Japan's nuclear restarts this year to accelerate LNG import decline

(Reuters) - Kansai Electric Power's plan next month to relaunch the last idle reactor at its flagship nuclear plant, capping a year-long series of restarts, will mark an energy shift in Japan with the sharpest drop in LNG imports since the Fukushima disaster.

Japan, the world's top buyer of liquefied natural gas (LNG), was forced to sharply increase its purchases of the super-chilled fuel after the 2011 disaster, which led to the shutdown of all 54 of its nuclear reactors.

While LNG imports have ebbed from their peak in 2014, as a smattering of reactors came back online and Japan boosted its use of renewable energy, Kansai's latest plans - including a reboot of the No.2 unit at its Takahama nuclear facility on Sept. 15 - will help to accelerate the fall this year to nearly 10%, analysts say. The repercussions, moreover, will extend beyond Japan.

"Lower LNG demand due to the higher utilization of nuclear in Japan ... will provide downward pressure on LNG spot prices in Asia," said Yoko Nobuoka, senior analyst for Japan power research at Refinitiv.

She estimates that Japan's LNG demand could drop by 6 million to 7 million metric tons in 2023, from last year's 72 million, of which some 3 million metric tons would be due to nuclear restarts. The rest would be due to warm weather, energy conservation and renewable energy development.

The restoration of nuclear facilities, with one-third of Japan's 33 remaining commercially available reactors now back online, has also helped to boost some of Japan's utilities to record first-quarter profits.

Kansai Electric, Japan's top nuclear power operator, restarted the No.1 reactor at Takahama last week, and a spokesperson said the facility's last idle reactor, the 826-megawatt No.2 reactor, would restart on Sept. 15.

With Takahama fully operational for the first time since 2011, Japan will have 12 reactors online with a combined capacity of 11.6 GW.

Japan's LNG imports in the first six months of the year have already fallen 13% from a year earlier, to 32.6 million metric tons, according to Ministry of Finance data.

In 2024, Refinitiv's Nobuoka expects LNG demand to fall by another 1.5 million metric tons on nuclear restarts alone, with 1 gigawatt of nuclear power equivalent to 1 million metric tons of LNG annually.

Tohoku Electric Power has said it plans to relaunch its Onagawa No.2 reactor next February, while Chugoku Electric Power and Tokyo Electric Power have said they are awaiting regulatory approvals - for Chugoku's Shimane No.2 reactor and Tokyo's Kashiwazaki Kariwa No.7 reactor.

That would bring another combined 3 GW of nuclear capacity online, based on the facilities' commercially available capacity.

Tohoku Electric and Chugoku Electric each told Reuters that reactor restarts would allow them to save 80 billion yen ($560 million) on fuel costs per year.

Hokuriku Electric Power, Shikoku Electric Power and Hokkaido Electric Power also said that nuclear power allows them to cut their use of fossil fuels - gas or coal or both - but gave no figures for volume reductions.

Kyushu Electric Power, which is now operating all four of its reactors, said it has cut use of both coal and gas by equal amounts.

And while Japan's declining LNG demand could pressure Asian spot prices, that in turn could spur increased imports elsewhere, analysts say.

"When LNG spot prices drop below long-term LNG prices, we see buying activity from utilities in other countries like China, India, and other Asian countries," said Masanori Odaka, senior analyst with Rystad Energy.

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