AlwaysFree: Japan LNG Sector Likely Unaffected By State Of Emergency

Operations in Japan’s LNG sector are likely to continue, although the government has declared a state of emergency due to the coronavirus pandemic. Power and gas utilities will continue to operate to ensure supply availability despite expected weaker demand. The state of emergency is imposed in seven prefectures; Tokyo, Osaka, Kanagawa, Chiba, Saitama, Hyogo, and Fukuoka. People in those regions are told to stay at home where possible from April 8 to May 8.

Tokyo Gas, Kansai Electric Power, and Osaka Gas have vowed to maintain normal operations of LNG imports, power generation, and city gas production. These companies are expected to be able to continue normal operations, although their workers have a suspected or confirmed COVID-19 infection.

However, the state of emergency is forecast to weigh on demand for electricity and city gas. The decline in gas demand from the commercial and industrial sectors is expected to outweigh the increase in demand from residential customers.

The Institute of Energy Economics Japan (IEEJ) expects that electricity usage in a Japanese city of 10 million people would decline by 25% or 39,300 MWhd due to office closure amid the state of emergency. Meanwhile, gas demand in a city with 7.5 million population is expected to decline by around 2,500 tons/day.

IEEJ previously forecast that Japan’s electricity and city gas consumption would decrease by 0.6% and 0.7%, respectively, if the outbreak ended in May. Japan’s power sector used 47.6 million tons of LNG last year, declining by 7.4% from 2018. LNG use by city gas firms also declined by 2.6% year-on-year to 26.9 million in 2019.

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