In 2013, CPC Corp, Taiwan invested in the Australian Prelude FLNG, the world’s largest floating liquefied natural gas (LNG)development project.
Now, less than a year after production started at Prelude, Taiwan is reaping the benefits: last week a large tanker holding 67,000 tonnes of LNG arrived in Kaohsiung’s Yongan Port (永安港), a highly significant event in terms of Taiwan’s energy stability and supply source diversification.
The main company behind the Prelude project is Shell, and in addition to CPC, the other investors are Japanese Inpex Corp and South Korean Korea Gas Corp.
Together with the Ichthys gas field project off the coast of Western Australia, in which CPC also has a stake, Australia is the world’s largest natural gas exporter, and is now Taiwan’s second-largest source of natural gas.
On the other hand, in August last year, CPC signed a 25-year purchasing agreement worth US$25 billion with the US’ largest LNG exporter, Cheniere Energy, which is expected to supply 2 million tonnes of LNG annually beginning in 2021.
Taiwan is currently working toward its goal of becoming nuclear-free by 2025. By that time, 50 percent of Taiwan’s energy will be supplied by LNG, 30 percent by coal-fired power plants and 20 percent by renewable energy sources.
This would require a sharp increase in the need for LNG, which means that a stable supply is a national security issue that would affect the lives of all Taiwanese.
The US and Australia have become important partners in Taiwan’s energy transformation, which is an inseparable and vital part of the US’ Indo-Pacific strategy.
The Asia EDGE: Enhancing Development and Growth through Energy initiative launched by US Secretary of State Mike Pompeo focuses on the energy security of the US’ allies in the Indo-Pacific region.
It is no secret that the main goal of the Indo-Pacific strategy is to open up the Indo-Pacific region and freedom of navigation in both the sea and the skies, along with maritime security, lie at its center in order to be able to guarantee that energy transportation routes in the region remain unobstructed.
Although the US and Australia are both major energy exporters, their competition should not stop them from working together for the common good.
In November 2017, the US and Japan set up the Japan-US Strategic Energy Partnership within the framework of the Japan-US Economic Dialogue. The main target of this partnership is to develop the natural global gas market.
In February last year, the US and Australia initiated the Australia-US Strategic Partnership on Energy in the Indo-Pacific.
This partnership includes maintaining open and competitive energy markets and helping to bring about universal access to energy. There is essentially no difference between this partnership and the partnership between the US and Japan, but it is the first to explicitly name the Indo-Pacific in its title.
In April last year, the US and India formally entered into a strategic energy partnership. That was followed by news that India would buy US LNG, as the government of Indian Prime Minister Narendra Modi is planning to increase the proportion of LNG from the current 6 percent to 15 percent.
The US, Japan, Australia and India are the main pillars of the Indo-Pacific strategy, and their mutually beneficial energy cooperation is the most concrete result of the Indo-Pacific strategy.
The best example of this is a forum on good energy governance in the Indo-Pacific region that was recently held in Taipei with the attendance of Japan, Australia and other like-minded partner countries.
In particular, as the US takes the lead, platforms such as APEC and the US-Taiwan Global Cooperation and Training Framework are important parts of energy cooperation, which is gradually becoming a part of multilateral cooperation between Taiwan, the US, Japan and Australia.
Taiwan is not missing out on energy cooperation, the most important building block of the Indo-Pacific strategy.
Chen Yung-chang is deputy secretary-general of the Taipei Chamber of Commerce.
Translated by Perry Svensson
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