Tue, Feb 17, 2009 - Page 11 News List

Taiwan cancels LNG deliveries

BLOOMBERG

Taiwan, East Asia’s third-biggest importer of liquefied natural gas (LNG), was seeking to cancel delivery of six LNG cargoes from Indonesia this year as fuel demand slows, a government official in Jakarta said.

One shipment to Taiwan from the Bontang LNG plant in East Kalimantan Province was canceled last month, Djoko Harsono, deputy of financial, economy and marketing at Indonesian oil and gas regulator BPMigas, told reporters yesterday.

Taiwan’s request to cease more supplies was being considered, Harsono said.

Fuel demand from Taiwanese industries and power plants has dropped as the global economic downturn slashes exports.

Electricity sales at Taiwan Power Co (Taipower, 台電), the nation’s monopoly grid operator, fell 6.6 percent in December from a year earlier, a company newsletter said.

CPC Corp, Taiwan (CPC, 台灣中油) also told Dow Jones Newswire yesterday that the state-run company wants to cut its LNG imports by about 13 percent this year, citing Lin Cheng-shiung (林正雄), CPC’s head of natural gas business division.

“We are talking with all of our suppliers to reduce [LNG] imports,” Dow Jones quoted Lin as saying. “There’s simply no [domestic] demand.”

DECLINES

CPC’s LNG imports this year are likely to decline by about 1.2 million tonnes from the 9.2 million tonnes last year, Lin said.

Generators account for about 80 percent of Taiwanese LNG consumption.

“Demand for gas from power plants dropped in 2008 because of the crisis,” Wei Juen-shen (韋潤生), a planning official at the Bureau of Energy, said by telephone yesterday.

“We saw a significant drop in imports and exports in December,” Wei said.

Taiwan bought 17 percent less of the cleaner-burning fuel in December, data from the energy bureau showed on Feb. 3. Purchases reached 1.2 million kiloliters, or 548,000 tonnes.

Last year, LNG imports rose 9.5 percent to 8.99 million tonnes.

The Taiwanese economy probably entered a recession in the fourth quarter, the statistics bureau said in November.

Economic data for last year and updated forecasts for this year are expected to be released on Thursday.

“We do not know how bad the economy will be, so we cannot estimate LNG demand at this moment,” Wei said. “The trend has changed significantly over the last two or three months because of the global financial crisis.”

Indonesia, which lost its place as the world’s largest LNG exporter to Qatar in 2006, plans to purchase as much as eight spot cargoes to meet a shortfall in its contractual commitment this year, Harsono said yesterday.

The Bontang and Arun LNG plants are unable to meet a 316-cargo commitment to Japan, South Korea and Taiwan because of demand for gas from local industries, including fertilizer makers, he said.

LNG is natural gas that is chilled to liquid form for transportation by ship to destinations not connected by pipeline. On arrival, it is turned back into gas for distribution to power plants, factories and households.

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