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Japan crisis may push LNG prices higher
New Delhi, 21
The aggravating Japanese nuclear crisis is likely to make
procurement of LNG pricier for Indian players, as Japan is
expected to rely more on gas and coal to meet its energy needs
in the short term, says a Crisil report.
Rating agency Crisil today said that Asian spot LNG prices are
expected to go up in the short term due to power generation
disruptions in Japan.
"Spot LNG accounts for around 8 per cent of the total gas
demand in India and its consumers include city gas
distribution, captive power plants and small industrial units.
"The gas acquisition costs of these entities are likely to
increase, thus affecting the demand," Crisil said in the
report titled Japanese Earthquake and Tsunami:Impact Analysis.
A devastating earthquake followed by massive tsunami last
Friday took a severe toll on people, properties and some
nuclear plants in Japan.
As per the report, the plants that have been shut down
subsequently represent an estimated 25 per cent of Japan's
nuclear power capacity.
"The shortfall in demand will have to be met by coal and
LNG-based capacities, thus resulting in higher imports of
coal, LNG and petroleum products (by Japan)," it said.
Crisil noted that it expects about 60 per cent of the shutdown
power capacities to be substituted with coal-based capacities,
while LNG-based capacities will make up for the rest.
"International LNG prices have been on the rise following the
natural calamity in Japan. Prices have jumped from around USD
9 per mmBtu to around USD 11-12 per mmBtu due to increased
demand from the country," the report said.