In January 2017, Alex Newman identified “one of the biggest medium-term threats” to liquefied natural gas (LNG) prices was “a faster than expected restart of the Japanese nuclear energy sector”. Our resources specialist was right on the money, with output from the country’s atomic energy complex set for a new high in the wake of the Fukushima Daiichi nuclear disaster.
Both Kansai Electric and Kyushu Electric have recently brought reactors back online, as the nation looks to substantially restore the nuclear industry’s market share to its level (approximately 30 per cent) prior to the 2011 tsunami and reactor meltdowns. The resultant plant closures and energy shortfalls meant that Japan became the world’s leading importer of LNG, bringing in around 83.5m tonnes annually. Japan idled all 54 of its nuclear plants following the disaster, but each restart will cut demand for LNG by as much as 1m tonne a year, as Tokyo looks to meet its obligations under the Paris climate accord.
None of this will be news to Royal Dutch Shell’s (RDSB) chief executive, Ben van Beurden, who has just announced that a group affiliate has taken a final investment decision on LNG Canada, a $31bn (£23.7m) natural gas export project in British Columbia, in which Shell holds a 40 per cent stake. The energy giant anticipates the project will be exporting gas to Tokyo Bay by midway through the next decade.
