IEEJ: August 2011

Special Bulletin
A Japanese Perspective on the International Energy Landscape (52)

July 22, 2011

The Two International Energy Seminars in Tokyo and their Implications toNatural Gas
Ken Koyama, PhD
Managing Director, Chief Economist
The Institute of Energy Economics, JapanOn July 19, the Institute of Energy Economics, Japan, sponsored two international energyseminars in Tokyo. In the one seminar, International Energy Agency Executive Director Nobuo
Tanaka made a presentation on the prospects and challenges of the international energy situation.
Another was a joint Japan-Australia energy seminar. Both seminars dealt with a wide range of timely
topics from the perspective of the present energy situation. Below, I would like to give my commentson discussions at the seminars.
In the former seminar, IEA Executive Director Tanaka made a presentation covering a wide
range of important topics including the IEA's recent coordinated release of oil stockpile, theFukushima Daiichi nuclear plant accident's impact on global nuclear power generation and overall
energy supply/demand conditions, details and implications of the golden age scenario for gas, energy
security linked to nuclear power generation and renewable energy, and Japan's energy policy
challenges. Particularly, the analysis of future nuclear power generation and its implications fornatural gas was very interesting, having a bearing on the Japan-Austria joint workshop, which will
be discussed later.
According to the his presentation, IEA expects that nuclear plants’ diffusion may be slower
than earlier expected as the Fukushima nuclear plant accident is likely to bring about an increase in
the number of nuclear reactors for earlier-than-expected decommissioning under tougher safety
regulations, a delay in investment in new nuclear reactors and overall nuclear plant cost hikes.
Although IEA is expected to give a detailed analysis in the newest World Energy Outlook to bereleased in November this year, Mr. Tanaka indicated a scenario where nuclear energy’s share ofglobal electricity generation may decline to 10% in 2035 from the present 14%. His key point wasthat natural gas may play a central role in making up for the decline in nuclear power generation. But
he also indicated that factors supporting the expansion of gas demand include not only slack nuclear
power generation but also supply-side factors such as the existence of abundant unconventional gas
resources and demand-side factors such as substantial natural gas demand growth in China and other1

IEEJ: August 2011

developing countries and the exploration of new gas demand in transportation and other sectors.
Another interesting point for me was that Mr. Tanaka gave an analysis of nuclear energy'sroles in countries with lower energy self-sufficiency ratios, heavy dependence on specific energy
suppliers (including the Middle East and Russia) and nuclear energy's roles based on international
comparison, as a perspective for considering energy security. It was also interesting for me to hearthat whether electric grid networks and other infrastructure spread beyond borders can be a factor
that could have influences on energy choices. This is a useful point for discussions on Japan's futureenergy policy.
The Japan-Australia joint energy seminar featured very timely topics for Japan as a majorenergy consumer/importer and Australia as a major energy resources holder/exporter that hope toenhance and deepen their bilateral relations. Representatives from the Australian government andmajor firms engaged in Australia LNG projects delivered addresses, including Australian Energy
Minister Martin Ferguson and officials from Woodside, Santos and Chevron. From the Japanese side,representatives of Japanese government, Inpex Corp.,Tokyo Gas Co. and myself madespeeches/presentations.
It was significant that representatives from the Australian and Japanese companies indicatedtheir respective specific views and project-based prospects regarding the importance of natural gasor LNG for the two countries, Australian LNG supply estimates, and Japanese (and Asian) LNG
demand estimates, and voiced their mutual confidence, appreciation and expectations as businesspartners. I thought that it was important that the Japanese and Australian energy experts, while
indicating different features and priorities in their reports, shared awareness about the long history ofJapan-Australia energy partnership, expectations on substantial gas supply expansion supported byAustralia's vast gas resources potential, positive efforts to promote investment enabling LNG supply
to be expanded, the potential of LNG demand growth in Japan as a stable, reliable market, andJapan's high eagerness and efforts to secure stable LNG procurement.
Behind the shared awareness may be growing expectations on LNG or natural gas in thewake of the Great East Japan Earthquake. We can understand this point in the same context as for thefuture scenario depicted by IEA chief Tanaka. Given the above, it was very significant that publicand private sector stakeholders in Japan, the world’s largest LNG importer, and Australia, expected
to become the world’s largest LNG exporter around 2020 through its substantial production capacity
expansion, discussed how best to enhance Japan-Australia relations for the two countries’ respective
development.
Reports and discussions at international seminars often provide participants with2

IEEJ: August 2011

opportunities to give their respective opinions. And interestingly, it often happens as well these
opinions shown in the seminar may indicate or form a sense of the contemporary trends and sharedperceptions in the energy market. In this context, the two separate seminars held on the same day
have given me an opportunity to reaffirm key points of the energy problems facing Japan and theworld, and important measures to solve them.
Contact: report@tky.ieej.or.jpThe back issues are available at the following URL.
http://eneken.ieej.or.jp/en/whatsnew/JPOIEL.html

3