• 3 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 5 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 6 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
Oil Markets Fear Iraqi Escalation

Oil Markets Fear Iraqi Escalation

The military operation by Iraqi…

Asian Market to be Flooded with Fuel Oil if Japan Restarts it’s Nuclear Reactors

Asian Market to be Flooded with Fuel Oil if Japan Restarts it’s Nuclear Reactors

After the Fukushima disaster led Japan to shut down its nuclear power sector fuel oil became one of the country’s largest sources of electricity generation, yet now it seems that this demand is set to fall to levels not seen since before 2011 as Tokyo Electric Power Co. (Tepco) leads the country’s energy utilities to switch to the cheaper fuels of coal and natural gas.

Some industry analysts have speculated whether this drop in demand from Japan, Asia’s largest importer of fuel oil, could flood an already oversupplied Asia-Pacific market, forcing prices to fall and hitting producers margins, which Reuters claims are already low due to refinery expansions in China and the Middle East.

After Japan’s nuclear reactors were shut down for safety checks the country’s fuel oil use rose to an 18 year high of 336,000 barrels a day for the last fiscal year which ended in March 2013. Japan became the largest importer of fuel oil in Asia, with a demand twice as high as the next largest, South Korea.

Related article: Japanese Optimistic on Putin’s Intentions to Develop Siberia

However, starting last year Japan’s demand for fuel oil began to fall as the country turned to coal and natural gas. The Institute of Energy Economics, Japan (IEEJ) confirmed that “factors including the rise in burning of LNG and coal, as well as the restart of nuclear power, will increase the pace C-type fuel oil use declines.”

By July 2015 Japan’s energy utilities are expected to develop 14 new natural gas-fired power plants, and two new coal-fired power plants have just recently begun operations, with a combined capacity of 1,600 megawatts. Yet it is the possibility of Japan restarting its nuclear reactors that will have the largest impact on their demand for fuel oil.

Speaking to Reuters an official from one Japanese refiner explained that “coal and LNG will make up a bigger share, but oil will still be the cushion for demand fluctuations until nuclear power comes back.”

The current government is considered pro-nuclear, and industry officials are trying to apply pressure for the safety checks to be completed soon so that plans can be made to begin restarting the reactors. It is thought that the first reactors will be brought back online in the next financial year, which begins at the beginning of April.

The IEEJ predicts that if Japan manages to bring online 16 reactors, an ambitious ask, then fuel oil demand may well fall by 57% to around 143,000 barrels a day by March 2015.

By. Joao Peixe of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News