Japan can cut its power costs by 30 percent if it restarts at least half the country’s 50 nuclear reactors by 2014, a government adviser said.
The savings would amount to 1.8 trillion yen ($20.3 billion), the Institute of Energy Economics, Japan, a Tokyo-based research group known as IEEJ, said in report posted today on its website. The country paid an estimated 6 trillion yen last year for its liquefied natural gas imports, twice as much as the year before, Yukio Edano, the country’s former trade and industry minister, said at a conference in September.
LNG replaced nuclear power as Japan’s primary power fuel after an earthquake and tsunami hit reactors at Fukushima in March 2011. Safety checks later that year and scheduled maintenance reduced the number of nuclear reactors operating to just two. Japan paid 5.48 trillion yen for its LNG imports from January to November 2012, according to data from Japan customs.
“It is important to steadily restart those nuclear power stations that are shown to be safe by the Nuclear Regulation Authority,” established along with an independent regulatory commission in September, the IEEJ said.
Japan’s 50 reactors supplied 30 percent of its electricity before Fukushima, according to data from the country’s trade body for utilities, the Federation of Electric Power Companies of Japan. The government will await new safety standards for nuclear plants before deciding whether to restart idled reactors, Shinzo Abe, Japan’s new prime minister, said Dec. 26.
Japan’s new nuclear regulator has said it will announce the rules in July, and Abe indicated some reactors may restart over the next three years if they meet the tougher safety standards.
Phasing out oil-indexed long-term LNG prices would better reflect supply and demand in the LNG market, which isn’t tied to crude, and help lower Japan’s energy bills, the IEEJ reiterated.
Long-term LNG contracts are typically linked to Brent crude or Japan Customs Cleared crude prices. Two western Japanese utilities, Chubu Electric and Kansai Electric, signed long-term contracts incorporating gas links as part of the price formula with BP Plc last year.
To reduce the “Asia premium” for LNG prices, the IEEJ said Asia’s LNG buyers should jointly purchase the fuel while investing in LNG and natural gas production assets.
The price of LNG spot cargoes delivered in four to eight weeks rose to $17.95 in northeast Asia, the World Gas Intelligence, an energy research company, said Jan. 14. Gas for February delivery traded as low as $3.566 per million British thermal units in electronic trading today on the New York Mercantile Exchange.
Chubu Electric and South Korea’s state-owned LNG importer, Korea Gas Corp., signed a LNG sales and purchase agreement Jan. 11 with Italy’s ENI for 28 cargoes of LNG from May 2013 to December 2017, according to a statement on Chubu Electric’s website.