Looming Maintenance Means 'Zero Nuclear' for Japan, but Does Zero Nuclear Mean More Gas?

Researched by Industrial Info Resources (Sugar Land, Texas)--Since July 2012, Japan has enjoyed the use of two of its 54 nuclear reactors. The remaining 52 have been shut down, due either to damage from the March 2011 earthquake and tsunami, or to required maintenance outages. The two units that were operational were two of the only units to be granted permission to restart before the restructuring of the nuclear regulatory body in the Japanese government and the announcement of the new safety regulations for nuclear reactors, Units 3 and 4 at Oi nuclear power station, owned and operated by Kansai Electric Power Company Incorporated (TYO:9503) (Osaka, Japan) (Kanden). These units will be shut down for their regular turnarounds on September 2 and September 15, respectively, bringing Japan back to a "zero nuclear" status.

Japan is the world's largest importer of liquefied natural gas (LNG), and this has become even more evident during these past two years of zero to limited operational nuclear capacity as import volumes climb. With the help of Oi units 3 and 4, Japan was able to get through a hotter-than-normal summer without instituting rolling blackouts. As the country moves into autumn, with demand likely to fall, the loss of the two reactors' electricity is more manageable. As such, it is possible that Japan will not see such a dramatic spike in spot LNG shipments to compensate.

However, judging by Kanden's experience with the previous nuclear regulatory body under the now-defunct Nuclear and Industrial Safety Agency (NISA), power companies may not have the nuclear capacity they need to deal with the winter season. Under NISA, it took roughly four months for Kanden to get approval for its restart. The new regulatory body, a branch of the Ministry of Environment called the Nuclear Regulation Authority (NRA), released its set of rules and standards on July 8 for power companies to restart their reactors. Four companies--Hokkaido Electric Power Company Incorporated (TYO:9509) (Sapporo, Japan) (Hokuden), Kanden, Shikoku Electric Power Company Incorporated (TYO:9507) (Takamatsu, Japan) (Yonden), and Kyushu Electric Power Company Incorporated (TYO:9508) (Fukuoka, Japan) (Kyuden)--immediately applied to restart reactors at their nuclear power stations. These applications represented ten reactors, fully one-fifth of Japan's total remaining, functional nuclear capacity. Because the safety precautions taken by these companies may not be up to the NRA's standards, not all of these stations may start up in time for the winter cold. If that is so, increased LNG consumption or rolling blackouts could be in the near future for Japan.

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