Eric Watkins
Oil Diplomacy Editor
The oil and gas industry has already seen changes emerging from the woes that have descended upon Japan, with oil suppliers ready to fill in the gap created by the shutdown of nuclear power plants.
"Japan will have a priority in the months to come as it deals with this disaster and tries to recover," said Saudi Aramco Chief Executive Officer Khalid Al-Falih, who pledged that his firm will accommodate the changing needs of its Japanese customers following the 9.0-magnitude quake and tsunami.
That statement coincided with reports that the world's five largest oil-tanker companies—Mitsui OSK Lines Ltd., Frontline Ltd., Teekay Corp., Nippon Yusen Kaisha, and NITC Co.—will still travel to the ports of Tokyo Bay.
New openings
Still, the series of disasters that hit Japan is already creating new openings into the country's energy mix, especially for suppliers and carriers of LNG.
These opportunities came as the price of uranium oxide, the most commonly traded form of the nuclear fuel, plummeted 27% to $50/lb in the spot market in the days following the earthquake, as investors who had bet on the renaissance of the nuclear power industry pulled out en masse.
As a result, analysts now see Russia as among the best placed global gas powers to profit long term from Japan's energy supply shortfall.
"The question marks raised over the future of nuclear energy also make gas a much surer option…playing to Russia's advantage," said Thierry Bros, senior gas and LNG analyst at Societe Generale.
"So the first one that's benefitting from this is Russia, is Gazprom," said Bros, whose firm estimates that Japan's supply gap could amount to 5 billion cu m in 2011, and a further 2 bcm in 2012.
LNG traffic rising
But others see advantages for LNG, too, especially analysts at Seoul-based KB Investment & Securities, who say that LNG traffic on the seas, which showed 6% average annual growth from 2000-09, is forecast to rise by 7.7%/year by 2015 due to Japan's nuclear woes.
Indeed, analysts say that the Japan quake should drive stronger demand for Australian output with $205.5 billion in proposed LNG export projects in the pipeline that could also prove a massive boost to the tanker market.
That's certainly the view of South Korea's Daewoo Shipbuilding & Marine Engineering, which believes a loss of nuclear capacity in Japan will further boost a nascent recovery in orders for LNG carriers.
"The LNG market has been slowly recovering from virtually zero orders from late 2008 to early 2010…and the nuclear crisis in Japan will obviously boost further growth," said Daewoo Executive Vice-Pres. Hwang Tae-jin.
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