ENERGY POLICY & LNG SUPPLY AND DEMAND in TAIWAN LNG Producer Consumer Conference Tokyo, Japan 19 September 2012 Sheng-Chung LIN Chairman CPC Corporation, Taiwan
LNG Producer - Consumer Conference 2012 Outline Ⅰ Introduction of CPC Ⅱ Taiwan s Energy Policy III LNG Supply and Demand in Taiwan VI M k t Expectations E t ti Market
CPC Corporation, Taiwan: Leading energy company in Taiwan CPC, established in 1946, is an integrated oil & gas company. Ranking 337 th in the world and 3 rd in Taiwan on the Fortune 500 list. Exploration & Production 21 fields in 7 countries Natural Gas 2 LNG re-gasification terminals Refinery & Petrochemicals Fuels Marketing LPG Lubricants 3 refineries (capacity:720,000 barrels/d) Filling-Station (market share:77%) 1 petrochemical plant (ethylene:850,000 ton/y) CPC-owned: 639 franchise: 1,382 3
LNG Producer - Consumer Conference 2012 gy Policy y Taiwan s Energy
Energy Overview in Taiwan In last decade: Primary Energy grew 24% Natural Gas increased 109% In 2011: Crude & Coal shared 79.3% of Primary Energy Supply Natural Gas 11.6% & Nuclear 8.7% respectively 99.33% of total energy supply imported 160,000 140,000 120,000 100,000 80,000000 60,000 Primary Energy Supply 0.3% 10.1% 6.9% 49.5% 0.5% 8.7% 11.6% 45.3% others Nuclear Natural Gas 40,000000 Crude & Petrol Products 20,000 33.2% 34 % Coal Products 10 3 KLOE0 2002 2011 5
Energy & GDP Growth Rate In last decade(2002-2011): Energy Intensity: 20% decreased LNG Consumption: 125% increased Real GDP : 47% increased 2012 Estimated GDP growth rate is 1.66% 240% 220% 200% Year 2002 =100% LNG Consumption Domestic energy consumption +125% Real GDP 180% LNG Energy Intensity 160% grows 140% +47% rapidly 120% 100% 80% -20% 60% 2002 2005 2008 2011 Source: Directorate Generale of Budget, Accounting and Statistics, ROC * Energy intensity, defined as Domestic energy consumption divided by Real GDP. in last decade 6
New Energy Policy in Taiwan 4-Stage Objectives: Ensure nuclear energy safety Completed the construction of 4 th nuclear power plant (2.7GW) in 2016. Steadily reduce nuclear energy dependence Build a friendly low-carbon green energy environment Gradually transform into a nuclear-free homeland Increase natural gas & renewable energy utilization for ecofi Phase out 1 st ~3 rd friendly. nuclear power plants (5.1GW). 7
LNG Producer - Consumer Conference 2012 LNG Supply and Demand in Taiwan Ⅰ
LNG/NG Facilities CPC owns and operates 2 receiving terminals. Taichung LNG Receiving Terminal Tunghsiao Station Tatan Station Tank storage: 480,000 KL Capacity of unloading: 4.5 mtpa Figure 8 loop of Gas Transmission i Network Yung-An LNG Receiving Terminal Tank storage: 690,000 KL Capacity of unloading: 9 mtpa 9
LNG Supply: Historical imported volume 98% Natural gas imported. 6 th largest LNG importing country in the world. Rising demand of LNG results from the growth of electricity and industry. Y2007=100% 150% LNG growth rate Electricity growth rate 140% GDP growth rate 130% 120% 110% 100% 90% +45% +17% 2007 2008 2009 2010 2011 +4% Unit: MTPA 15 12 9 6 3-8.3 9.1 8.8 10.9 12.0 2007 2008 2009 2010 2011 10
LNG Demand: Main customers & electricity mix 82 % gas for power generation (Taipower & IPPs) in 2011 29 % electricity from gas-fired generators (15GW) LNG as main substitute for nuclear when existing plants decommissioned Industrial 7% Residential 11% Gas Customers Mix IPPs 22% Taipower 60% Electricity Mix Cogeneration Renewable Energy Hydro Power Oil Nuclear Coal Gas 4.3% 2.6% 1.4% 3.3% 19.0% 29.1% 40.3% 11
LNG Procurement Strategy Security Purchase from reliable & stable sources at reasonable price Major volume from long-term contracts Allocation to worldwide supply sources Diversityit Interest in new supply sources from USA, Canada and Australia Competitiveness Portfolio of pricing index, Oil-linked & US Gas-linked Participation in upstream 12
LNG Producer - Consumer Conference 2012 Consumers Expectations Consumers
Main LNG Consumers Three major LNG importing countries, Japan, South Korea and Taiwan (JKT), account for 53% global LNG trade in 2011. JKT increase LNG import by 9.9% in 2011. change y-o-y % 30 20 10 0-10 -20 Japan South Korea Taiwan 2008 2010 2011 2009 Year Demand Q' ty (106 T) 100 Source; The LNG Industry, 2011 & 2011, GIIGNL 2010 2011 % change 11.6 79.09 80 70.87 60 40 32.64 20 0 35.55 8.92 Growth (%) 11.1812.2 Japan South Korea Taiwan 12 11 10 9.12 9 14 8
Consumers Expectations More Supply & More Flexibility = More Competition More Supply To meet increasing global demand, it requires more investment on LNG supply chain and unconventional production technology. Government policy to encourage LNG export and import, including application of LNG as fuel for marine tankers and land vehicles. Fair treatment to all importing countries and eliminate free-trade obstacles. More Flexibility Diverse gas price indexation, oil-linked and gas-linked, to allocate risk of pricing fluctuation. More flexibility on destination to invigorate market. 15
Conclusion LNG demand steadily increases LNG/NG plays a critical role in the global energy market as the primary alternative for crude and nuclear. Taiwan s new energy policy promotes LNG utilization. More LNG supply is expected Qatar & Australia are major supply countries for its abundant natural source and stable environment. Asian market is looking forward to US and Canada LNG without trade restriction. Prepare for the coming Golden Age of Gas For above purpose, support for and investment in LNG supply chain are continually required from government and LNG industry. LNG market is drastically changing; all players need more communication and cooperation. 16
Thank You for Your Attention