokyo Electric Power Co.'s Kashiwazaki-Kariwa's seven reactors in northwest Japan was closed due to an earthquake, and kept shut until 2009, resulting in the company, Japan's largest supplier of electricity, having to pay much more to keep power flowing to customers.
The desperate struggle to contain a fire and radiation leaks at Tepco's Fukushima complex Saturday is likely to be followed by extended closures of those plants and other reactors while safety checks are completed and inquiries held.
Energy demand comparisons between the 2007 and 2011 earthquakes are further complicated by the impact of the global economic crisis, which hit oil, gas and coal use in Japan, as it did elsewhere.
Ten nuclear reactors with a combined capacity of 8.6 gigawatts have been taken off line in Japan. Seven are operated by Tokyo Electric, two by Tohoku Electric PowerCo. and one by Japan Atomic Energy Power Co. Tepco said it has suspended operations at five thermal power plants as well.
Oil traders are closely tracking developments, given Japan's weight as the world's 3rd-largest oil user, all of it imported. They've also been having to factor-in sharp price rises and oil market volatility in recent weeks caused by political turmoil in the Middle East.
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