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CPC Corp, Taiwan planning spot LNG purchase record

CPC Corp, Taiwan (台灣中油), the nation's only natural gas importer, said it plans to buy a record amount of liquefied natural gas (LNG) cargoes on short-term contracts or for immediate delivery to meet a supply shortfall.

The company would probably buy as many as 31 spot LNG cargoes, accounting for about 23 percent of its total purchases of the fuel, said C.S. Lin (林正雄), CPC's vice president. That's an increase from a record 27 cargoes last year.

CPC has turned to the spot market for LNG because the nation's demand for the fuel is forecast to rise 5 percent to 8 million tonnes this year and the company has long-term agreements for only 5.6 million tonnes. LNG meets more than 90 percent of gas demand in Taiwan, Asia's third-largest buyer of the fuel. Power producers account for approximately 75 percent of the nation's gas consumption.

"We have secured enough of the fuel," Lin said by telephone in Taipei yesterday. "Prices are quite high, though."

The supplies, priced at about US$10 per million British Thermal Units (BTU), will come from Asia, and countries including Algeria, Oman and Egypt, he said.

Gas for May delivery dropped 1.6 percent to settle at US$7.801 per million BTU on the New York Mercantile Exchange last Friday. Benchmark futures are 9.3 percent higher than a year ago.

Taiwan Power Co (台電), which supplies three quarters of the island's electricity, may increase gas consumption 9 percent to 4.24 million tonnes this year, spokesman Clint Chou (周義岳) said last Wednesday.
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