Tokyo Electric May Use Less LNG as Oil, Coal Retreat

By Dinakar Sethuraman

Aug. 6 (Bloomberg) -- Tokyo Electric Power Co., the world's second-biggest, non-state, liquefied natural gas buyer, may use less of the cleaner-burning fuel in the year ending March 2009 as crude oil and coal prices decline from records.

Asia's biggest utility may use about 19.2 million metric tons of LNG compared with 19.9 million tons a year earlier, company spokesman Hiro Hasegawa said today by telephone. Consumption rose about 18 percent a year earlier, boosted by imports of spot cargoes.

The company's power plants burnt 7.2 percent less LNG in June, using more oil and coal, according to data on its Web site. Benchmark crude oil and coal prices have fallen from records in July as high fuel costs slowed demand.

``LNG imports peaked last year after the nuclear shutdown,'' said Tony Regan, a consultant with U.S. Nexant Ltd. ``They are now using more coal as it is cheaper than LNG.''

Tokyo Electric has started up a new gas-fired generator in Futtsu city that uses less LNG than a conventional one. The utility relied on coal, crude oil and LNG as fuel after shutting the world's biggest nuclear power plant last July.

The company's shares rose as much as 0.65 percent today to 3,090 yen and were trading at 3,050 yen at 2.40 p.m. in Tokyo.

The power producer led a surge in imports of spot cargoes after closing the Kashiwazaki Kariwa nuclear power station on July 16, 2007. The company, which imports about 17 million tons under multiyear contracts, may have bought about 3 million tons on the spot market in the year ended March 2008.

Spot Imports

The utility imported a total of 20.4 million tons in the year ended March 2008, up from 17.47 million tons a year ago, Hasegawa said. It may get at least three spot cargoes in August from suppliers including Nigeria, AISLive on Bloomberg showed.

Japan, the world's biggest LNG buyer, increased spot imports of the fuel from the Atlantic Ocean basin to 584,704 tons in June, an increase of 46 percent from May, to meet summer demand for electricity, according to the Ministry of Finance.

The weekly price index for power-station coal shipped from Newcastle in Australia, a benchmark for Asia, dropped 8.2 percent last week to $160.40 a ton, according to the globalCOAL NEWC index. It reached a record $194.79 in the week ended July 4.

Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11. It was at $118.67 in electronic trade on the New York Mercantile Exchange at 10:36 a.m. Singapore time.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.