The Natural Gas Situation in Taiwan

Tien-Sung ChienEnergy Commission

Ministry of Economic Affairs

October 5, 2001

CONTENTSCONTENTS

A. Natural Gas Supply and Demand in 1980-

2000

B. Outlook for Natural Gas

C. Measures for Promotion of Natural Gas

Utilization

D. Conclusions

Natural Gas Supply and Demand

in 1980-2000

Coal

Petroleum

Natural GasHydro Power

Nuclear Power

0

10

20

30

40

50

60

70

80

90

100

1980 1985 1990 1995 2000

Nuclear Power

Hydro Power

Natural Gas

Petroleum

Coal

Energy Supply Structure（ 1980 - 2000 ）

%

year

1959

16691418 1471 1480

13271209 1223

1395 1405

2246

3290 32613412

4143

4629 4723

5538

6561 6677

7200

16691418 1471 1480

1209 12231395 1405 1304

1327

1959

987855 828 908 942 901 860 879 856 747

0

1000

2000

3000

4000

5000

6000

7000

8000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Natural Gas Supply （ 1980-2000 ）

103m3

Year

Indigenous

Imported

Natural Gas Imports（ 1990-2000 ）

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Malaysia

Indonesia

Million tons

Year

0.71

1.511.70 1.70

2.262.46

2.61

3.22

3.934.00

4.43

Natural Gas Consumption（ 1980-2000 ）

1980 1990 2000 1980-2000 Year

Item 106m3 % 106m3 % 106m3 % Growth Rate ﹪

Total Consumption 1,748 100 1,799 100 6,400 100 6.7

Power Generation － － 299 17 3,702 58 －

Industrial 1,421 81 833 46 1,698 26 0.9

Residential 277 16 555 31 780 12 5.3

Commercial 49 3 96 5 181 3 6.8

Others 1 0 15 1 39 1 25.8

City Gas Utilities Profile

Number of Utilities ： 25

Material: Natural gas / LNG

Clients ： 2.15 million

Gas Sales ： 1billion cubic meters in 2000 2.74 million cubic meters per day

Gas Prices ： NG1 : 11.18 － 13.46NT$ NG2 : 13.29 － 15.01NT$

Gas Pipeline Length ： 16,000KMHigh Pressure Pipeline： 2,600KMMiddle Pressure Pipeline： 4,600KMLow Pressure Pipeline： 8,800KM

CPC's Prices NG1 NG2

Industry 8.7 9.68

City Gas Utility 8.11 9.02

Cogenration 8.07 8.98

Power Generation

WinterMonths 6.7 7.46

Other Months 7.45 8.29

SummerMonths 7.82 8.70

City Gas Utility Prices 11.18-13.46 13.29-15.01

Gas Prices

Unit : NT$/M3

Outlook for Natural Gas

Outlook for Natural Gas

Over the next two decades, the demand for natural gas is expected to grow significantly.It will be increased from 4.8 million tons in 2000 to 13 million tons in 2010 and 16 million tons in 2020.

The contribution of natural gas to total primary energy supply will

increase from 7% in 2000 to 14% in 2020.

Natural gas for power generation will remain the largest consuming

sector and occupy 60 -70% of total natural gas consumption.

The share of gas-fired unit to total power generation will increase

from 16% in 2000 to 25% in 2020.

Projected Gas - Fired Power Plants

ProjectCapacity（MW）

Gas Demand（MTA）

Start Year

Ever Power 960 0.41 2001

Hsin Tao Power 600 0.27 2001

Chiahui Power 670 0.29 2003

Kuo Kung Power 470 0.20 2003

Star Energy Power 490 0.23 2004

Sun Ba Power 980 0.47 2004

IPP Total（Before 2005） 4,170 1.87

Tatan Project 4,000 1.88 2003

Tatan4,000Mw

2002

Tungsiao1,060Mw

Hsinta2,200Mw

South1,090Mw

Talin1,050Mw

Ever Power960 Mw

Kuo Kung600 MwJun., 2003

Hsin Tao600 MwSep., 2001

Star Energy490 MwApr., 2004

Sun Ba980 MwApr.,2004

Chiahui670 MwSep., 2003

Taipower

IPP

Gas-Fired Power Plants in Taiwan

Measures for Promotion of

Natural Gas Utilization

Measures for Promotion of Natural Gas Utilization

Promote the construction of northern LNG receiving terminal. Expand gas infrastructure including terminal facilities, inland and

sea -bed trunklines, storage tanks . Increase the use of gas through gas- fired units using in middle

load replace peak load Encourage the construction of gas-fired units of IPP. Reduce supply cost of natural gas by removing import tariff and

excise tax gradually.

CPC Implements quantify discount system of gas prices for industry and city gas customers.

City gas utilities have been allowed to sell gas to industrial users since 1999.

CPC returns its revenues from canceling special price for fertilizer industry to all customers.

Natural Gas Infrastructure

Yung An LNG Terminal

240KM

Tung Hsiao

Projected LNG Terminal Shin LungShin Jr

The Great Taipai

Yang Ming Shan

Shin Shin

Shin Tai

Shin Hai

Shin Chung

Shin Hu

Shin Chang

Shin Yun

Shin Chia

Shin Ying

Shin Lin

Chu Ming

Shin Hsiung

Shin Kao

Shin Nan

Shin Taur

Nan Jen

Shin Ping

Shin Chu

C.P.C.

Chu Chien

Yu Miao

Underground Gas Storage

LNG Terminal Facility

Projected LNG Terminal

Distribution Station

Trunk Pipeline

Ring Pipeline

Submarine Pipeline

Constructing New Pipeline

City Gas Utility

CPC’s Yung - An LNG Receiving Terminal

Main ItemsLNG Receiving

CapacityCompletion

Year

First Phase3 × 100,000 CBM inground tanks, aberth, submerged combustion /open - rack vaporizers

1.5 MTA 1990

Second Phase 3 × 130,000 CBM inground tanks, aberth, an open - rack vaporizer

4.5 MTA 1996

Third Phase240 km/36" submarine pipeline,154 km/26" inland pipeline, anopen - rack vaporizer

7.44 MTA 2001

Power Generation Cost in 2000

Unit : NT$/KWH

Oil-fired 1.78

Coal-fired 0.87

Gas-fired 2.44

Nuclear Power 0.78

Conventional Hydro 1.42

Source : Taiwan Power Company

Quantity Discount of Gas Prices

Item M3/Month Discount:NT$/M3

Q < 10,000M3 0

10,000M3 < Q < 300,000M3 0.03

300,000M3 < Q < 1,000,000M3 0.11

Q > 1,000,000M3 0.36

Industry

Q < 300,000M3 0

300,000M3 < Q < 1,000,000M3 0.01

1,000,000M3 < Q < 5,000,000M3 0.03

Q > 5,000,000M3 0.13

City Gas Utility

Source : Chinese Petroleum Corporatiom

Conclusions

Conclusions

Natural gas keeps playing an important role in Taiwan’s energy supply and demand.

Private invested northern LNG receiving terminal will increase supply diversity and hence improve the security of gas supply in Taiwan.

New gas infrastructure should be completed to cope with existing supply bottlenecks and meet regional growing demand.

Enhance the introduction and development of new technologies of gas supply system and gas equipment.

Competitiveness of gas cost will affect the demand for natural gas.