Mitsubishi Corp to Buy More LNG Projects in Indonesia

AFP Picture taken on February 24, 2011 in Bratislava shows the 100 percent electric compact Citroen C-Zero vehicle presented for the first time by Dalkia and Citroen in Bratislava. This vehicle is developed in collaboration with Japanese Mitsubishi Motors Corporation.

TOKYO, KOMPAS.com - To cope with the shutdown of nuclear power plants, Japanese utilities and trading houses have secured the additional 5 million tons of liquefied natural gas needed to meet electricity demand during the peak summer season, The Nikkei reported early Thursday.

The March 11 disaster has knocked multiple Tokyo Electric Power Co. nuclear reactors out of commission. When power demand peaks this summer, Tepco's output capacity will fall 55 million kilowatts short even if users in its service area reduce electricity use by 15%.

But the utility apparently resolved the shortage by securing the 2-3 million tons of LNG needed to generate 55 million kilowatts, according to sources. Similarly, Tohoku Electric Power Co., which serves the hardest-hit areas in northeastern Japan, is believed to have secured about 1 million tons of LNG.

Chubu Electric Power Co. received promises from Qatar's energy minister and others that they will cooperate as much as possible in supplying LNG. The utility will likely have to buy an extra 3.2 million tons in light of its decision to shut down its Hamaoka nuclear power plant.

With purchases by other utilities are added, the total amount secured for the summer reaches an estimated 5 million tons. Japan is already the world's biggest importer of LNG, buying some 70 million tons a year. With the drop in nuclear power output, it will need to boost annual purchases by about 10 million tons, or 14%, for the entire fiscal year, including the combined 6.2 million tons to 8.6 million tons for Tepco and Tohoku Electric.

To secure the remaining 5 million tons for the rest of the fiscal year, trading houses will increase procurement from LNG projects they participate in. Mitsubishi Corp. is negotiating to buy more from projects in Malaysia and Indonesia, while Mitsui & Co. will receive more from projects in Russia and Qatar. They will purchase the rest on spot markets.

Meanwhile, heavy machinery manufacturers are stepping up production of large gas turbines to cope with the expected surge in demand for gas-fired power plants. Power generation using natural gas, which emits less carbon dioxide than burning coal or oil, is increasingly replacing nuclear power.