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SaJAPAN NRG WEEKLYOCTOBER 05, 2020

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JAPAN NRG WEEKLY
October 5, 2020
NEWS

ANALYSISTOPOIL REFINERIES READY FOR TRANSFORMATIONDESPITE THE CURRENT WORLD-BEATING PROFITS•Will TEPCO need to sell its last nuclear power plant? Rumors grow,It’s a strange time for Japanese oil refiners to accept

even as the power utility considers loading KK Unit 7 reactor

that the journey is over. Japan’s gasoline and diesel•

Minister demands explanation after capacity market prices jump•

Japan targets commercialization of hydrogen-fired power by 2040•

Chubu Electric rumored to be interested in Hokuriku rival takeover

OIL & GAS

consumption are at 95% of pre-Covid levels. The
refinery run rates have finally bucked a six-monthdeclining trend. And margins are the envy of all Asia, if
not the whole world. And yet, the industry knows that
this is the end of the line. As another Japanese oil
refinery stops operating this month, industry watchers

Tokyo Gas registers unit to trade LNG, may expand it overseas•

GasTech – view from Japan: LNG needs emerging Asia demand

estimate that a fifth of the country’s entire crude
processing capacity, or some 700,000 barrels per day(bpd) of throughput, must be idled in the near to mid-e•term. This translates into at least three mid-sized

POWER & NUCLEAR

refineries out of the 22 units in Japan.

Several power utilities unveil zero-carbon electricity plans•

Kyushu brings forward restart dates for two nuclear reactors

MARKET TURMOIL OFFERS JAPAN’S BUYERS THE KEYS
TO THE U.S. LNG CASTLE AT BEST PRICE IN YEARS•KEPCO struggling with public trust endangers nuclear restarts

Earlier this year Japan's buyers felt they got a raw deal•

Electricity tariffs to rise for first time in six months; gas prices fall•Toshiba runs Australia trials to diagnose life of thermal power•

OPINION: Why phase-out of coal is actually soft on polluters•

EDITORIAL: Japan must stop promoting nuclear plant exports

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m

pl

•

RENEWABLES, OTHER•

Bidders in offshore wind tenders protest lower tariff guidance•Japan’s secondary market for solar to almost double in two years•

Sumitomo Corp plans wind farm off the coast of U.K.

•

Toyota, Denyo to develop fuel-cell powered commercial autos•

Kyushu Electric takes delivery of biomass fuel transport ship•

Japan has potential to combine farms and solar plants. Why has
this not worked?

on long-term U.S. LNG contracts, but now on thethreshold of winter there’s the best opportunity inyears to lock in more U.S. supply on the cheap. U.S.
producers are ready to accept steep discounts,
industry insiders say, and Tokyo Gas' cut-priceacquisition of a U.S. gas project earlier this month
showed yet another way how Japanese firms could
exploit the situation. With as much as one-tenth ofJapan’s annual import volumes bound in long-term
contracts that are due to expire by Dec. 2021,
Japanese buyers could leverage their negotiating
position to rethink supply sources.

EVENT METI’s Annual LNG Conference
One of the premier events in Japan’s LNG conference
calendar will be held online, a first. The Oct. 12 event,hosted by the key ministry responsible for energy(METI) will focus on pricing stability and the potential
for decarbonization in the LNG sector. Our NRG teamwill attend and report on the main talking points anddevelopments in the Oct. 19 edition of Japan NRG
Weekly. See below for an outline of the main issues.

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NEWS: OIL & GAS
Japan Oil Price: $43.42 / barrel
80,000120.0070,000110.00100.0060,00090.00

50,00080.00

40,00070.00

30,000

60.00
50.00

20,00040.00

10,000

30.00

16.00
14.00

80,000

12.00
10.00

60,0008.00

40,000

6.00
4.00

20,000

2.00

0

0.00
Jan-14Jul-14Jan-15
Jul-15Jan-16
Jul-16
Jan-17
Jul-17Jan-18
Jul-18Jan-19Jul-19Jan-20Jul-20Jul-20Jul-19Jan-20Jan-19Jul-18Custom Clearance Price: JCC (Usd/bbl)

Custom Clearance Price: JLC (Jpy/t)

Custom Clearance Price: JLC (Usd/MMBtu)e

Jan-18

Jul-17Jan-17

Jul-16

Jan-16

Jul-15

Jul-14Jan-15

Custom Clearance Price: JCC (Jpy/KL)

18.00

100,000

20.00
Jan-140

Japan (JLC) LNG Price: $6.45 per Mbtu
120,000•

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Tokyo Gas registers unit to trade LNG, considers global expansion(Dempa Publications, Sept. 29)

Co. set up "TG Global Trading" (based in Tokyo) as a wholly owned subsidiary to handle the sales of LNG
to third-party clients. In the future, Co. said it will consider setting up offices for the unit overseas.
Tokyo Gas wants to utilize existing storage tanks and transport vessels’ infrastructure to capture growthm•opportunities for LNG demand in Asia.
•

Co. wants to grow third-party trading of LNG to 5 million tons a year by 2030.

•

CONTEXT: As previously reported, Tokyo Gas is establishing a global LNG trading desk in Singapore.

Sa

This sets up the trading part, separate from Tokyo Gas’ activities in procuring LNG via mostly long-term
contracts for use in Japan in gas-fired power generation and gas sales.

GasTech – View from Japan: LNG prices fall as market growth slows(Gas Energy Shimbun, Sept. 28)•

Gastech, one of the world’s largest LNG conferences, was held in Barcelona from September 7 to 11. For
the first time ever, the conference was held online.

•

The feeling at the conference was that demand for LNG and natural gas in the medium term will remainstrong in developing markets.

•

However, the coronavirus pandemic has meant that growth in global LNG imports, which surpassed 180
million metric tons in the first six months of this year, is slowing, with demand only 5% above the figure
for the same period last year. Japan’s LNG imports remain at their lowest level in 10 years.

• TAKEAWAY: A little more than a week from now Japan will host its own major LNG conference. (See the Events
section of this report for more details.) Uncertainty over demand is not only due to the outbreak of COVID. China’s
announcement of a 2060 carbon-free goal is the largest but by no means the only major pledge made by a country or
corporation in recent months. The concern is especially strong in Japan, which as well as being the top LNG buyer
sees the fuel as part of its economic future via related infrastructure exports. It’s curious, however, that a fuel recently
seen as a better alternative to coal but too expensive for the developing world is now pinning its future demand on
those markets.

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NEWS: POWER & NUCLEAR

3.00

1

started process4

yet to start / not known

22

0.00

LNG Imported by EPCOs

Sep-20completed work

Month End LNG Stock by EPCOs

eof which

1.00
Apr-2027

Nov-19No. of reactors slated for decommissioning

2.00

Jan-193

Jun-19No. of nuclear reactors under construction

Aug-184

Mar-18able to use MOX fuel4.00

Oct-173

May-17in operation today

5.00

Jul-169

Dec-16

restarted

6.00

Feb-1616

Sep-15approved by regulator

Apr-1525

Nov-14applied for restart

7.00

Jan-14of which

Power Utilities’ LNG Imports Vs Stockpiles

33

Jun-14

No. of operable nuclear reactors

plSource: JANSI and JAIF, as of Sept. 30, 2020

Will Kashiwazaki-Kariwa be sold? Japan struggles under Japan-U.S. nuclear agreement(Weekly Economist, Sept. 28)

A Joe Biden victory in the U.S. presidential election will likely result in demands by the U.S. for Japan tom•reduce its 46 metric ton plutonium stockpile to fulfill its obligations under the Japan U.S. Agreement for
Cooperation Concerning the Civil Use of Atomic Energy.
To achieve this, at least 15 reactors would need to be converted to run on plutonium-enriched MOX fuel.

•This would likely mean that ownership of two of the reactors at TEPCO’s Kashiwazaki-Kariwa plant wouldSa•

be transferred to the Japan Atomic Power Company.
•

SIDE DEVELOPMENT:TEPCO considers loading nuclear fuel into Kashiwazaki-Kariwa Unit 7(Kyodo News, Various, Oct. 3)•o

TEPCO does not yet have the local green light for reactor restarto

Co. is thinking of loading the unit with an eye on a March-April start.

CONTEX: Japan currently has 4 nuclear reactors that are permitted to run on MOX fuel. At present,
Japan does not create or process its own MOX fuel and one facility that would do so, the Rokkasho plant,
has yet to get the final go-ahead to begin operations.

•

CONTEXT: The Kashiwazaki-Kariwa plant was one of three nuclear power plants owned by Tokyo Electric(TEPCO) and once ranked as the world’s largest NPP. A 2011 disaster at TEPCO’s Fukushima Dai-Ichi
plant tarnished the firm’s reputation with the public and two of TEPCO’s NPPs including the Dai-Ichi will
never operate again. The remaining Kashiwazaki NPP has seven reactor units. Of those, five are also
unlikely to ever restart due to public pressure and TEPCO has mostly acknowledged this.
What TEPCO had hoped to salvage were the two more recent units at Kashiwazaki. This has also proveda step too far. Units 6 and 7 were approved for restart at the end of 2017. Three years on, TEPCO has
failed to gain the tacit approval for restarts from the local authorities. The national government isincreasingly certain that for the reactors to ever restart they need to be managed by a different company.

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Japan Atomic Power Co. is an entity set up by the country to promote commercial use of nuclear power
and is jointly owned by Japan’s major electric utilities.
•

SIDE DEVELOPMENT:
Nuclear disaster was fault of TEPCO and government, says appeal court(Tokyo Shimbun, Sept. 30)o

The Sendai High Court has upheld a district court judgment that found the government
and the Tokyo Electric Power Co. liable for the Fukushima nuclear disaster. The court
ordered over ¥1 billion in damages to be paid to 3,500 plaintiffs.

oBoth the government and TEPCO appealed the Fukushima District court’s 2017 verdict.

• TAKEAWAY: The U.S. has been aware of Japan’s growing plutonium stockpile for years and due to the closure ofmost of the nation’s nuclear reactors since 2011 the stockpile has not notably increased. It is not clear that a Biden
presidency would actually press the button on the issue. However, for those in Japan who support the nuclear
complex (which includes spent fuel recycling and MOX fuel usage), the U.S. presidential change would be great
cover. Whether it is real or not, Japanese politicians and bureaucrats like to use “outside pressure” as an excuse toemove unpopular legislation / processes forward. Biden as president would serve as that trigger.

•

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Minister demands explanation after jump in price at power capacity auction(Asahi Shimbun, Sept. 30)
CONTEXT: Launched in July 2020, the market enables utilities to bid not for kilowatt hours of electricity,
but power capacity. As capacity market trading is allowed for up to four years into the future, it allows thembigger industry players to better manage future revenue than spot electricity trading. The idea is also thatit allows power companies to feel more secure about investing in construction of new power facilities.
•

Bids in a recent capacity tender reached the government imposed maximum of ¥14,137 per kilowatt.
Some non-legacy generators expressed shock at the high prices and there were calls for the bidding•Sasystem to be changed.

Environment Minister Koizumi Shinjiro said on Sept. 29 that he believes the high prices seen on the
power capacity trading market will result in households paying even more for electricity.

•

Koizumi has demanded more transparency about the reason the capacity prices were so high.

Chubu Electric rumored to be interested in Hokuriku EPCO takeover(Economist Online, Sept. 28)•

As Japan’s electricity and gas industries undergo a major restructuring, there is an increasing trend to
consolidate generation capacity in western Japan and to invest in beefing up transmission networks in the
country’s east.

•

As acquisitions become more commonplace, Chubu Electric Power Co. is rumored to have its eye on the
Hokuriku Electric Power Co.

• TAKEAWAY: As reported in the Sept. 7 edition of Japan NRG Weekly, we are very likely moving toward a stage ofmarket consolidation among the major electricity utilities. Since the 2016 deregulation of the electricity market, a few
of the 10 incumbent power utilities are struggling, either due to their energy mix or declining regional demand.
What’s more, the idea of a Chubu-Hokuriku merger was favored by the METI officials that advised former prime
minister Abe Shinzo. It’s an idea that’s unlikely to have waned with the new prime minister and it has also been
discussed in several media publications.

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Tohoku Electric unveils new zero-carbon retail plan
(Tokyo Yomiuri Shimbun, Sept. 29)•

Tohoku Electric has unveiled a new plan known as “Eco Denki Premium” that claims to supply electricity
generated with net zero carbon emissions.

•

The plan asks clients to pay an additional ¥3.3 per kilowatt hour.

••

Subscribers will receive a certificate to confirm their zero-carbon status.
SIDE DEVELOPMENT:
Toho Gas rolls out zero-emissions electricity plan
(Nikkan Kogyo, Oct. 1)o

Co. promises electricity derived from renewable energy sources and will give certificatesto clients as proof•o Co. claims to be offering a cheaper zero-emissions plan than rivals
SIDE DEVELOPMENT:TEPCO rolls out zero-emissions electricity plan
(Nikkan Kogyo, Sept. 28)o

TEPCO Energy Partner, in collaboration with Gunma Prefecture, will start an emissions-efree electricity plan based on electricity generated by hydroelectric power plants in the•

SIDE DEVELOPMENT:plprefecture.

Chubu Electric unit rolls out zero-emissions electricity plan
(Denki Shimbun, Oct. 2)oChubu Electric Power Miraiz said it will offer from November an emissions-free electricitymplan based on electricity generated by its hydroelectric power plants in the Nagano prefecture.
• TAKEAWAY: The cost of electricity is famously expensive in Japan. For some listed corporates, however, this will beSaseen as a necessary ESG expense that will pay back the value many times over.

Kyushu Electric brings forward restart dates for Sendai No. 1 and No. 2 nuclear reactors(Jiji, Oct. 1)•

Kyushu Electric said units one and two at the Sendai nuclear power plant in Kyushu will go back online
one month earlier than initially scheduled, on November 26 and December 26, respectively.

•

The reactors were shut down to undergo enhancements to bolster resilience against terrorist attacks andsimilar incidents.

•

CONTEXT: Should the restarts take place, they would increase the operating capacity of nuclear power inJapan by 55%. For the Kyushu area, however, the impact would be more drastic. It would mean Kyushu
Electric has three of its four units up and running.

KEPCO struggles to win public trust, endangering restarts of its nuclear units(Chugoku Shimbun, Oct. 2)•

The Kansai Electric Power Company convened a recent meeting of its Board of Directors in Fukui, which
is home to its nuclear power stations, to send a message that it was part of the local community.

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•While the move was designed to restore confidence in the utility after recent bribery allegations, theprocess of restoring the public’s trust will likely be difficult.

•

It also appears likely that none of KEPCO reactors that are currently able to restart, but are down formaintenance, will actually restart soon. This will place further pressure on KEPCO’s revenue.

• TAKEAWAY: Kansai Electric has seven operable nuclear reactors. Only two are actually working. In theory, thecompany can bring online all seven, since it has the approvals from Japan’s nuclear regulator. Last month, it evenfinished the extra work on older units that extended their 40-year licenses for another 20 years. However, the reality isthat KEPCO’s projected timeline for restarting at least two more units may be too optimistic. The company wasmarred by bribery and fraud allegations, which hit over a year ago. KEPCO is working to present itself asrehabilitated. Reports in the local media suggest that the local public and politicians are not buying it. And, without
their consent, it’s very hard for the company to turn on the switch.

Electricity tariffs to rise for first time in six months(Tokyo Shimbun, Sept. 29)
Four of Japan’s electricity utilities have said they will raise tariffs in October, in the first such rise in sixe•months.

Other utilities such as Chubu Electric Power are continuing to lower their electricity tariffs.

•

All Japan’s major gas utilities will lower their tariffs in October, citing lower LNG prices.

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•

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Toshiba runs Australia trial to diagnose useful life of thermal power plant(Denki Shimbun, Sept. 30)
Toshiba Energy Systems says it has developed a system that can predict the useful life of a thermal•

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generation plant and diagnose and foresee faults.
In a project sponsored by the New Energy and Industrial Development Organization, Toshiba is trialing
the system at the Vales Point power station in New South Wales, Australia. The trial will continue until
March 2022.

OPINION: Why phase-out of coal plants is actually soft on polluters(Toyo Keizai, Sept. 30)•

CONTEXT: This is a Q&A article with Yamaka Kimo, head of the Enerugii Senryaku Kenkyuujo [Energy
Strategy Laboratory], based on his views about the country’s energy policies.

•

According to Yamako, the much-trumpeted phase-out of coal-fired power is not as radical as it sounds.
The big top-line numbers cited for coal plant closures actually include plants that have already been
decommissioned or closed on a temporary basis. This contrasts with the decision in Germany and the
U.K. to shut down all coal-fired power stations.

•

The government aims to reduce electricity generated from burning coal, currently at 32%, to 26% by2030. While some think-tanks and analysts believe the 26% figure could be lowered even further, this isan unknown quantity. The government may be unable to achieve further reductions in this time frame.

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•While the government’s policy calls for over 20% of power from nuclear by 2030, many say Japan’s
nuclear output could fall significantly, even to just 5% of total consumption. This means the government
will be forced to increase supply from renewables sources to meet emissions targets.

•

METI recently said it will create a “capacity market” for the trading of power generation. Unlike thecapacity markets that operate in the U.S. and elsewhere, the Japanese model does not mandate that thecapacity bought on this market has to supply the wholesale electricity market. Japan’s capacity market isactually seen as a lifesaver for coal-fired stations, because it guarantees that they will be able to not only
cover their overheads, but also turn a profit.

•

SIDE DEVELOPMENT:
Coal-fired power stations scramble to improve efficiency(Nikkei, Oct. 2)oSome 114 of Japan’s 140 coal-fired power stations, accounting for around half the total
coal capacity, are classified as “subcritical” or “supercritical”. Subcritical and supercriticaltechnologies date from the 1960s and 1980s, respectively. Both are now classified asinefficient by the Japanese government.

oOnly a handful of stations, all of which were constructed in or after the 1990s, areoeclassified as “ultra-super critical”, and therefore efficient.

The government’s decision to phase out inefficient coal power has shocked industry.

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Steelmakers are among the manufacturers lobbying the government for an exemption
from environmental targets.
o

As most coal-fired power stations are already fully depreciated, they are very profitablefor utilities. Coal power also represents a stable source of electricity that is well suited tomsmoothing out the fluctuations in output from renewable sources.

•

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EDITORIAL: Japan needs to revise its stance on nuclear exports(Tokyo Shimbun editorial, Sept. 28)
CONTEXT: This is an editorial article in a left-leaning daily. The paper is national, yet as the namesuggests it is more focused on the Tokyo region.
•

Japan has bountiful wind, sunshine, and geothermal energy, in addition to technical prowess. According
to the International energy agency, Japan’s electricity output from renewable sources is trending up, evenamidst the coronavirus pandemic.

•

Hitachi’s plans to build two 1.3 GW nuclear plants in Wales were put on hold after tougher safety
requirements in the wake of the Fukushima disaster made the project financially unviable.

•

While Hitachi did not formally cancel the project at that time in deference to the Japanese government’s
policy of promoting nuclear infrastructure exports, in recent years the explosion of renewables in the U.K.
has reduced the need for nuclear power, and Hitachi has now pulled the plug on the project.

•

With Toshiba having already exited nuclear power abroad and Mitsubishi Heavy Industries considering a
withdrawal from its Turkish reactor project, Japan’s nuclear export program is basically finished. Prime
Minister Suga’s government should delete the word “nuclear” from its infrastructure export policy right
now and replace it with “renewable energy”.

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NEWS: RENEWABLES & OTHERS
Spot Electricity Prices (24h)

16.00

15.00

14.00

13.00

12.00

11.00

10.00

Spot Electricity Prices (2020)
JEPX Spot System Power Price 24hr (Jpy/kWh)JEPX Spot System Power Price DT (Jpy/kWh)JEPX Spot System Power Price PT (Jpy/kWh)

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017

2019

2020

5yrs avg

2018

e

2016

Ja
n20
Fe
b2
M 0
ar
-2
0
Ap
r-2
M 0
ay
-2
0
Ju
n20
Ju
l-2
0
Au
g20
Se
p20
Oc
t-2
No 0
v20
De
c20

2015

1.00

•

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Japan targets development of commercial hydrogen-power technology by 2040
(Kankyo Business, Sept. 30)
State-run entity NEDO (New Energy and Industrial Technology Development Organization) said it willdevelop a highly efficient, zero-emission system to generate electricity from hydrogen, with a view tocommercialization as early as 2040.

The closed-cycle system will burn hydrogen at 1,400°C to achieve efficiencies of up to 68%.

•

CONTEXT: In 2018, Japan turned on the world’s first heat and power hydrogen-fired facility in an urbanm•area with the launch of a test project in the city of Kobe. The plant used 100% hydrogen fuel. Meanwhile,Sa

major engineering firm Mitsubishi Hitachi Power Systems has developed a generation plant that can
flexibly use hydrogen and natural gas together. The major challenge here is cost of electricity.
•

SIDE DEVELOPMENT:

Saudi Arabia Sends Blue Ammonia to Japan in World- First Shipment(Various, Sept. 29)o

CONTEXT: Blue ammonia is a feedstock for hydrogen created from natural gas. This

process is labelled as “blue hydrogen” to note that emissions from burning gas in the
manufacture of hydrogen are captured and stored, or reused. Hydrogen made fromburning gas without the carbon capture element is called grey hydrogen.

oThe shipment is part of a pilot study conducted by the Institute of Energy Economics
Japan and Saudi Aramco in partnership with Saudi Basic Industries Corp. The feedstock
sent to Japan will be used for power generation.

o

The pilot project aims to show how hydrocarbons can be converted to power without
triggering the release of carbon dioxide emissions.

o

The first shipment carries 40 tons of blue ammonia.

• TAKEAWAY: Saudi supply is not the only one aiming for the Japanese market. Brunei, Australia and Russia are among
the countries that have already sent or aim to supply Japan with some form of hydrogen. Of issue going forward willbe the energy source used in the manufacture of the hydrogen. However, this may be more of an issue for the
suppliers than Japan.

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Bidders in offshore wind farm tender protest low tariff advice(Diamond Online, Sept. 28)•

CONTEXT: As reported in the previous edition of the Japan NRG Weekly, on Sept. 15, a key government
panel turned in its offshore wind pricing recommendations to METI and the Agency for Natural Resources
and Energy. One of the main points was advice to set a ceiling for offshore wind feed-in tariffs at ¥29 per
kilowatt hour.

•

The price ceiling was a far cry from the ¥36 various offshore wind operators were expecting. A wind lobby
group petitioned the government to reconsider, but the bureaucrats stood fast in the face of criticism.

•

The ceiling rate was made lower than industry expectations partly because METI has already committed
to ¥3.8 trillion in FIT payments for renewable energy projects. The ministry is now trying to conserve
costs.

•

Ironically, some latecomers to the bidding for offshore wind projects were trying to push for a lower rate
than the ¥36 proposal. These parties saw the price as being too favorable to TEPCO and Obayashi.
However, even these latecomers are now not sure they can turn a profit.

• TAKEAWAY: Many of these kinds of stories in Japanese media are part of a lobbying campaign on both sides. The
tariffs are still in a negotiation period and both the government and various business players are trying to scare otherseinto giving in. Operators want higher FIT to make their projects more profitable. The government doesn’t want to be
seen as a pushover and create the problems that the solar market attracted after it unveiled the most lucrative FIT inplthe world. A final decision from METIC is due before April 2021. It is likely to reflect closely the recent advisory panel
recommendation of a ¥29/kWh ceiling. It is also likely that industry players will find a way to make it work.

•mJapanese secondary market for solar-generated electricity to reach 1.2 GW in 2021/22(Mega Solar Business, Sept. 19)
The Yano Research Institute is predicting that the Japanese secondary market for solar generatedSaelectricity, which was estimated to be 730 MW in 2019/20, will reach 1.2 GW during the next financialyear.
•

In its report, the Institute characterizes the secondary market for solar farms as a sellers’ market, and saysongoing demand is expected from infrastructure investment funds and individual investors.

•

CONTEXT: Japan has become the world’s third-largest market in terms of solar capacity within less than adecade. The secondary market allows both electricity and non-electricity companies to operate
renewable energy assets without taking on the initial development risks.

Sumitomo Corporation plans wind farm off U.K. coast(Nikkei, Sept. 29)•

Sumitomo Corporation said it had joined a project to establish a wind farm off the U.K. coast, which aims
to start feeding power to the grid in 2030.

•

Sumitomo says it has joined a consortium of European companies that includes Germany’s RWE
Renewables and Siemens. The consortium has obtained the necessary leases in the North Sea.

•

The farm will generate 350 MW. Sumitomo holds a 12.5% stake in the project.

• TAKEAWAY: With so many potential new projects available in offshore wind in Japan, why does Sumitomo invest in
the U.K. market? Clearly, in the U.K. there is more regulatory clarity, a more organized offshore industry, and the
profit potential is easier to grasp. However, Sumitomo’s investment is probably in part a learning exercise that canhelp the company reinvest the know-how into the Japanese market at a later date.

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Denyo and Toyota to develop fuel-cell powered commercial vehicle(Nikkei, Sept. 17)•

Generator manufacturer Denyo is collaborating with Toyota to develop a fuel-cell powered vehicle thatruns on electricity generated from hydrogen gas.

•

The manufacturers believe that commercial vehicles need to be converted to run on fuel cells in order toreduce carbon emissions and prevent atmospheric pollution.

•

The system will be trialed on a Dyna truck, using the fuel cell system from the Toyota Mirai.

• TAKEAWAY: California has recently announced a complete ban on gasoline engine vehicle sales on its territory by2035. The zero-emissions plan is due to hit Japanese carmakers very hard since few have a strong track record inelectric cars and most do not even have an EV available in the U.S. market. Japan’s top industry player, Toyota
Motor, recently said it would reach its EV sales target five years earlier than initially planned. However, Japanese
automakers do not necessarily see “zero-emissions” as only meaning EVs. There has been a strong push to develop
fuel-cell vehicles in Japan, as some even experiment with novel solutions such as burning aluminum in cells. The mostrecent developments center on hydrogen. Toyota’s green auto sales targets also include its projections for hydrogenfuel-cell cars. Still, Toyota and its domestic peers will need to move fast to popularize fuel cells before the trend fore

EVs overtakes the auto market.

•

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Kyushu Electric takes delivery of biomass fuel transport ship from Erex
(Erex press release, Sept. 30)

Erex has delivered the Ibuki, a 2,300 metric ton cargo ship, which will be used to transport biomass•mpellets to Kyushu Electric’s Buzen power station.

At 3,200 cubic meters, the under-deck area is 30% larger than usual to allow the lightweight pellets to beSatransported efficiently.

Japan has potential to combine farms and solar plants. Why has it not worked?
(Smart Japan, Sept. 28)•

Since its inception, agricultural solar sharing, in which horticulturalists collaborate with a solar farmoperator to erect solar panels on cultivated land, has faced issues with obtaining finance.

•

While banks are relatively relaxed about lending to operations in which the same entity both cultivatesthe land and owns the solar panels, when the two sides of the operation are run by different entities, it isa different story.

•

It costs around ¥15 million to install solar panels above a 2,000 m² rice paddy. When you consider that, in
2015, only 29,000 farms achieved an annual turnover of ¥10 million or more, and a mere 3,500 farms
made at least ¥50 million, you can see how difficult it is for farmers to raise these levels of capital.

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ANALYSISMAYUMI WATANABE,RESEARCHER,YURI INVEST RESEARCH

Japan’s Oil Refinery Firms Prepare for Energy Transition
Despite Sector Currently Enjoying World-Beating Profits
It’s a strange time for Japanese oil refiners to accept that the journey is over.

Japan’s gasoline and diesel consumption are at 95% of pre-Covid levels. The
refinery run rates have finally bucked a six-month declining trend. And margins
are the envy of all Asia, if not the whole world.

pleAnd yet, the industry knows that this is the end of the line. As another Japanese
oil refinery stops operating this month, industry watchers estimate that a fifth ofthe country’s entire crude processing capacity, or some 700,000 barrels per day(bpd) of throughput, must be idled in the near to mid-term. This translates into
at least three mid-sized refineries from Japan’s 22 units.

m

The refineries will need to close or transform into an entirely different facility.
For the record, conversions have generally not fared well in Japan. Last year,
ENEOS’s Muroran refinery, given a new lease of life in 2014 as Japan’s largest
paraxylene facility, stopped production. It could not survive competition andwas recast again as a storage terminal.

Sa

The issue of what to do with excess oil refining capacity during a period ofenergy transformation away from petroleum is not limited to Japan. The onsetof the Covid pandemic has accelerated the global shift away from gasoline intransport, while also vastly undercutting demand in the current no-travel, workat-home era.
U.S. inventories of distillate (diesel, jet fuel, gasoil and heating oil) are at thehighest level since almost the early 1980s. In Europe, margins for refining crude
into gasoil are down to USD 3/barrel, from USD 16 at the start of the year,
according to Reuters data. That’s probably not enough to cover costs, Reuters
analyst John Kemp notes.
Global oil majors have one after another announced plans to idle or convert
crude refining facilities. In late September, Total pledged more than 500 million
euros to convert its Grandpuits, France, refinery into a zero-crude platform forbiofuels and bioplastics as soon as next year. Marathon, the top U.S. oil refiner,
said last week it will cut 12% of its workforce due to the slump in fuelconsumption since COVID hit.
The “nice” problem for Japan’s oil refiners is that their current situation is notthat bad, in comparison. If anything, this year’s pandemic-induced demand
drop had little impact on the refining margins of the three dominant industry
players: Idemitsu Kosan, ENEOS, and Cosmo Energy. Their margins remained

12
CONTACT US: nrgnews@yuri-invest-research.com

high, quickly recovering to above ¥10/liter, and oscillating around ¥15 since.
That’s five or more times higher than levels in Europe. As a result, Japan’s three
oil refining firms have forecast sales declines of a quarter to a third during thisCovid-afflicted financial year ending March 2021. Jefferies brokerage has kept
both Idemitsu and ENEOS as a Buy, and Cosmo a Hold in its stock
recommendations.

WHICH REFINER BLINKS FIRST?
Japanese oil refinery run rates edged up to 59.6% in July 2020 from 59% inJune, the first rise in six-months, according to Ministry of Economy, Trade andIndustry (METI) data. Ministry officials told Japan NRG Weekly that thisprobably signaled that the demand drop post-Covid has bottomed out.

It’s unlikely that refinery run rates will quickly return to their 80-90% levels, but
it feels that the worst may be over. For now.

pleThat said, it’s clear that further refinery closures in Japan can and should
happen, and new ENEOS President Ota Katsuyuki only confirmed the plans inrecent media interviews.

m

In fact, the first refinery closure is already cued up. ENEOS, formerly known as
JXTG Holdings and JXTG Nippon Oil & Energy Corp., said in July 2019 that it
will cease primary refining operations at its Osaka facility and repurpose it as anasphalt-fueled electric power station. Due to new refineries starting up in Asia,
the Osaka plant, operated as a JV with Petro China, was no longer finding
enough demand.

Sa

This month the Osaka oil refinery will retire, leaving Japan with around 3.4
million bpd of processing capacity, down from 5.6 million bpd in the 1980s.
Back then, Japan provided almost one in ten of the world’s petroleum
products.

Utilization Rates of Japanese Oil Refineries (Orange) and Total Capacity (Blue, in 000s of bpd)

Source: Petroleum Association of Japan 2019 report, METI

13
CONTACT US: nrgnews@yuri-invest-research.com

With the need to close a further three or so mid-sized oil refineries, thequestion is which ones come next.
With scale affecting operational economics, one would expect the dial to fall on
the smallest facilities. However, this has not been the case so far in Japan.
Closures are more likely to be driven by regional supply competition.
For example, the 115,000 bpd Osaka facility is Japan’s fourth smallest, yet it
operated in one of the most oversupplied hubs of the country. Tokyo is anotheroverly concentrated region, especially the recent ENEOS merger with smaller
rival TonenGeneral. At present, ENEOS has four facilities serving a post-Covid
Tokyo metropolis, where gasoline and truck fuel demand plummeted 20% in
the aftermath of the pandemic, according to the Petroleum Association ofJapan data.

e

The three refineries below the Osaka one in terms of output capacity are the70,000 bpd Keihin refinery, the 86,000 bpd Yokkaichi refinery, and the 100,000
bpd Sakai refinery.

mpl

The last two belong to Cosmo Energy. The smallest of the three Japan oil
refining majors, it has fared better than domestic rivals during this year. While
Idemitsu was still processing its merger with Showa Shell and ENEOS wasdoing the same after taking over the TonenGeneral business, and thus
doubling its Tokyo-area capacity, Cosmo only had to focus on cutting facility
operating costs. It did not need to deal with post-merger redundant capacity.

Sa

Cosmo has also been smart in forging alliances with its larger rivals, such asbuilding a pipeline in China that it shares with ENEOS. Cosmo and Idemitsu
have an alliance based on an understanding for production sharing in the
Yokkaichi area, another very busy refining hub where Cosmo and Idemitsu haveneighboring facilities.
As a result of its smart maneuvers, Cosmo achieved a run rate of 71.9% during
the April to June period. ENEOS’ 11 facilities averaged 68%; Idemitsu had
70%.

PLANNING FOR THE NEXT STEP
According to ENEOS, all Japanese refineries face one of two scenarios: scale
down of production, or closure and conversion into a petrochemical facility,hydrogen terminals, or power plant.

The costs of conversion will run into hundreds of millions, if not billions ofdollars. That alone will not guarantee a happy rebirth, as ENEOS’s experience
with the Muroran refinery showed. Before Covid, a major global campaign was
to cut the use of plastics and this year Japan has mandated charges on plasticbags handed out at shops.
To be sure, the money all three Japanese refinery companies are making today
is still considerable. In terms of securing future income in new business areas, it
may be those who first brave the jump will seize the advantage.

14
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ANALYSISJOHN VAROLI,DIRECTOR, NORTH AMERICAYURI INVEST RESEARCH

Hit Hard by the Pandemic, U.S. Offers Bargain LNG Deals
That Japan Could Use to Rebalance Its Import Portfolio
Earlier this year Japan's buyers felt they got a raw deal on long-term U.S. LNG
contracts, but now on the threshold of winter there’s the best opportunity inyears to lock in more U.S. supply on the cheap. U.S. producers are ready toaccept steep discounts, industry insiders say, and Tokyo Gas' cut-priceacquisition of a U.S. gas project earlier this month showed yet another way how
Japanese firms could exploit the situation.

ple

A pandemic-induced economic downturn and milder temperatures have hurt
Japan's LNG demand this year. Still, the nation is likely to remain the premium
importer for the near term. And with a reported 7 million metric tons of LNG
import contracts due to expire by December 2021 – equivalent to one-tenth ofJapan’s annual imports – Japanese buyers could leverage their negotiating
position to rethink supply sources.

m

Now's a perfect storm for Japanese bargain-hunting, said Rudolf Huber,president at LNG Europe - Institute for Methane Fuels in Austria. “The U.S.
currently doesn’t really make money out of LNG exports, and now is a goodtime for Japanese buyers to get advantageous long-term deals with U.S.
producers,” said Huber.

Sa“[U.S. producers] are willing to give as much as possible in order to get theirproject sanctioned.”
The current U.S. administration is making a major push to expand LNG exports.
For example, in mid-July it authorized export from a proposed $10 billion LNG
terminal and pipeline project in Jordan Cove, Oregon. This is despite many
doubting the economic viability of the complex. It seems that Jordan Cove is
yet another example of LNG being used as “freedom gas” to bolster theenergy security of allies, including Japan, and to compete with new sources ofthe fuel from nations like Russia.
“Japan continues to benefit from the abundance of U.S. LNG supply in the
global market, which has brought down spot prices to historic lows,” said Ruth
Liao, LNG editor of the Americas for Independent Commodity Intelligence
Services (ICIS).
“This has been a challenge for the long-term offtakers, which had to cancel
cargoes this summer as a result of uneconomic market conditions, but higher
demand and spot prices should be supportive of more LNG to Asia.”

15
CONTACT US: nrgnews@yuri-invest-research.com

Source: EIAe“Cargo cancellations expected in October are at the lowest level since thespring. Meanwhile, Asian spot LNG has broken through USD5/mmbtu on
expectations of more buying ahead of the winter season.

mpl

CHINA LNG DEMAND GROWTH TO HELP OR HURT JAPAN?
In 2019, Japan was the world’s largest LNG importer, receiving 105 billion
cubic meters (about 77.2 million tons), or 21.7 percent of global LNG imports.
China was a distant second. The top five LNG exporters in 2019 were Qatar,
Australia, the U.S., Russia and Malaysia.

Sa

China, however, remains the elephant in the room. The Trump administration
has singled out China as America’s arch nemesis, but it’s also the fastest
growing LNG market. One of the few long-term contracts signed this year wasfor a 15-year supply of 500,000 tons per annum to China’s Shenenergy Group.,with U.K.’s Centrica Plc. the provider.
This year alone, China’s LNG imports are expected to grow 10% to new highs
as its economy recovers from the pandemic.
In contrast, Japan’s long-term demand is in question due to depopulation anda changing energy mix. At China’s current pace, it will overtake Japan as the
top global importer within two years.
So, will Washington compromise geopolitical strategy to score a betterbusiness deal?
Probably not. Even aside from China’s recent national commitment to a zerocarbon target in 2060, the world’s most popular nation is a tricky customer for
most sellers.
Geopolitical tensions could spill over into sanctions. It would not be the firsttime the U.S. had blocked energy sales to force an issue.
What’s more, Huber believes China could easily switch its current interest in
LNG to more coal in the face of economic difficulties. Since 2007, the country

16
CONTACT US: nrgnews@yuri-invest-research.com

brought online around 40 GW to 80 GW in new coal capacity per year. It’s hard
to imagine such vast investments would be left idle any time soon. In fact,
Chinese industry insiders told Bloomberg last week they expect it will bebusiness as usual for coal firms in the country for many more years to come.
“Just let China's economy take another hit, just let the conflict with the U.S.
deepen and China won't touch U.S. LNG anymore,” Huber said. “Japan has nosuch growth and is hard to deal with, but it's also a safe bet. China has burnt us
many times so far.”This leaves Japan as a “premium buyer,” Huber said.
With few natural resources, no pipeline connections to other countries, and oneof the world’s highest renewable energy bills, Japan is also seen as a safe bet
to long-term LNG purchases. What’s more, Japanese utilities traditionally pay
more to lock in volumes.

ple

NEW STRATEGIC AIMS FOR JAPAN BUYERSThe U.S. only started mass exports of LNG in 2016, although Japan had one
legacy contract with U.S. in the 1960s (the former Kenai LNG Plant in Alaska).

Sam

At present, Japan’s biggest LNG offtake and investment deals in the U.S.
include the JERA and Osaka Gas involvement at Freeport LNG in Texas (15million tons per annum - mtpa); Mitsui and Mitsubishi Corp participation in
Cameron LNG, Louisiana (13.5 mtpa); and Tokyo Gas and Sumitomo Corp
presence at Cove Point LNG in Lusby, Maryland, close to Washington D.C.

Source: ICISThis summer, Tokyo Gas showed that the list of Japanese investments in U.S.
gas may yet grow for reasons other than imports of the fuel to Japan. The gas
company raised its stake in U.S.-based shale gas operator Castleton Resources
to 70% and spent $188 million to acquire a gas field in Louisiana on the Gulf of
Mexico.
The deal, which was said to occur at a 20% discount, was meant to increase
Tokyo Gas’ exposure to American gas demand as a hedge against future
weakening in the domestic outlook.

17
CONTACT US: nrgnews@yuri-invest-research.com

With Japanese companies investing in new LNG locations such as
Mozambique, their domestic needs for more U.S. supply is low.
However, in addition to the near-term expiry of contracts with high-costsuppliers like Qatar, Japanese firms have become more aggressive in pursuing
LNG infrastructure and supply deals in southeast Asia.

Sa

m

pl

e

That signals that the geopolitical relationship with the U.S., and role ofAmerican companies as partners in LNG infrastructure, could pave the way formore strategic U.S. investments by Japanese firms. New U.S. offtakeagreements too may no longer depend only on whether the fuel needs to beburned in Japan.
.

18
CONTACT US: nrgnews@yuri-invest-research.com

INDUSTRY EVENTSThe 9th LNG Producer-Consumer Conference
Hosted on Oct. 12, online, by METI
https://www.lng-conference.org/english/

Japan’s Ministry of Economy Trade & Industry will host its 9th LNG ProducerConsumer Conference for the first time in a virtual format on Oct. 12th.
The conference will be held against the backdrop of significant difficulties in theoil and gas sector, caused mainly by the pandemic-induced disruption to oil
consumption and the accelerating push for decarbonization.
No new FIDs for natural gas projects have been approved so far in 2020.

ple

Oil prices are currently trading below $40/barrel with 70% of natural gas
contracts still oil-indexed. Spot LNG prices in Asia Pacific are also very low at $5
mmbtu, well below the breakeven levels required by LNG suppliers to generate
returns on infrastructure investments made over the last several years. US natural
gas prices are around $2.40 mmbtu.

mHowever, despite the pandemic, global LNG volumes are still expected toincrease by around two percent year-on-year in 2020 to over 350 million tons
with overall global LNG trade valued at between $150 to $200 billion in 2020.

Sa

Increases in LNG demand are mainly driven by Asia. Japan’s LNG imports in 2019were 77 million tons and cost $44 billion. JERA is now Japan’s largest LNG
importer. Global LNG volumes are still expected to double over the next 20 years
as the energy transition takes hold and natural gas replaces coal for electricity
production.
The Japanese government is expected to use this year’s LNG conference to push
for further expansion and construction of LNG facilities across Asia-Pacific tosupplement domestic natural gas production. To this end, Japan has committed
to $20 billion of financing and to the training of up to 1,000 staff, mainly in
ASEAN countries. Energy ministers from Cambodia and Myanmar will be among
those making an address at this year’s conference.
There are currently 21 LNG exporting countries and 42 LNG importing countries;
the industry numbers 427 liquefaction facilities and 920 regasification plants.
Australia, Qatar, and the U.S. continue to dominate the export market.
Angola, Russia and Papua New Guinea are recent new suppliers deliveringsignificant volumes to the global LNG market. JOGMEC is financing LNG
facilities in Russia, including at Yamal and Arctic LNG 2, and has provided over
$7 billion of credit for LNG development globally. Japan has also invited energy
ministers from Nigeria and Tanzania to address the Oct. 12th LNG event.

Three of Japan’s trading companies, Marubeni, Mitsui and Mitsubishi – all large
LNG investors and intermediaries, will also address the conference. Mitsui is

19
CONTACT US: nrgnews@yuri-invest-research.com

expected to use it as a platform to announce that the company will becomecarbon-neutral by 2050.
Mitsui is in 11 LNG projects in nine countries with a recent major investment inMozambique LNG. Warren Buffett recently announced a $6 billion investment inJapan’s trading companies, thought to be driven mainly by their global energy
businesses.

Sa

m

pl

e

Japan’s role in shaping the global LNG industry will again be on display on Oct.
12. Japan NRG’s team will be participating in it for the ninth consecutive timesince the conference’s inception in 2012.

20
CONTACT US: nrgnews@yuri-invest-research.com

STOCK MARKET PERFORMANCE

As of close on October 2, 2020

TickerMarket Cap

1W (%)MTD (%)YTD (%)

billions of yen
EnergyINPEX CORP

1605 JP

798.72-4.94-51.07-15.30JAPAN PETROLEUM EXPL.

1662 JP

94.42

-0.44

-42.47-7.53

ENEOS HOLDINGS INC

5020 JP

1207.80-2.98-20.45-6.20

IDEMITSU KOSAN CO LTD

5019 JP

663.94-2.95-22.07-0.76

COSMO ENERGY HOLD.

5021 JP126.56-3.86-37.49-6.80

JGC HOLDINGS CORP

1963 JP270.62-5.86-39.69-7.53

CHIYODA CORP

6366 JP

63.26

-4.71

-14.13-10.33

MITSUBISHI CORP

8058 JP3719.51

-3.23

-8.91

-1.86

MITSUI & CO LTD

8031 JP

3079.63

-4.02

-3.47

-6.11

pl

TOKYO ELECTRIC POWER

9501 JP

453.18-6.00-39.61-9.90

CHUBU ELECTRIC POWER

9502 JP

947.50-4.97-16.04-2.98

KANSAI ELECTRIC POWER

9503 JP

939.67-4.01-17.27-3.01

m

UtilitieseIndustrials

9508 JP

448.10

-2.22

3.53

0.85

9513 JP

286.66-5.25-38.54-0.54

9531 JP1042.60

-4.79

-9.02

1.77

9532 JP

829.61

-6.59

-2.49

-2.14

TOHO GAS CO

9533 JP

534.37

-7.19

14.64

8.91

SAIBU GAS CO

9536 JP

97.02

-7.22

5.27

7.73

SHIZUOKA GAS CO

9543 JP

69.26

-6.29

-3.58

4.00

KYUSHU ELECTRIC POWER
J-POWERTOKYO GAS COSa

OSAKA GAS CO

21
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DATA
Crude Imports Vs Processed Crude

Japan Oil Price
Custom Clearance Price: JCC (Jpy/KL)
Custom Clearance Price: JCC (Usd/bbl)

60,00040,00020,0004.50

100.00

4.00

80.00

3.50

60.00

3.00

40.00

2.50

20.00

2.00

Jan-14Jul-14Jan-15
Jul-15Jan-16
Jul-16
Jan-17
Jul-17Jan-18
Jul-18Jan-19Jul-19Jan-20Jul-200

120.00Total Imported Crude Oil (Mbpd)
Total Cruded Oil Processed (Mbpd)

Jan-14Apr-14Jul-14Oct-14Jan-15
Apr-15
Jul-15Oct-15Jan-16
Apr-16
Jul-16Oct-16
Jan-17
Apr-17
Jul-17Oct-17Jan-18Apr-18
Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20
Apr-20Jul-20
Oct-2080,000Monthly Crude Processed (Mbpd)

Monthly Oil Import Volume (Mbpd)
4.00

e

4.00
3.50

3.50

pl

3.00

3.00

2.50

2.50

1.50

m

2.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1.50
1.00

2015
2019

2016
2020

2017
5yrs avg

Sa

2014
2018

2.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014
2018

2015
2019

2016
2020

2017
5yrs avg

Domestic Fuel Sales

0.50
0.00

Jan-14Apr-14Jul-14Oct-14Jan-15
Apr-15
Jul-15Oct-15Jan-16
Apr-16
Jul-16Oct-16
Jan-17
Apr-17
Jul-17Oct-17Jan-18Apr-18
Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20
Apr-20Jul-20
Oct-20(0.50)

Mogas (Mbpd)
Middle Dist.* (Mbpd)
Net Export/Import (+: Net Imp, -: Net Exp)

Naptha (Mbpd)
Fuel Oil** (bbl/Mbpd)

SOURCES: the Ministry of Economy, Trade, and Industry (METI), Ministry of Finance, and the Petroleum Association of Japan

22
CONTACT US: nrgnews@yuri-invest-research.com

Japan LNG Price

20.00

100,000

15.00

80,00060,00010.00

40,00020,000LNG Imports: Japan Total vs Gas Utilities Only
9.00

3.00

7.00

2.50

5.00

2.00

5.00

1.50

0.00

1.00

Jul-20Jul-19Jan-20Jul-18Jan-19Jul-17Jan-18

Jul-16

Jan-17Jan-16

Jul-15

Jul-14Jan-15Jan-14

0

3.50

3.00
1.00
Jan-14Apr-14Jul-14Oct-14Jan-15
Apr-15
Jul-15Oct-15Jan-16
Apr-16
Jul-16Oct-16
Jan-17
Apr-17
Jul-17Oct-17Jan-18Apr-18
Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20
Apr-20Jul-20
Oct-20120,000

Total Imported LNG by Gas Companies (M t)
Total Imported LNG - Japan (M t)Custom Clearance Price: JLC (Jpy/t)
Custom Clearance Price: JLC (Usd/MMBtu)

Total LNG Imports (M t)

LNG Imports by Gas Firms Only (M t)

3.40

e

9.00
8.00

2.90

pl

7.00

2.40

6.00

1.90

m

5.00
4.00

Sa

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014
2015
2016
2017
2018
2019
2020
5yrs avg

City Gas Sales – Total (M m3)

4,500.00
4,000.00

1.40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014
2018

2,500.00

2016
2020

2017
5yrs avg

City Gas Sales by Sector (M m3)

2,000.00

3,500.00

1,500.00

3,000.00

1,000.00

2,500.00

2015
2019

500.00Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014
2018

2015
2019

2016
2020

2017
5yrs avg

SOURCES: the Ministry of Economy, Trade, and Industry (METI),
Ministry of Finance

0.00
Jan-14Apr-14Jul-14Oct-14Jan-15
Apr-15
Jul-15Oct-15Jan-16
Apr-16
Jul-16Oct-16
Jan-17
Apr-17
Jul-17Oct-17Jan-18Apr-18
Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20
Apr-20Jul-20
Oct-202,000.00

City Gas Sales; Residential (M m3)
City Gas Sales; Commercial (M m3)
City Gas Sales; Industrial (M m3)

23
CONTACT US: nrgnews@yuri-invest-research.com

Current Vs Historical Demand (GWh)

Japan Total Power Demand (GWh)

90,00090,00085,00080,00080,00075,00075,00070,00070,00065,00065,00060,00060,000Jan-14Apr-14Jul-14Oct-14Jan-15
Apr-15
Jul-15Oct-15Jan-16
Apr-16
Jul-16Oct-16
Jan-17
Apr-17
Jul-17Oct-17Jan-18Apr-18
Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20
Apr-20Jul-20
Oct-2085,000Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014
2018

Day-Ahead Spot Electricity Prices
2015

2016

2017

2018

2019

2020

5yrs avg

JEPX Spot System Power Price 24hr (Jpy/kWh)JEPX Spot System Power Price DT (Jpy/kWh)JEPX Spot System Power Price PT (Jpy/kWh)

20.00

17.00

2017
5yrs avg

Day-Ahead Vs Day Time Vs Peak Time
25.00

2014

2016
2020

e

22.00

2015
2019

pl

15.00

12.00

10.00
5.00

Sa

LNG Imports by Electricity Utilities
6.50
6.00
5.50

Jul-20Jan-20Jul-19Jan-19Jul-18

Jul-17Jan-18Jan-17

Jul-16

Jan-16

Jul-15Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Jan-150.00
Jul-142.00

Jan-14m

7.00

LNG Stockpiles of Electricity Utilities

3.20

2.70

5.00
2.20

4.50
4.00

1.70

3.50
3.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014
2018

2015
2019

2016
2020

2017
5yrs avg

1.20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014
2018

2015
2019

2016
2020

2017
5yrs avg

SOURCES: the Ministry of Economy, Trade, and Industry (METI), and the Japan Electric Power Exchange

24
CONTACT US: nrgnews@yuri-invest-research.com

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e

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pl

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m

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Sa

K.K. Yuri Group: Oonoya Building 8F, Yotsuya 1-18, Shinjuku-ku, Tokyo, Japan, 160-0004.

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