Natural gas prices soar!
What will happen to the electricity bill?
October 20, 18:36
The prices of natural gas used as fuel for thermal power plants are skyrocketing all over the world.
In Asia, including Japan, and in Europe.
In early October, the spot price of LNG = liquefied natural gas in Asia was more than 10 times higher than the same period last year.
What exactly is happening?
As I proceeded with the interview, I could see the strategic change of the great powers and the dangerous energy situation in Japan that was shaken by it.
(Reporter, Ministry of Economic Affairs, Kouki Nishizono, Reporter, Osaka Broadcasting Station, Tomokazu Kogi)
LNG price hits record high
This is a graph of LNG = liquefied natural gas trading price = spot price in the Asian region.
On October 6, it reached a record high, more than 10 times the level of the same period last year.
Japan depends on LNG
You may think that natural gas is not very familiar to us, but in fact, many people use it.
Japan imports LNG = liquefied natural gas, which is originally a gas, by cooling it to minus 162 degrees Celsius to make it liquid and carrying it in a small volume.
When it is brought to Japan, it is returned to gas and used as fuel for power plants.
The ratio to the total power generation is about 37% (FY2019).
This is the highest ratio by power source.
Since the price is soaring, I am concerned about the impact on electricity prices.
What is the impact on electricity prices?
I will explain how it works.
About 80% of the LNG imported by domestic electric power companies is long-term contracts.
This long-term contract is based on the crude oil price for three months.
Now that the price of crude oil is rising, the rise in the price has affected the procurement of LNG, leading to an increase in electricity prices.
On the other hand, the spot price for immediate transactions is about 20%.
Since the ratio is low, the direct impact on electricity prices is limited, but if the cold wave continues beyond expectations and the electric power company has to purchase a large amount of LNG at the spot, it will be very costly and the electricity price will be charged. Will also affect.
Last winter, the cold weather caused a shortage of LNG, and the supply and demand of electricity became severe.
As a result, the price of the wholesale market that trades electricity has skyrocketed, and some new electricity has gone bankrupt.
Based on the lessons learned from these bitter experiences, electric power companies explain that they are securing about 1.5 times as much LNG as in the normal season in preparation for this winter.
The Japan Meteorological Agency has announced in a long-range forecast that "strong chills may come in early this winter," so I'm worried that rising LNG prices will affect electricity prices.
Soaring natural gas The existence of China and Russia
So why is the price of natural gas soaring?
The presence of China and Russia has a great influence.
First is the situation in China.
A fuel procurement meeting held on the 6th floor of the Kansai Electric Power Headquarters in early October.
Then, what came up on the agenda was the trend in China.
A person in Singapore who is looking at the fuel procurement market said at an online conference:
"By that will be the Beijing Olympic Games to be held in February next year, expected as LNG demand also because environment shift toward it."
On the other hand, an instruction to executives be wary to oversee the supply and demand of the head office I put it out.
"I think China's every move will have a huge impact on the world as a whole, so please continue to watch here."
China's "Blue Sky Operation" Price Rise
China is now buying large quantities of LNG to drive the environmental shift.
The main power source of China's power plants is coal-fired power.
It accounts for 61% in the 2020 statistics.
On the other hand, natural gas is 3%.
Most of them are procured from domestic production or from Russia and other countries by pipeline, but it is said that they are rapidly shifting from coal-fired power to natural gas-fired power, which emits relatively little carbon dioxide.
Since the country is large, the amount of electricity used is also huge.
Experts analyze that domestic production and pipelines are not enough to cover the increase in LNG procurement.
From January to September, China's imports amounted to more than 58 million tons, surpassing Japan's largest importer, Japan's more than 56 million tons, for the first time.
Since a huge buyer called China has appeared in the LNG market, the price has become a situation where the price fluctuates greatly depending on the trend, and if China sneezes, Japan will catch a cold. It is.
Deputy General Manager Inokai
"It is said to be an operation against the blue sky, but in China, the whole country is trying to control coal and clean the air in China. If China expects LNG demand due to cold waves and power supply troubles. If we do, we can't help but be affected. "
Natural gas prices are high in Europe
Natural gas prices are skyrocketing in Europe as well.
The Dutch TTF gas futures price, which is an indicator, temporarily reached a level more than eight times that of the same period last year in early October.
The amount of natural gas traded in European spots is more than three times that in Asia, and its price has a significant impact on the Asian market.
Will Russia's strategy shake the market in the west?
Most of the natural gas imported in Europe is supplied mainly by pipelines from Russia and other countries.
The JOGMEC Japan Oil, Gas and Metals Mineral Resources Organization, a specialized agency in the energy field in Japan, analyzes the factors behind the price increase as follows.
・ LNG demand increased in Asia due to the cold wave in
January, and
inventory is declining in Europe.
・ Heating demand increased due to unexpected cold weather in April and May.
・ Wind power generation is mild in northwestern Europe. became small amount of power generated by the
other hand, the supply of natural gas from Russia was not sufficient for the increased demand
Why did the supply of natural gas become inadequate?
Based on information from Europe, JOGMEC suspects that Russia, an energy superpower, is shaking European countries.
The source of the fire is the natural gas pipeline "Nord Stream 2" currently under construction.
A new pipeline that connects Russia and Europe.
Originally, tensions were rising in international politics over the construction of this pipeline, as the US Trump administration sanctioned companies involved in the construction, saying it would increase Russia's influence over Europe, especially Germany.
This year, the Biden administration was inaugurated in the United States.
The sanctions have been lifted, but Germany is in the process of licensing and it is taking some time.
For this reason, there is widespread speculation that Russia may be putting pressure on the European side by narrowing down the gas supply in the existing pipeline.
Russia denies supply cuts
In response, Russian President Vladimir Putin has strongly denied reducing supply.
At an international energy-related conference held in Moscow on October 13, he argued that he was "increasing supply to Europe even in difficult circumstances."
I don't know the political meaning, but various speculations and strategies are intertwined, and the index price (TTF) of natural gas soars.
It is also affecting the Asian market.
What is the future of the swaying gas market?
Power movements can move the price of natural gas, which can circulate and affect our electricity prices.
Experts point out that as the decarbonization process accelerates, this situation may continue to occur frequently.
According to JOGMEC researcher Hiroshi Shirakawa, investors are paying close attention to the development of fossil fuels as the momentum for decarbonization increases.
On the other hand, Russia and Qatar are poised to continue producing natural gas in order to moisten the national economy, and their presence is expected to increase further in the future. It is said that the situation may occur in the future.
Required strategic energy policy
Regarding the impact of rising natural gas prices around the world, experts point out the need for energy costs-aware energy policies.
Director Takeuchi
"Energy is not a luxury item, it is used in daily life and economy, and if the price rises, it will be difficult for households. Also, since energy is also used in factories, if the price goes up, the electricity bill will be cheap. There is a risk that industry will flow to the country. "
Japan seems to be at the mercy of the shift in energy strategies of China and Russia, while electricity prices are high and low, but there is a risk that it will directly lead to the country's industrial competitiveness.
Through the rise in natural gas prices, I became keenly aware of how Japan should maintain energy security as a country, and that Japan needs strategic diplomatic and energy policies from a long-term perspective due to scarce resources. bottom.
Reporter of the Ministry of Economic Affairs
Nishizono Kouki
Joined the
Bureau in
2014
After working at the Oita Bureau, the
Ministry of
Economic Affairs is
currently
in charge of the
Ministry of Economy, Trade and Industry and the
energy industry.
Tomokazu Kogi, a
reporter for the Osaka Broadcasting Station
Joined in 2007. Covered the
financial industry at the Ministry of Economic Affairs, and is currently in charge of economics at the Osaka Station.