Japan & Global Energy Update
February 2015

2 February 2015/Tom O’Sullivan

What is happening in
global energy markets now ?

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US$ vs Oil

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Mathyos Japan-Private & ConfidentialGlobal Oil Market-Update

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Overview of US
Main Logistics Trading Corridors

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Main US Logistics Routes

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Source: Brookings

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Mathyos Japan-Private & ConfidentialJapan: Current Energy Status

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Mathyos Japan-Private & ConfidentialJapan’s Fuel Consumption /Self Sufficiency Rates/CO2 Emissions

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Source IEEJTransportation is about 25% of Japan’s
Total Energy Consumption

Source : IEEJ
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Source IEEJ

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City Gas Consumption Patterns

Source : IEEJ

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Fuel Oils and LPG

Source: IEEJ
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Mathyos Japan-Private & ConfidentialJapan’s LNG Infrastructure

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Mathyos Japan-Private & ConfidentialJapan’s Power Split

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Mathyos Japan-Private & ConfidentialJapanese Generation Assets by EPC

Source : FEPC
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Mathyos Japan-Private & Confidential

Annual Fuel Usageby the Japanese EPCs-Y2013
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56 million tons of LNG ( $48.0 billion )

150 million barrels of crude and fuel oil - 400,000 bpd oraround 10% of Japan’s oil imports ( $15.0 billion)

100 million tons of thermal coal ( $10.0 billion )# Total Fuel Inputs: $73 billion= Y8/ kWh

About 30% of Japan’s Fuel Imports are currently consumedby its Power Sector
Japan has very limited gas strategic reserves-16 days vs 90
days for oil
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Current Generation Mixof the Japanese EPCs
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LNG
: 43%  Coal
: 28%  Oil: 18%  Hydro : 8%
 Others : 3%
390 billion kWh
252 billion kWh
160 billion kWh
72 billion kWh
26 billion kWh

100%-900 billion kWh
Mathyos Japan-Private & Confidential

Fossil Fuel Usage by Japan EPCs
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Source : IEEJ

Facts & Figureson the Japan Power Sector
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Generation Capacity of EPCs: 220 GW
 Self-generation capacity: 80 GW
 Transmission & Distribution: 18,200 km
 No. of Residential Customers : 54 million
 No. of Commercial/Industrial Customers:30 million
 Revenue Base : $150 billion
 Equity/Debt Split of the Industry:4:1
 Carbon Emissions of the sector: 700 million tons
 CAPEX: FY03/14 : $24 billion
Mathyos Japan-Private & Confidential

Coal vs LNG in Japan
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Mathyos Japan-Private & Confidential

Source:IEA

Japan’s LNG Imports for Power Generation
LNG imports by Japan’s regional power providers spiked after the Fukushima accident caused theshuttering of the country’s 50 nuclear power plants, with 2013 imports closing in on 60 million tons.
Limited or no nuclear restarts would mean that Japanese EPCOs would have to secure additional fuelsupplies for power generation. New term contracts will have to replace those expiring, and potentiallythose volumes currently secured on a shorter term or spot basis.

Japan’s EPCO LNG Imports
70,000,000

60,000,000

Chugoku Electric

50,000,000

Okinawa ElectricTons

40,000,000Kyushu Electric
Shikoku Electric

30,000,000

Kansai Electric

Chubu Electric

20,000,000

Tokyo Electric
Tohoku Electric

10,000,000018

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012

Japan’s Generation before/after Fukushima

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Source : IEEJStatus of Nuclear Re-Starts
Ohi Reactor shut down on 16 September 2013 and since then no reactor has been activated. FY2014 will be thefirst year in four decades that no nuclear reactor has been in operation in Japan.
The average numbers of years that Japan’s reactors have been non-operational is now 3.5 years or a cumulative
152 years of non-operation or approximately 880 TWh of output has been lost over this period that is almost
equivalent to one year of power consumption in Japan or $150 billion of revenues.
Ten reactors (9.6 GW) may re-start in FY 2015 subject to NRA clearance.
#1 & #2 Sendai: Kyushu EPC#3 & #4 Genkai: Kyushu EPC#3 & #4 Takahama : Kansai EPC#3 Ikata : Shikoku EPC#3 & #4 Oi: Kansai EPC#3 Tomari :Hokkaido EPC
Four reactors are now aged over 40 years:-# 1 Tsuruga -JAPC# 1 & 2 Mihama-Kyushu EPC#1 Shimane – Chugoku EPC
Three more reactors will reach 40 years by July 2016:#1 and #2 Takahama-Kyushu EPC#1 Genkai – Kyushu EPC
Government efforts now underway to decommission up to 12 reactors starting with #1 and #2 in Mihama.

Y2.2 trillion ($19 billion) has been the spent so far on upgrading reactors to meet new NRA standards.
TEPCO, Tohoku, Chugoku, Chubu, Hokuriku unlikely to re-start any reactors in FY 2015.

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Source : METI

Fuel Sourcing Uncertainties AcrossMajor Economies Asia PacificSource : IEA
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Mathyos Japan-Private & ConfidentialJapan is invested in all LNG regions

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Mathyos Japan-Private & Confidential

Source: IEA

Gas Deregulatory Environment in Asia

Source: IEA
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Mathyos Japan-Private & ConfidentialJapanese Gas Importers & Related Companies
Trading Companies EPCOs
Marubeni
Chubu Electric
Mitsubishi
Chugoku Electric
MitsuiKansai Electric
ItochuKyushu Electric
Shikoku ElectricTokyo Electric
Tohoku Electric
Shipping Companies
Mitsui OSKNYK
Kawasaki KKTokyo LNG Tankers
EPCs and City Gas Cos

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Gas Utilities
Hiroshima Gas
Nippon Gas
Osaka Gas
Toho Gas
Tokyo Gas
Saibu Gas
Shizuoka Gas

Others
Itochu Corp
JAPEX
Gas Bureau, City of Sendai
Nippon Steel
Idemitsu

Owners of Regasification Installations Construction of LNG Facilities
EPCs
JGC
City Gas Cos
ChiyodaStorage Infrastructure Pipeline & Steel Companies Road Distribution of Gas
IHI
Nippon SteelCity Gas Cos
EPCs and City Gas Cos JFE
Niyaku Corp
Toyota Tsusho
Mitsui
Mitsubishi
E&P Companies

In FY 2014 Reserve Margins deteriorated
significantly particularly in Kansai and Kyushu

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Source : IEEJForward Projections
Of Japan’s Generation Capacity

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US : Gas & Renewables to assume
larger share of US energy mix

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Mathyos Japan-Private & ConfidentialGlobal Electricity Prices
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End/Out
Tom O’Sullivan, Tokyo, Japan.
E-mail: tomosullivan@mathyos.com
T : 81-80-1213-5802
www.mathyos.com
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