Utilities in Japan could slow down the switch to oil-powered power generation as LNG prices dropped and oil prices have shown an increase.
During the first two months of the year, utilities used more oil due to a global price drop which lowered the LNG demand, a source told Platts.
According to a Platts unit Eclipse Energy, the threshold at which Japanese utilities switch from gas-powered to oil-powered power generation is at $7.70 MMBtu in March while prices of LNG for delivery in March averaged $7.436 MMBtu which is 26 cents below the threshold. It is believed that the switch to oil would not occur beyond that threshold.
With the oil prices recovery from early February, it is unlikely that switching from gas to oil will be attractive to power generators from March.
LNG World News Staff; Image: Tepco