Japan could soon be toppled from its place as the world’s biggest importer of natural gas as the country’s nuclear reactors are controversially started up again following the Fukushima disaster, according to a definitive study of the world’s energy outlook for 2019.
With significant impact on LNG shipping, the Institute of Energy Economics Japan expects Japan’s domestic natural gas supplies to fall, albeit slightly, for the third consecutive year in fiscal 2019 among other wider predictions. The institute estimated imports will total 82M tonnes compared with 82.3M in 2018. For further comparison, imports stood at 85.6M tonnes in 2017.
Meantime China is steadily gaining ground on Japan as the number one buyer, having imported around 54M tonnes in 2018 in pursuit of its clean-energy policy.
During 2019, nuclear power will come rapidly back on stream, more than doubling from the 31.3Bn kWh delivered in 2017 to 65.4Bn in 2019. The effect on LNG consumption would be immediate because demand for the fuel rose sharply in Japan as nuclear plants were mothballed in the wake of Fukushima in 2011.
Taking a longer view, the institute predicts that natural gas will surpass coal in the mid-2030s as the second-largest global energy source after oil. There will be different rates of growth in different regions however, with natural gas becoming the largest energy source in the US around 2030 and around 2040 in the EU.
Simultaneously, the production of natural gas is forecast to nearly double in the next 30 years, rising 1.7 times by 2050, with a consequent steady increase in seaborne trade. North America and the Middle East will see the biggest increases in LNG exports, with Qatar probably boosting exports the most rapidly, up from the current 77 mta to 100 mta as soon as 2024. However non-OECD Europe, which includes Russia, will continue to be the biggest exporter, albeit mainly by pipelines.
As for the biggest buyers of LNG, the current leaders in (mainly seaborne) imports, Japan and South Korea, will be joined by China, India and Europe in a trend that clearly justifies the current round of investment in new LNG carriers.
Meantime other nations in the Asian region will be forced to become importers as their gas fields run out. “Asean nations, which have long been exporters, will also rapidly expand their imports due to increased consumption and resource depletion,” the institute predicted.
On a more alarming note, a severe disruption of energy security from, most significantly, a unilateral ban on constructing new coal-fired power plants would dramatically skew most assumptions about future demand for natural gas.
“If natural gas-fired power plants are built instead of coal-fired plants, the additional consumption of 1.3Tn m3 from the reference scenario is enormous,” the study concluded. “[It would be] equivalent to the sum of the current production of the US and Russia. Such a scenario would trigger a scramble for all possible sources of natural gas “including those that are technically difficult, such as [those in] deep water and the Arctic Ocean.”
Inevitably, the effects on shipping would be profound, requiring a massive expansion of natural gas trade, and particularly the LNG trade. That would happen because Asia would be the main source of rocketing consumption while the Middle East, non-OECD Europe and North America would be the main source of growing production.
Overall, said the institute, in this emergency scenario the amount of LNG trade required as soon as 2030 would be nearly three times the current level. Under the current campaign to clean up the planet, the only way to avoid such a crisis would be if photovoltaic solar and wind power plugged the gap, the institute said.