ENERGY POLICY & LNG SUPPLY AND DEMAND in TAIWAN LNG Producer Consumer Conference Tokyo, Japan 19 September 2012 Sheng-Chung LIN Chairman CPC Corporation, Taiwan
Outline Ⅰ Ⅱ III VI Introduction of CPC Taiwan s Energy Policy LNG Supply and Demand in Taiwan Market Expectations
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 Natural Gas 21 fields in 7 countries 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
Taiwan s Energy Policy
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 80,000 60,000 40,000 20,000 0 10 3 KLOE Primary Energy Supply 0.3% 10.1% 6.9% 49.5% 33.2% 0.5% 8.7% 11.6% 45.3% 34 % 2002 2011 others Nuclear Natural Gas Crude & Petrol Products Coal Products 5
240% 220% 200% 180% 160% 140% 120% 100% 80% 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% Year 2002 =100% LNG Consumption Domestic energy consumption Real GDP Energy Intensity +125% +47% -20% 60% 2002 2005 2008 2011 Source: Directorate General of Budget, Accounting and Statistics, ROC * Energy intensity, defined as Domestic energy consumption divided by Real GDP. LNG grows rapidly 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 ecofriendly. Phase out 1 st ~3 rd nuclear power plants (5.1GW). 7
LNG Supply and Demand Ⅰ in Taiwan
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 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. 150% 140% 130% 120% 110% 100% 90% Y2007=100% LNG growth rate Electricity growth rate GDP growth rate +45% +17% +4% 2007 2008 2009 2010 2011 Unit: MTPA 15 12 10.9 12.0 9 8.3 9.1 8.8 6 3-2007 2008 2009 2010 2011 10
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% LNG Demand: Main customers & electricity mix 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 Diversity Allocation to worldwide supply sources 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 Demand on New Energy Policy To reach the goal of low-carbon green energy environment, Taiwan government has drawn an ambitious plan to increase LNG consumption. LNG demand may increase from 12 million ton in 2011 to 20 million ton in 2030 depending on economic situation and energy demand. 20 18 16 14 12 10 MTPA LNG Demand Forecast 67% 20 MTPA 2011 2015 2016 2019 2023 2030 13
Consumers Expectations
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. y-o-y % change 30 20 10 0-10 -20 Japan South Korea Taiwan 2008 2009 Year 2010 2011 100 Source; The LNG Industry, 2011 & 2011, GIIGNL Demand Q'ty (106 T) 80 60 40 20 0 70.87 2010 2011 % change 11.6 79.09 32.64 35.55 8.92 Growth (%) 9.12 11.1812.2 Japan South Korea Taiwan 12 11 10 9 8 15
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. 16
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. 17
Thank You for Your Attention