It has been well documented that the damage to Japan’s nuclear capacity could lead to a spike in demand for liquified natural gas. but how much could the country need, and what could that do to prices?
PFC Energy has come up with some fairly credible figures. Its analysts point out that in 2007, when a slightly smaller earthquake struck the country, it took out 8.2GW of nuclear capacity. In the aftermath, Japan’s spot LNG purchases jumped from 100 mtons to 500 mtons per month.
Last week’s quake has taken out 9.7GW of capacity, and PFC calculates this could result in a 500-600 mton/month jump in Japanese LNG prices.
But as for the apparent price spike? Well, not quite:
The relatively healthy price for Asian spot ($8-$9/MMBtu) may be sustained, and even receive a temporary boost, even though we are now entering the off-peak season for LNG deliveries.
Hardly alarm-bell territory.