Japan's third biggest power company on Monday is expected to shut a nuclear plant because of its vulnerability to a major quake, adding to concerns about electricity supplies after a giant quake and tsunami crippled another nuclear facility in March.

The expected announcement follows a call by Prime Minister Naoto Kan to close the Hamaoka plant in central Japan, about 200 km (120 miles) southwest of Tokyo, and signals a potential shift in energy policy following the worst nuclear crisis in 25 years.

Chubu Electric Power Co shares tumbled as much as 14 percent on the call by the prime minister. Chubu will hold a board meeting at 0630 GMT at which it is expected to make a final decision to close the plant, Japanese media said.

A board meeting on Saturday had failed to reach a consensus, reflecting worries over whether the company would be able to get alternative supplies of energy as well as cope with a sharp jump in its fuel costs.

The government is under pressure to review its energy policy, of which atomic power is a major part, after the March 11 quake and tsunami wrecked the Fukushima nuclear power plant run by Tokyo Electric Power.

Nearly 26,000 people were killed or are unaccounted for following the natural disaster which triggered the world's biggest nuclear crisis since Chernobyl in 1986. The plant is still leaking radiation.

Government experts put the chance of a magnitude 8.0 quake hitting the Hamaoka area in the next 30 years at 87 percent, which has raised questions over why it was built there in the first place.

Shares of Chubu were down 11 percent at 1,570 yen in afternoon trade, after falling as low as 1,521 yen. Chubu's tumble helped push Tokyo's electric and gas subindex down 2.7 percent.

This news is triggering uncertainty not just about Chubu Electric but the whole utility sector, said Yoshinori Nagano, a senior strategist at Daiwa Asset Management.

Investors are concerned that on the back of this news other reactors currently under inspection may not resume operations soon.

Kan, under fire for his response to the crisis in northeast Japan after the March quake, said the government would try to prevent the halt of the Hamaoka reactors from causing power supply problems.

Chubu has said it can meet peak demand of 25,600 MW even if Hamaoka shuts. But relying on thermal plants to fill the power gap would push up costs by 700 million yen ($8.7 million) a day -- or about 256 billion yen a year, double its projected profit of 130 billion yen in the year to March 2012.

HOT SUMMER WORRIES

However, an unusually hot summer would raise the risk of Chubu not having enough capacity to meet peak demand, which could cause problems for Toyota Motor Corp and other major manufacturers with factories in the region.

Chubu chairman Toshio Mita flew to Qatar to discuss possible procurement of liquefied natural gas.

Qatar, the world's largest exporter of LNG, recently reached the capacity to liquefy 77 million tones of natural gas annually.

Analysts said additional demand from Chubu would unlikely lead to a squeeze in the global LNG market.

Koki Ota, senior economist at Sumitomo Shoji Research Institute in Tokyo, said Qatar is estimated to have about 27 million tones of LNG in 2011 that is not bound under longer-term contracts and therefore can be supplied to the spot market.

Qatar has sufficient LNG supply to absorb additional demand from Japan, so a sharp jump in the global LNG price is unlikely even if Chubu is to entirely rely on LNG as an alternative source of energy if its plants are shut, he said.

Chubu in March estimated it would buy 8.42 million tones of LNG in 2011/12, down from 10.43 million tones the year before. That estimate did not take into account the impact of the March 11 earthquake and tsunami.

Ota said if Hamaoka's capacity is to be made up only with gas-fired plants, it would amount to about 3.75 million tones worth of LNG.

Chubu generates a relatively small proportion of its power from nuclear plants, accounting for 14 percent of the firm's total electricity generated in 2009/10. That was below a 30 percent average nationwide, while gas thermal power held a 47 percent share.

(Additional reporting by Ayai Tomisawa; Editing by Nathan Layne and Jonathan Thatcher)

Japan Quake