TOKYO, Aug 31 (Reuters) - Japan's consumption of liquefied natural gas (LNG) is set to fall as the country's nuclear reactors restart, with output from atomic power set for its highest since the aftermath of the Fukushima disaster.
The return of Japan's nuclear capacity should lead to lower imports of fossil fuels, especially LNG. While that is a positive for Japan's utilities, especially as LNG prices are near four-year highs in Asia, the loss of Japanese demand could undermine the demand outlook for the global market.
Japan is the world's biggest buyer of LNG.
"It's a good thing that the power utilities in western Japan have restarted nuclear plants, which is leading to the cuts in fossil fuel costs, primarily LNG, through the continued operations of nuclear plants," said Tomoko Murakami, manager of the nuclear energy group at the Institute of Energy Economics, Japan (IEEJ).
Kansai is Japan's second-largest utility by sales and was the most reliant on nuclear power before the March 2011 Fukushima disaster, when a nuclear power plant owned by Tokyo Electric Power suffered meltdowns after an earthquake and tsunami.
Before the disaster, Japan had the world's third-largest reactor fleet which provided about one-third of its electricity. But the plants were shut down for relicensing after Fukushima highlighted regulatory failings.
Operating Kyushu's nuclear units will save the company about $2.2 billion in annual costs based on current LNG prices, its spokeswoman said.
The country's use of LNG in power generation has been declining this year as more reactors return. In June, LNG imports fell to the lowest monthly amount since May 2016 and for the year through to July are down 2.4 percent.
The Fukushima disaster sparked the country's worst energy crisis in the post-war period, forcing it to import record amounts of LNG and driving prices to record highs. Utilities also turned to cheaper coal imports.