The Analyst Hub's  Instablog

Nuclear power accounts for 30% of the Japanese power demand. and current disaster may cause reactor shut downs for several months.

A few years ago, on July 16, 2007, an earthquake with a magnitude of somewhere between 6.6 and 6.8 struck Japan. Its epicenter was about 16 kilometers north of the Kashiwazaki-Kariwa Nuclear Power Plant (KKNPP). It caused shut down in a number of reactors and lead to a multi-month increase in Japanese LNG demand. Current earthquake is much worse and nuclear reactors affected by it can see longer shutdowns. LNG is likely to make up for the loss of nuclear capacity again.

Going forward, we expect increased imports of LNG by Japan and a rise in LNG prices. LNG suppliers like Woodside Petroleum (WOPEY), BG Group Plc (BRGYY) and Royal Dutch Shell (RDS.A) are best positioned to benefit this given their spot capacities and strong relationships with Japanese buyers.

Further, an increase in Japanese LNG consumption can also put an upside pressure on European gas prices. Gazprom (OGZPY) and Statoil (STO) will be the likely beneficiary.

Lastly, LNG shippers like Golar LNG (GLNG) and Teekay LNG Partners Lp (TGP) could also benefit due to increased utilization and rise in LNG tanker's spot rates.