Japan's LNG sector carries on amid state of emergency

Japan's state of emergency in response to the coronavirus pandemic is unlikely to hit the country's LNG import operations, with power and gas utilities to continue operations to ensure stable supplies despite expected weaker demand.

The state of emergency, calling for people to stay at home where possible, covers seven prefectures — Tokyo, Osaka, Kanagawa, Chiba, Saitama, Hyogo and Fukuoka — from midnight on 8 April for a month until 6 May.

Japan's largest thermal power producer Jera, its largest gas retailer Tokyo Gas and fellow Osaka-based utilities Kansai Electric Power and Osaka Gas are pledging to continue their normal operations, including LNG imports, power generation and city gas production. All the companies expect to be able to continue operations, even if workers have a suspected or confirmed coronavirus infection.

But the state of emergency is expected to further cut into demand for electricity and city gas amid weakness in the commercial and industry sectors. This would outweigh any expected rise in demand from the household sector from those confined to homes and increased teleworking.

Government-affiliated think-tank the Institute of Energy Economics Japan (IEEJ) forecasts the country's electricity demand from the state of emergency will fall by 39,300MWh/d, or 25pc, for a city of 10mn, which it mainly attributed to office closures. Power demand in Tokyo, which has a 13.7mn population, was 201,990MWh/d in April last year. The IEEJ also projected city gas demand for a city with a 7.5mn population to drop by around 2,500 t/d of oil equivalent.

The IEEJ had previously forecast Japan's demand for electricity and city gas to fall by 0.6pc and 0.7pc respectively with a peak in coronavirus infections by the end of May.

Japanese power producers consumed 47.6mn t of LNG in 2019, down by 7.4pc compared with a year earlier. LNG use by city gas firms also fell by 2.6pc to 26.9mn t over the same period.

By Motoko Hasegawa

source: Argus Media