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« John Pugsley: Japan Crisis Is Not the End of Nuclear Power | Main | Shneur Gershuni: Coal Stocks Fired Up »
Wednesday
Mar232011

Nuclear Outlook Under Review

Japan Nuclear 24 March 2011.JPG

NEW DELHI: Japan's nuclear disaster is set to bring about a dynamic change in the global energy market , which may force countries to reconsider their fuel options. 

"Rising energy prices coupled with high interest rates is a toxic for any economy that was last seen in the 1970s, and is now playing out for the first time since then," chief economist of British Petroleum Christof Ruehl told ET soon after presenting BP Energy Outlook 2030

Interest rates have already started rising in countries that are not members of the Organisation for Economic Cooperation and Development ( OECD )) like India, China, Brazil and some European countries. The disaster in Japan will lead to a slowdown in additional or new nuclear capacity and, in the short-term, lead to an increase in demand for gas and coal. Since a number of big consumers like US, Japan, China and India have to depend on imported gas, this is expected to give a push to liquefied natural gas (LNG) trade, which had slipped following the global recession and the increased use of shale gas in the US markets. 

"Long-term gas contracts will now be even more indexed to crude. But now that Japan and Korea will focus on energy security and long-term contracts, the sellers would want it to be linked to crude oil prices," Ruehl said. 

The nuclear disaster will lead to an increased demand in the short term, which can be met easily. But linkage with crude oil will tend to keep an upward pressure on gas prices. The natural gas market had seen some significant changes in the last few years after the reforms in the European electricity market and the emergence of shale gas in the US. 

The power reforms in Europe had allowed the utility firms to demand re-worked contracts that were not linked to crude. 

The geopolitical issue could impact crude oil supplies and force countries like Saudi Arabia to bring in their spare capacities. Volatility in crude oil prices has been a factor and it is expected to remain so even in the future. Geopolitics will also play a big role in fuel pricing in the troubled nation. "No matter which individual or regime wins, there will be an increased trend to subsidise fuel prices as the new governments will be forced to offer cheap fuel to keep the people quiet," Ruehl said.




(Reuters) - Following are main developments after a massive earthquake and tsunami devastated northeast Japan and crippled a nuclear power station, raising the risk of uncontrolled radiation.

- Estimated cost of damage from the earthquake and tsunami to top $300 million, making it the world's costliest natural disaster. The 1995 Kobe quake cost $100 billion while Hurricane Katrina caused $81 billion in damage

- United States the first country to block some imports from Japan as concern grows over the risk of radiation contamination from the crippled Fukushima nuclear plant.

Hong Kong also banned food and milk imports from five prefectures, citing radioactivity levels in spinach and turnip samples up to 10 times over the safety limit.

- Tokyo authorities said water at a purification plant for the capital of 13 million people contained more than twice the level of radioactive iodine than is safe for infants.
Japan's health ministry says it has detected above-safety level radiation in 11 types of vegetables from the Fukushima area where the nuclear plants are located.




Yukinobu Okamura, a prominent seismologist, warned of a debilitating tsunami in June 2009 at one of a series of meetings held by the Nuclear and Industrial Safety Agency to evaluate the readiness of Daiichi, as well as Japan’s 16 other nuclear power plants, to withstand a massive natural disaster. But in the discussion about Daiichi, Okamura was rebuffed by an executive from the Tokyo Electric Power Co., which operates the plant, because the utility and the government believed that earthquakes posed a greater threat.

That conclusion left Daiichi vulnerable to what unfolded on March 11, when a 9.0-magnitude earthquake struck off Japan’s northeast coast. Experts now say that Daiichi, as designed, withstood the quake. It was the ensuing tsunami, with waves more than 20 feet high, that knocked out the facility’s critical backup power supply and triggered a nuclear emergency, resulting in widespread releases of radiation.

The situation remains very hard to call we can only hope and pray that the Japanese authorities get on top it by stabilizing the plant and minimizing the effects of radiation.

We will continue to monitor the situation and report back as things change.

...................................................................................

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SK model portfolio 14 March 2011.JPG



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Stay on your toes and have a good one.

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Reader Comments (3)

The backup power was disabled not by a failure of the diesel generators but by the fuel tanks being washed away. They were above ground outside the plant. Stupid. How anyone overlooked this design flaw is beyond me, BUT, the fix is simple.

Had this one plant feature been designed differently and the tanks been buried underground, for instance, there would have been no failure.

Yes, the neck bone is connected to the shoulder bone and you have to look at the whole, but this would never have happened at any modern plant.

Just let other energy prices rise to suffocating levels and let's see if nuclear isn't viewed in a much more favorable light. If your choice is between going bankrupt paying for oil and gas or shivering in the dark and accepting the risks nuclear carries (which are decreasing all the time), I suspect nuclear won't look so bad after all.

March 24, 2011 | Unregistered Commenterfallingman

Yea ,Bury the fuel tanks underground and watch them get crushed in the earthquake instead ! Great idea !

March 24, 2011 | Unregistered Commenteruranium bug

Good point. I'm not an engineer, so I shouldn't even comment on alternatives. Burying might be equally foolish...or not. Dunno, but the essential point is that:

1) Leaving them exposed certainly didn't make sense and that something can be done to protect the fuel tanks. The problem is fixable.

Are you an engineer? I'd like to know if you have any insight into the problem. Or anyone else out there. I've worked with hundreds of nuclear engineers and all I can say is they're VERY smart people and I'm guessing they've already considered the design flaw and corrected it in the newer plants. Anybody know?

March 24, 2011 | Unregistered Commenterfallingman

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