Energy and Utility Management Consultants

Japan restarts nuclear reactor, East Africa look towards mass extraction of gas and oil

July 2012


The UN embargo on Iranian oil is now in effect and has again raised fears of retaliation byIran, who have mentioned the possibility of a blockade on the Strait of Hormuz – restricting the access of those countries in support the UN oil embargo. The Strait of Hormuz carries almost a fifth of the world’s oil supply each day, and the US has reportedly doubled the number of minesweepers in the Gulf as a deterrent to any hostile action. Worth mentioning is that Iran have begun testing medium-range missiles this week – said missiles being capable of hitting US bases in the region or in Israel – although there is nothing to suggest at present that this is the purpose of the tests. These political actions can be seen as a driver behind a recent climb in oil prices, from $90per barrel to over $96 per barrel in just a fortnight.


Positive global economic news has also affected prices, as future demand is expected to increase. Norwegian offshore oil field workers are currently striking against pension cuts – which has accounted for some 13 per cent of Norwegian oil capacity and 4 percent of their gas output has been lost by the industrial action, which is now into day 11. Norway is the fifth-largest oil exporter in the world, and any disruptions are likely to have repercussions on the market costs of Brent crude oil of and natural gas. Further meeting between the unions involved are scheduled for Friday, so hopefully an end is in sight. Japan has restated one nuclear reactor of the four at the 1,180MW plant at Oi, in the Fukui prefecture, amid public protests and demonstrations. The generator is expected to reach peak output from Sunday, and is the first of many required restarts - all of which are expected to attract protests - as the Japanese government look to secure enough energy to see the country through another notoriously hot summer.


The restoration of nuclear power to the Japanese grid is likely to lessen their current reliance on LNG, freeing up deliveries to other countries including the UK. Having historically been a very small exporter of gas and oil, East Africa is becoming poised to be a major player in world gas production in the near future. With massive proven reserves – up to 100 trillion cubic feet of gas, and millions of barrels of oil - in countries across the east of the continent, from Mozambique to Tanzania, benefiting from $billions of foreign investment, it is expected that the amount of LNG alone available for extraction could have massive impacts on (primarily) the Asian LNG market. The previously untapped reserve of the natural resource is not likely to have any immediate impact on global power infrastructure, but will certainly go a long way ensuring long-term energy supply. Locally, and the €600 million Ireland to Wales 500MW interconnector is nearing completion and is expected to go live before the end of the year.


The interconnection, from Barkby Beach in North Wales to Rush North Beach in County Dublin, will allow the UK access to Irish electricity, and vice versa, with demand and market prices dictating the direction of flows. The aim is to increase competition and ensure Irish supply security, and UK suppliers will finally be able to access the Irish market without the hurdle that currently exists which is to actually create generation inIrelandbefore being able to supply there. The impacts on the markets will be seen in due course and we’ll keep you up to date on any revelations in the meantime. Get in touch with our expert team of Energy Consultants and Utility Consultants today using the links on this page to discuss any queries you have with Business Energy Procurement and Energy Management – in these volatile times, any advice can be good advice, and we’re always happy to help.





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