JAPAN ENERGY WEEKLY
NEWS ALERT
June 13 to June 19, 2020
COMPANIES IN FOCUS
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NEWS
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DATA
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ANALYSIS:
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CONTACT US nrgnews@yuri-invest-research.com
NEWS
OIL
Cosmo cuts prices by 0.5 yen across the board[1] (Sekiyu Tsushin, June 19)
- Cosmo cut prices on all fuels by 0.5 yen for the week to June 25, the first such reduction in two weeks.
Demand for petrol will recover to 95% of pre-corona levels, says JXTG chair (Sekiyu Tsushin, June 19)
- JXTG Holdings chair Sugimori Tsutomu said in a press conference that he believed Japanese demand for petrol would soon reach 95% of pre-pandemic levels as the economy restarts.
- Sugimori said that with the exception of jet fuel, fuel prices were recovering after falling significantly during the COVID-19 induced lockdown.
Idemitsu cancels oil refinery maintenance and with it 4,000 nights of accommodation over coronavirus fears (NHK News Web, June 16)
- Idemitsu cancelled 4,000 nights of hotel accommodation in Kita-Hiroshima, Hokkaido, after periodic oil refinery maintenance in nearby Tomakomai was cancelled at the request of the prefectural government due to coronavirus fears.
- Concerned about the impact on the economy, the Kita-Hiroshima municipality has complained to Idemitsu about the situation.
- BACKGROUND: The latest revelations follow a similar spate of cancellations in nearby Chitose city.
Idemitsu CEO sees fuel demand likely recovering next year, but industry impact to last 2 years (Nikkan Kogyo Shimbun, June 17)
- Idemitsu CEO Kito Shun’ichi says Idemitsu assumes the effects of the COVID-19 pandemic will continue to be felt until 2022/23, although demand will recover by 2021/22.
- While demand for fuel fell significantly during the Golden Week holiday, it has since recovered somewhat. The current level of demand is not so low that refineries need to be shut down, Kito said.
Volatile crude price drives growth in renewable infrastructure (Sankei Shimbun via Yahoo News, June 19)
- Fossil fuel prices are currently low. While it was traditionally thought that this would cause investment in renewables to fall, the volatility of fossil fuel markets is actually making investors appreciate the importance of diversifying energy sources, and oil companies and power companies continue to invest in renewables.
- TEPCO Holdings chair Kobayakawa Tomoaki has stressed the risk of becoming overly dependent on fossil fuels even at a time of historically low prices due to the volatility.
- Stressing the importance of diversification, Kobayakawa says TEPCO will continue to make use of renewable energy sources and nuclear energy.
Consumer price index down again over weak crude (Asahi Shimbun via Yahoo News, June 19)
- Japan’s Consumer Price Index (CPI) was 101.6 in May, down 0.2% on May 2019. This is the second consecutive month in which the CPI fell YoY.
- Contributing to the fall were lower prices for kerosene (16.5% down against May 2019), reticulated LPG (3.3% down), and electricity (2.0% down).
GAS
Hiroshima Gas receives first LNG shipment under agreement with Tokyo Gas (Sekiyu Tsushin, June 19)
- Hiroshima Gas’ Hatsukaichi plant received its first shipment of LNG under a joint supply agreement with Tokyo Gas and Tokyo LNG Tanker.
- The eight-year agreement was signed with the aim of ensuring an uninterrupted supply of gas from Sakhalin (Russia) using tankers provided by Tokyo LNG Tanker.
Inpex-led Ichthys LNG project completes $8.3 billion in refinancing (Sekiyu Tsushin, June 18)
- Inpex asked lenders for improved conditions in March despite the drop in crude oil prices. Of the $15.6 billion in project finance, $8.3 billion was refinanced at lower interest rates to improve the cost structure of the Australian project.
- Move expected to improve the value of the project.
POWER
TEPCO Chair abrogated responsibilities (Facta, July)
- Kawamura Takashi took over as chairman of TEPCO Holdings after an elite career in nuclear energy in Hitachi, in which he eventually rose to the position of director.
- Kawamura is credited with single-handedly turning Hitachi around, and has described himself as the “last man”, meaning the person who will take ultimate responsibility for a project. Last Man is also the title of his recent autobiography.
- In fact, Kawamura is more of a listener than a doer. Most of the hard work carried out to rationalize Hitachi’s nonperforming operations was performed by Kawamura’s predecessor.
- Kawamura assumed the role of TEPCO chair to great fanfare, but unwilling to do anything that would damage his reputation he avoided “getting his hands dirty” and achieved very little in his three years in the job.
- Kawamura’s former workmates at Hitachi are dismissive of his claims and self-praising autobiographies. The Nikkei’s glowing treatment of Kawamura has also given many the false impression that he is a skilled businessman.
TEPCO: Instructions to doctor recordings came from top (Asahi Shimbun, June 14, 2020)
- It was discovered that instructions to falsify recordings of conversations with customers made by TEPCO contractor Relia Communications came directly from the head of the offending division.
- The division targeted elderly subscribers in an effort to achieve its sales targets.
- While TEPCO has terminated its relationship with the division responsible for the misconduct, it continues to work with other divisions of Relia.
Utilities to lower power/gas tariffs in August (Mainichi Shimbun, June 18)
- In a reflection of the impact of the coronavirus pandemic on crude prices, ten major Japanese power companies announced that their August tariffs will be lower than in July.
- The four major gas utilities have also announced reduced rates for August.
Kansai Electric (KEPCO) hushed up bribery investigation (Asahi Shimbun, June 18)
- After learning of bribery allegations against former directors in March 2018, KEPCO insiders asked directors and related parties to keep the matter confidential, despite lobbying by then Osaka High Public Prosecutors Office director Sasaki Shigeo (now a KEPCO external auditor) for the release of the information.
- According to an internal report from September 2018, the KEPCO board of directors was not informed, due to fears they would leak the information.
- Then CEO Iwai Shigeki is suspected of ordering that the revelations be hushed up during a tax inspection in February.
FURTHER READING: KEPCO external auditor Sasaki Shifeo made false statement on notice of convocation (Jiji, June 16)
KEPCO should use compensation suit to rebuild confidence (Yomiuri Shimbun editorial, June 18)
- KEPCO claims to be working in earnest to reform its problems with transparency. One cannot help but doubt the sincerity of these claims.
- A trial is required to find out how a fraudulent corporate culture became established at the utility. Because the KEPCO auditor who overlooked irregularities has not been charged, we may never gain a full picture of the offending.
- If it hopes to regain public confidence, KEPCO should take this opportunity to radically overhaul its insular corporate culture and turn over a new leaf.
KEPCO to construct two new hydroelectric power stations (Nikkan Kogyo Shimbun, June 16)
- KEPCO will start work on two new hydroelectric power stations in Gifu prefecture next year.
- The stations will go online in 2025 and have a combined output of over 9,000 kW.
Consumer Affairs Agency urges compliance as marketing violations rise (Asahi Shimbun, June 18)
- Japan’s Consumer Affairs Agency has formally requested the country’s 655 registered electricity retail marketers to comply with restrictions on marketing, amid an increasing number of complaints from consumers.
- Around 6,000 people contact the National Consumer Affairs Center every year with complains about the marketing of electricity.
Itochu invests 1 billion yen in TEPCO power retail firm (Jiji, June 18)
- Investment via third-party allotment and convertible bonds into TRENDE, the Tokyo-based power retail firm that is under the umbrella of TEPCO Holding.
Chubu Electric deploys flying drones to monitor power grid (Nikkan Kogyo Shimbun, June 17)
- Chubu Electric Power has implemented an autonomous drone program to aid in the inspection of power infrastructure.
- Drones are useful in inspecting dangerous and inaccessible locations, but they do rely on human operators.
- Chubu Electric aims by 2022 to have a drone fleet that is able to automatically avoid power lines and other obstacles.
COAL
BMA to introduce unmanned trucks (Sangyo Shimbun, June 17, 2020)
- The BHP Mitsubishi Alliance (BMA) will introduce driverless mining trucks at the Gonyella Riverside coal mine in Australia from September.
- 86 driverless trucks will be deployed at Gonyella by 2022.
- BMA said the move will lead to the creation of 140 new jobs, some of them for remote truck controllers.
NPO makes proposal to Mizuho shareholders (Alterna via Yahoo News, June 17)
- Kiko Network, a Kyoto-based non-profit organization and shareholder in Mizuho Financial Group, filed a climate resolution that calls on Mizuho to bring its investment practices in line with the Paris Agreement.
- While Mizuho initially pledged to stop financing coal-fired power station projects by 2050, Kiko Network is calling for an end to such investments by 2040.
OTHER
TEPCO nuclear compensation reaches 12.6 billion yen (Asahi Shimbun via Yahoo News, June 17)
- Approved compensation claims by those who have suffered damages as a result of radioactive fallout released in the TEPCO nuclear disaster reached 12.6 billion yen.
- This represents 86% of all claims, which total 14.6 billion yen.
Cosmo to partner with e-Mobility on rapid charging points for electric vehicles (Nikkan Kogyo Shimbun, June 18)
- Cosmo Oil Marketing says it will partner with electric vehicle promoter e-Mobility to install fast charging points in Cosmo service stations.
Biggest Hokkaido gasoline station operator plans to expand into renewables (Nikkei Shimbun, Jun 19)
- Sapporo City based Hokkaido Energy said it has appointed new president Nobuhiko Kimura and that the company plans to explore ways to enter the renewable energy field.
- Parent company Hokkaido Energy Holdings has established a unit, Hokkaido Createive, to will handle hydrogen fuel for cars and renewable energy businesses.
OIL DATA
GAS DATA
ELECTRICITY DATA
ANALYSIS
| Japan EPCOs losing trust as other options come to the fore | |
The dominant Tokyo power electric utility, TEPCO, is embroiled in a scandal over one of its contractors preying on elderly clients in order to switch their electricity providers, and then doctoring the call recordings to make sure any evidence was swept under the carpet. Directors of the dominant Osaka and Kansai region utility, KEPCO, were revealed bribing as least 75 people in the locality around the utilities Japan’s 10 electric power utilities, though free to compete, were essentially monopolies in their own regions until the power industry’s unbundling in 2016. Public patience with EPCOs, it seems, has worn thin. In a full-bloodied editorial, Japan’s top newspaper by circulation, the Yomiuri Shimbun, Such criticism matters because now there are other options and consumers are getting more comfortable with switching providers. EPCOs need to show the public that this time it’s different. |
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