Page 5 - AsianOil Week 40 2022

AsianOil COMMENTARY AsianOil

In Japan, supply security concerns have caused by high commodity prices, their high
prompted efforts to expand LNG storage, levels of energy import reliance, and the risk
increase imports of fuel oil imports, and restore of sudden spikes in demand owing to extreme
previously mothballed thermal power plants. weather. As a result, further economic policy
The government is also looking to boost the measures are being introduced to shield con-
number of active nuclear reactors to 10 by the sumers to some extent from difficulty. With
end of the year from five currently, and increase an economic slowdown and the need to rein in
the number to 17 by the end of 2023. Japan is also fiscal expenses, further options to support con-
considering the construction of next-generation sumers will be increasingly limited.
reactors by 2030 instead of phasing out nuclear Japan narrowly avoided power cuts in the
power by 2040. Tokyo region in spring and summer, but current
Meanwhile in South Korea, the new con- forecasts suggest the country’s power reserves
servative-leaning president, Yoon Suk-yeol, has less this winter will surpass the 3% threshold for
reversed the decision of his liberal predecessor stable supply. Nevertheless, utilities are offering
to phase out nuclear power and wants to expand industrial customers incentives to curb their
LNG infrastructure further to make it easier to power use, and the risk of a colder-than-average
procure the fuel. However, utilities and heavy winter means a December cold snap could lead
industry have resorted to increasing the use of to further power shortages.
LPG because of high LNG prices, and coal use Indias’ government has cut tax on diesel and
remains stable despite past commitments to gasoline to provide consumers with some relief,
reduce it. but rising gas prices drive up prices for other key
Across Southeast Asia, the push to shift away domestic commodities, such as urea and potash,
from coal will require investments in additional used for producing fertilisers. High commodi-
gas and renewable power capacity. Meanwhile, ties prices, combined with geopolitical volatility
falling domestic output in the Philippines and and the outlook of foreign direct investment, are
Thailand, the risk of disruptions in Thailand’s resulting in interest rates hikes.
gas supply from Myanmar, and high generation Subsidies are also becoming increasingly
requirements in Vietnam and the Philippines, common. Japan is providing fuel subsidies to dis-
after prompting governments to look at various tributors to keep pump prices low, while South
renewable and nuclear options, as well as LNG. Korea is subsidising the cost of diesel for trucks
But none of these solutions will result in signifi- and taxis. Indonesia has nearly tripled fuel price
cant immediate boosts in energy supply. subsidies, and the government may have to pass
some of this expense to state enterprises. In Thai-
Policy responses land, the government is likely to do what it can
Fuel switching is not enough to help Asian coun- to protect consumers from energy price shocks,
tries overcome the problems that have been especially as there is an election looming. ™

Week 40 10•October•2022 www. NEWSBASE .com P5