Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, said Japan’s nuclear accident will support world natural gas demand in the longer term.
Shell plans to increase liquefied natural gas supplies to Japan, the world’s largest buyer of LNG. The cost of building nuclear power generators will rise because governments will increase safety demands and compliance for the operators, said De La Rey Venter, Shell’s Global Head of LNG.
“It will have a long-term impact on gas demand, simply because it’s unlikely that all of these facilities will come back on stream,” he said in an interview in Amsterdam yesterday. “Japan had quite an aggressive plan for new-builds, but that program will be challenged by public acceptance issues and that program will be less comprehensive and will take longer time than what was expected. Much of that structural change gap will be filled by natural gas.”
Tokyo Electric Power Co. is battling to gain control of its Fukushima Dai-Ichi plant after the March 11 earthquake, Japan’s strongest. The utility has started scheduled power outages to conserve electricity to counter a shortfall in power supply.
“In places like the America, Europe this is going to have a lasting effect on public opinion, which is going to drive the extent” of nuclear power capacity construction, Graeme Wildgoose, an LNG consultant at Poten & Partners, said in an interview yesterday. “Politics is driven by public opinion and nobody is going to sanction a nuclear project if all the population against it.”
Japan will require an additional 10 billion cubic meters a year of LNG imports in the medium-term, Philip Olivier, president of GDF Suez (GSZ) LNG, forecast yesterday. Asia-Pacific LNG demand growth will rise by one percentage point to about 6 percent a year following the accident, he said.
“That’s not an isolated incident. It will resonate elsewhere,” Venter said. “It will add to the cost of safety compliance in the nuclear industry. It strengthens the case for gas.”
