Post on 28-Oct-2021
Fossil Fuel Option and
Japan-US Cooperation
SPF-WWC Joint Seminar
31 October, 2012
Tsutomu Toichi
The Institute of Energy Economics, Japan (IEEJ)
2
Higher Uncertainties of Oil & Gas Supply from the Middle East
-Spreading of “Arab Spring” from North Africa to the Middle East
-Qatar has become the world’s top LNG exporter
-Increasing geopolitical risks due to the Iran’s nuclear crisis
Geopolitical Risks in the Middle East
Possibility of military attack to Iran by Israel
Civil war in Syria
Conflict between North and South Sudan
Continuing violence and political instability in Iraq
Iran’s nuclear program and economic sanctions by US and EU
Libya Egypt
Saudi Arabia
Tunisia
Qatar UAE
Strait of Hormuz
3
Japan’s Fossil Fuel Dependence on Middle East
The share of Middle Eastern oil remains high at above 80%.
Middle Eastern LNG supply has significantly increased last year to make up for the lost nuclear power generation.
Japan’s crude oil imports by country
Source: METI; IEEJ
Japan’s LNG imports by country
27%
0%
5%
10%
15%
20%
25%
30%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
'000 tons
Others
Australia
Russia
Indonesia
Malaysia
UAE
Oman
Qatar
Middle East %
86%
0
50
100
150
200
250
300
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
mill
ion K
L
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Others
Indonesia
Russia
Oman
Kuwait
Qatar
Iraq
Iran
UAE
Saudi
Arabia
Middle
East %
4 4
Japan’s Power Generation by Supply Sources
21.3 21.6 21.2 21.0 21.5 22.3
23.0 23.6 24.4 24.232.3 35.2
12.2 10.5 6.6 7.3
13.617.222.5 23.1 26.0 25.5
9.5
11.1 11.0 11.1 11.4 11.9 12.6
1.8
11.211.210.710.810.39.8
0%
20%
40%
60%
80%
100%
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
石炭
天然ガス
石油等
水力・再エネ
原子力
32% 33% 37% 36% 21% 13%準国産
電力シ ェ ア
自家発
( )内は太陽光・風力(0.2) (0.2) (0.3) (0.5)(0.3) (0.4)
68% 67% 63% 64% 79% 87%化石燃料シェ ア
Source: IEEJ, July 2012
Coal
Natural Gas
Oil
Renewables
Nuclear
Self-Generation
Fossil Fuel
Domestic Supply
5
Historical Trend of Japan’s LNG Imports by Country
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
1969 75 80 85 90 95 2000 05 11
×1000 Ton
その他
ロシア
赤道ギニア
ナイジェリア
オマーン
UAE
ブルネイ
カタール
オーストラリア
マレーシア
インドネシア
米国
83,183
54,157
36,077
16,965
182
70,562
Others
Russia
Guinea
Nigeria
Oman
UAE
Brunei
Qatar
Australia
Malaysia
Indonesia
US
Note: LNG imports in 2012 is estimated to be about 88 million ton by IEEJ.
fiscal year
6
Natural Gas Prices in Japan, EU and US
0
2
4
6
8
10
12
14
16
18
20
Henry Hub
Japan
Russia-Germany (Border)
Japan LNG
US Henry Hub
Germany
($/MMBtu)
-Japan: LNG imported prices are linked to the Japan crude cocktail
-Germany: Border gas price from Russia is linked to prices of heating oil and heavy fuel
-US: Spot prices at the Henry Hub in the Gulf coast
7 Source: IEEJ
0
50
100
150
200
250
300
350
400
450
500
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
大西洋向け売主自社マーケティング
事業化検討中プロジェクト
SPA・HOA締結済プロジェクト
既存プロジェクト
高需要ケース
低需要ケース
100万トン
LNG Outlook in Asia and Middle East
High Demand
Low Demand
Existing Capacity
Divertible LNG from Atlantic
Planning
Projects with SPA/HOA signed
Million Ton
8
North American LNG Exports to Asia
Export Potential of
over 100 MT/year
Asian market
targeted due to
price difference
Export authorization
as an uncertainty
Sabine
(Cheniere, 18MT)Freeport
(Freeport LNG 11-22MT)
LNG,Corpus Christi
(Cheniere, 14MT)
Kitimat
(Apache/EOG/EnCana, 5-10MT)
Douglas Channel
(BC LNG Export, 2MT)
LNG Canada
(Shell/Mitsubishi/KOGAS/CNPC, 12MT)
Lake Charles
(Southern/BG, 15MT)
Jordan Cove
(Veresen, 9MT)
Cove Point
(Dominion, 8MT)
Cameron
(Sempra, 12MT)
Gulf Coast LNG
(Gulf Coast LNG, 22MT)
Alaska North Slope
(ExxonMobil, ConocoPhillips, BP)
24MT)
E
T
E
Project participated by Japanese companies
9
1. Diversification of supply sources - Traditional suppliers: ASEAN, Australia and Middle East
- North America: New business model for LNG imports
- Russia: LNG and pipeline gas in the long run
- Africa: New projects from East Africa
2. Diversification of fuels for power generation - Coal use with Clean Coal Technologies
- Restart of nuclear plants under the new safety regulation
3. Market reform of the electric power industry
- More competition by unbundling the power system
- Investment in power plants by LNG suppliers of
NOCs/IOCs
Measures for LNG supply security with affordable costs
11
Source: Kensuke Suzuki “Toshiba's Activity in Clean Coal and Carbon Capture Technology for Thermal Power Plants” presented at the APEC Clean Fossil Energy Technical and Policy Seminar, February, 2012
12
Energy Security and Japan-US Cooperation
1. Recent developments in the Middle East causes additional risks to Japan’s energy security. Both countries should prepare how to respond to oil and LNG supply disruption.
2. Post-Fukushima Japan will depend more on gas, at least for the short/medium-term. US DOE approval of LNG export to Japan is very useful for strengthening the natural resource alliance of both countries.
3. Diffusion of Clean Coal Technologies to Asian countries are effective to reduce CO2 emissions as well as to improve energy security in Asia. Two countries could cooperate to introduce the “Bilateral Offset Credit Mechanism”.