Japan to import more oil supplies for thermal power generation

15 March 2011 09:32  [Source: ICIS news]

SINGAPORE (ICIS)--Japan is likely to import additional oil supplies for thermal power generation to make up for the shortfall in nuclear power after Friday’s powerful earthquake and tsunami that ravaged the country’s northeast, media reports said on Tuesday.

Fears over widespread nuclear radiation in Japan intensified on Tuesday following fresh explosions at the quake-crippled Fukushima Daiichi nuclear facility located about 200km northeast of Tokyo.

Of Japan's 54 nuclear reactors, 11 have been shut down following Friday’s devastation, according to a Reuters report. About a third of Japan's energy is derived from nuclear power.

Uncertainty over electricity supply from nuclear facilities has fuelled demand for additional oil shipments for use in power generation, media reports said.

Buying interest in medium sweet crude grades suitable for direct burning, such as Minas low-sulphur Indonesian crude, has been buoyed by expectations of increased demand from Japan.

US-based oil refiner, Chevron Corp, this week arranged a shipment of crude oil from Indonesia to power plants in the region south of Tokyo, Dow Jones quoted Mike Wirth, the company’s head of refining and marketing, as saying.

The company is in talks to send more oil to Japan, the world’s third-largest oil consumer, Wirth told the newswire.

Meanwhile, Tokyo Electric’s (TEPCO) oil needs for thermal power generation is likely to increase given the massive power shortages in Japan, Petromatrix’s Oliver Jakob told the Financial Times.

The move back to thermal operations would see TEPCO increasing its oil needs by at least 100,000 bbl/day of fuel and 50,000 bbl/day for the direct burning of crude oil, Jakob was quoted as saying by the newspaper.

Following an earthquake in July 2007, TEPCO’s shut down its Kashiwazaki nuclear facility, which led to an increase of fuel purchases, according to the Financial Times.

Meanwhile, Indonesia, the world’s largest exporter of thermal coal, is also preparing to provide additional coal to Japan to meet an expected surge in demand, a Reuters report said.

Additional reporting by James Dennis

By: Nurluqman Suratman

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