Kansai Electric to drop spot LNG purchases

Japanese utility, Kansai Electric Power signaled a shift to an increased share of nuclear power as it moves away from the use of LNG as fuel. 

The share of nuclear power in Kansai Electric’s production mix before the Fukushima disaster in 2011 was at around 50 percent, and the company has brought back four reactors online out of a total eight that have sprung back into operation in Japan.

The company that has a total of seven nuclear reactors has upped its utilization rate in 2017/2018 to 18 percent, reducing the LNG use by 16.3 percent, down to 7.56 million tons.

Speaking to Reuters, Shingo Shimada, Kansai Electric’s general manager of fuel planning group, said the company will be cutting down on spot and short-term LNG purchases. Currently, these volumes cover around 20 percent of the company’s total power mix.

Shimada added that long-term contracts are also under pressure due to the power liberalization which has made it difficult to project demand.

Overall, Kansai Electric is looking to up the share of nuclear, renewable and hydropower in its production mix to 5o percent, from 25 percent in the year 2017/2018.

In addition, the company is looking to cut the destination clauses from its existing long-term deals, however, the negotiations could take a while. The move is expected to enhance the company’s trading capacity, as it plans on increasing free-on-board (FOB) deals share up to 30 percent.

LNG World News Staff