Platts - Tuesday, July 18, 2006 http://www.platts.com ------------ Chubu Electric's nuclear woes lends support to spot LNG market Singapore (Platts)--18Jul2006 Japan's Chubu Electric Power has been actively buying spot LNG cargoes since a unit at its Hamaoka nuclear plant was shut down last month, lending some support to a market that would otherwise be in a seasonal lull, industry sources said Tuesday. Chubu Electric has already bought, or is in advanced negotiations to buy, three to five spot LNG cargoes for August and September delivery, traders said. The shipments were sourced from Algeria, Qatar and Oman through Japanese trading firms, said traders. Chubu Electric paid prices in the range of $8 to $9 plus per MMBtu, depending on the cargo origin, for the shipments on a delivered basis, according to various industry sources, but a company source declined to confirm either the price or volume of its purchases. "We are now negotiating for more (spot LNG) cargoes," the Chubu source told Platts Tuesday. "The volume required will depend on how long the nuclear unit remains shut," he said. The company is also considering the possibility of buying spot LNG from Egypt although it prefers rich gas, he added. Egyptian supplies are typically lean gas. But the Chubu source was unable to say when the 1.38 GW No. 5 reactor at its Hamaoka nuclear plant would restart. The unit was shut down automatically on June 15 after vanes from a turbine fell off. "We are now investigating the situation and assessing the damage," the source said. According to a July 11 statement from Chubu Electric, the affected unit is expected to be shut "for a considerable period of time" given the results from inspections and investigation then. The company has revised its net profit forecast for the financial year ending March 31, 2007, to $52 billion yen as a result of the shutdown, down 54.8% from an original forecast made in May. The $8 to $9 plus per MMBtu price that Chubu Electric reportedly paid for its spot purchases was generally deemed higher than what other Asian buyers would accept. With demand in a summer lull and US gas futures prices weak at the moment, most other Asian buyers' are unlikely to pay more than $7/MMBtu for spot supplies since they are mostly facing a high-inventory situation, traders said. Asian buyers are currently paying $6.50-7/MMBtu for long-term supplies, one trader estimated. Chubu Electric probably paid up because of the urgency of its requirement and the high prices of alternative fuels. The spot LNG prices paid by Chubu Electric still make sense since "they are far lower than that of oil", another trader observed. Demand from Chubu Electric has helped to ease the length in the spot LNG market. "Because of Chubu, the market is picking up a little bit. It is now tighter than in June," the second trader said. EGYPT'S DAMIETTA PLANT PLANS AUGUST MAINTENANCE Supplies could tighten further in August, when Egypt's Damietta plant enters maintenance, sources said. Egypt's single-train 5.5 million mt/year Damietta LNG facility is scheduled to be shut for the whole month of August, the sources noted. But Egypt's other LNG facility at Idku is expected to issue its second spot sell tender soon, traders said. The two-train 7.2 million mt/year Idku plant sold two spot cargoes in June through a sell tender -- its first tender issue since production started last year. Another Asian buyer Korea Gas, however, said it was not in a hurry to procure spot LNG at the moment. Kogas' inventory is now "almost tank top" and the company had been unable to take additional cargoes in May and June for the same reason, a company source said Tuesday. "We will consider buying probably several spot cargoes before the winter season. But we have to wait and see and assess our summer demand situation in the next few weeks," he said. Meanwhile, weak demand in the US and Spanish markets continued to prompt west-bound cargoes to seek diversion to Asian markets. A shipment from Trinidad and Tobago, originally bound for Spain, is sailing for Asia for August delivery, a trader said. Another trading source, however, doubted the likelihood of such a long-haul diversion. --KimFeng Wong, kim_f_wong@platts.com For more news, request a free trial to Platts LNG Daily at http://www.platts.com/Request%20More%20Information/ ------------ Bush, Putin plan agreement on civilian nuclear energy Washington (Platts)--17Jul2006 The US and Russia agreed at the G8 summit in St. Petersburg to prepare an agreement promoting peaceful use of nuclear energy. In a joint statement Monday, President Bush and President Putin said the agreement would reflect the Bush administration's Global Nuclear Energy Partnership, which aims to develop innovative nuclear reactor and fuel cycle technologies, and a previous Russian proposal to establish a system of international centers to provide uranium enrichment and other nuclear fuel services. "Following up on these initiatives, the United States and the Russian Federation intend to work together, actively involving the [International Atomic Energy Agency], to allow all nations to enjoy the benefits of nuclear energy without pursuing uranium enrichment and spent fuel reprocessing capabilities," Bush and Putin said. The presidents' statement, as well as broader summit statements on global energy security and nuclear nonproliferation, reiterate prior commitments to guard against nuclear terrorism. "This particular statement focuses on the dangers of nuclear terrorism," Anthony Wier, a research associate with the John F Kennedy School of Government's Project on Managing the Atom, said in praising the presidents' declaration. "If nuclear energy is going to play a critical role in the future, it's essential to have the security to prevent nuclear terrorism." Bush and Putin's statement also praised India for its "important nonproliferation commitments" and said they are "especially concerned" by Iran's efforts to develop a nuclear program. For more news, request a free trial to Platts Inside Energy at http://insideenergy.platts.com or subscribe now at http://www.platts.com/infostore/product_info.php?cPath=23_33&products_id=61 ------------ All but one US reactor at full capacity during heat wave Washington (Platts)--17Jul2006 Only one US nuclear unit was offline while 102 were at full capacity as a heat wave roasted the country July 17 and pushed grids to cope with record demand. With air conditioners going full-blast from Maine to Los Angeles, electricity systems were straining to keep up, and the nuclear units contributed a total net output of about 98,000 megawatts. Only Detroit Edison's 1,089-MW (net) Fermi-2 was offline, with a transformer replacement due to wind up shortly. Exelon's Oyster Creek was at 70% power in the early morning while grass was cleaned out of its river intake but had ramped back up to full effective capacity for the day's demand. Eight other units were slightly below full nominal capacity because of other operating restrictions, but none was below 96% power. Real-time power prices across the country topped $300/MWh and hit $399 in California as grid operators in the northeast, midwest and west reported setting all-time demand records as the afternoon progressed. ------------ DHS awards contracts for radiation detection at US ports Washington (Platts)--14Jul2006 The Department of Homeland Security has awarded contracts worth $1.157 billion to enhance detection of radiological and nuclear materials at US ports of entry, the department announced July 14. DHS said the new systems will more clearly identify the source of detected radiation through spectroscopic isotope identification. DHS said the advanced systems will reduce the false alarm rate by distinguishing between special nuclear materials and naturally occurring radioactive materials. Raytheon Co.-Integrated Defense Systems, Thermo Electron Corp., and Canberra Industries have been awarded contracts with one base year and four one-year options, DHS said. ------------