Japan’s long-term LNG demand outlook and recent regional ... · Chikako Ishiguro Osaka Gas Co.,Ltd. [email protected] 14th March 2016 Japan’s long-term LNG demand outlook

Chikako Ishiguro

Osaka Gas Co.,[email protected]

14th March 2016

Japan’s long-term LNG demand outlook and recent regional market development

Behind the Scenes of the Easing Supply and Demand Balance‐ “Demand”

Various Sources

2014 Jan-June (yoy gross) 2014 July-Dec (yoy) 2015 Jan-June (yoy)

Korea;  LNG Demand for Power Sector 

Generation Volume by Source (yoy TWh)LNG Import Volume (MT)

Korea custom, Kepco

Mt $/t Natural Gas Import Price

China;  Natural Gas Supply in Winter

Natural Gas Import Volume (Winter)

China Custom

India; Highly Price Sensitive Market

Total RLNG Consumption - 45.2 mmscmd(2014)

Waterborne

LNG Import Volume (MT)

Fall in LNG Prices and LNG Imports

$/mmbtu MtJapanese LNG Import Price Asian LNG Imports

Renewable 13-14%

Nuclear 10-11%

Natural Gas 18%

Coal 25%

LPG 3%

Power 28%

PES486million kL

50.3million kL

TFC326million kL

Safety

Energy Security ； Self-Sufficiency of Energy Supply

Economic Growth ； Reduction of Power Supply Costs

Environment Protection； Reduction of GHG Emissions

Fuel 72%

Energy Saving

Oil 30%

Self Sufficient24.3%

Long-term Energy Outlook in Japan to 2030

New Energy Policy in Japan

METI

Outlook for Power Generation Mix

METI

Average of 10 years prior to Great Earthquake

FY 2030

Oil 12 % 3 %Coal 24 % 26 %LNG 27 % 27 %

Nuclear 27% 22-20 %

Renewables

PV

11% 22-24 %

7.0 %Wind 1.7 %Geothermal 1.0-1.1%Hydro 8.8-9.2%Biomass 3.7-4.6%

- Liberalization of full retail market （2017）- Neutrality of pipeline network of three gas companies (2022/4)

Gas Industry Reform

- Establishing a regional transmission organization (2015) - Starting full retail competition (Price regulation to be continued) (2016)- Legal unbundling of T/D divisions (2018-2020)- Abolishing price regulation (2018-2020)

Electricity Industry Reform

Electricity / Gas Industry Reform: Market Liberalization

METI HP

Tokyo E: KASHIWAZAKI・KHokuriku E: SHIGA

JAPC:TSURUGA 

Kansai E:MIHAMA 

Kansai E:OHI 

Kansai E:TAKAHAMA 

Chugoku E:SHIMANE 

Hokkaido E:TOMARI

Tohoku E :HIGASHIDORI

Tokyo E:FUKUSHIMA 1 

Tohoku E:ONAGAWA

Tokyo E:FUKUSHIMA2

Chubu E:HAMAOKA

Shikoku E:IKATAKyushu E:SENDAI

Kyushu E:GENKAI  JAPC:TOKAI2

To be decommissioned  14

On hold                             18

Applied  for restart          21

611

1

1

2

2

2

7

2

2

3

3

3

4

1

5

2 31 4

4

2

2 31 4

21 21 3

21 3

1 2 3

1

1 3

61 2 3 4 5

1 2 3 4

1 2

4 5

2

Source：Companies’ HP etc.

Status of Existing Nuclear Power Plants

1

Restart                                4

Application for Inspection

Pre- Service Inspection

Public Acceptance

Permission

Public C

omm

ent

Com

mercial O

peration

Approval

July 2013 Sep. 2014 Aug 2015

Source: Schedule of Sendai Plant #1 is by Kyusyu E shown in The above flow chart is quoted from the material published by Kansai EP in Jan. 2015

Process of Restart Operation of Nuclear Power

Assessment Process of

“Reactor InstallmentLicense Application”

Assessment Process of “Construction Plan Application”

Assessment Process of “Safety Regulation Application”

Mar 2015

May2015

Approval

Sep2015

Outlook for LNG DemandBased on New Nuclear Power Re‐start Scenario

FY

Desired Feature of LNG

13

Decreased supply of nuclear power

Expected Role of LNG

CurrentMarket Trends

Increasingsupply

flexibility

Loweringprocurement

costs

Main fuelfor

Power generation& city gas

Abundant andstable supply

Increased supply of renewables

Market liberalization

Increased liquidity of LNG

Low oil prices

Balancing Fuelfor

Power generation

Relaxed S/D balance of LNG

Challenges

Introducingnew

LNG pricing

Government-ledsupport for

new supplies

Promotinginvestment inLNG industry

EnsuringJapan’s

Energy Security

Role of LNG in Evolving Energy Market

Ishikari LNG/Hokkaido Gas

Kushiro LNG/JX Nippon Oil & Energy

Hachinohe LNG/ JX Nippon Oil & Energy

Hachinohe LNG/ JX Nippon Oil & Energy

Shinsendai /Tohoku Electric Power

Gas Bureau City of Sendai /Sendai City

Soma/JAPEX

Hitachi/Tokyo Gas

Kagoshima/Nihon GasNagasaki/Seibu Gas

Fukuoka/Seibu Gas

Hibiki/Hibiki

Tobata/Kitakyusyu Riquid Natural Gas

Yanai /The Chugoku Electric Power Hatsukaichi/Hiroshima Gas

Mizushima/Mizushima-LNG-Group

Hijeji/The Kansai Electric Power

Himeji/Osaka Gas

Senboku Ⅰ/Osaka GasSenboku Ⅱ/Osaka GasSakai/Sakai LNG

Yokkaichi/Chubu Electric PowerYokkaichi Center/Chubu Electric Power

Kawagoe/Chibu Electric Power

Toyama Shinminato/Hokuriku Electric Power

Joetsu/Tohoku Electric Power

Oita/Oita Liquid Natural Gas

Matsuyama/Shikoku Gas

Sakaide/Sakaide LNG

Wakayama/The KansaiElectric Power

Shimizu Sodeshi/Shimizu LNG

Yoshinoura/Okinawa Electric Power

Sodegaura/TEPCO, Tokyo Gas

Futtsu/TEPCO

Minami Yokohama/TEPCO, Tokyo Gas

Ohgishima/Tokyo Gas

Higashi Ohgishima/TEPCO

Joetsu/Chubu Electric Power

Naoetsu/INPEX

Yufutsu/JAPEX

Hakodate Minato LNG/Hokkaido Gas

Tobu Gas Akita/Tobu Gas

Nihonkai Nigata/Nihonkai LNG

Okayama/Okayama Gas

Takamatsu/Shikoku-gas

Chita Joint/Chubu Electric Power, Toho GasChita/Chita LNGChita Midorihama/ Toho Gas

Start Before 2013

Start After 2014