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CPC to buy big on LNG spot market

Taipei: CPC Corp., Taiwan's state-owned oil refiner, may buy a record number of liquefied natural gas cargoes in the next few years from the spot market because contracted supplies have failed to match demand, reports the China Post.

CPC, which accounts for about 5 percent of the world LNG market, may buy 2 million metric tons of LNG in 2008 and 2009 in individual cargoes and under short-term agreements, said CPC Vice President C.S. Lin. The company's long-term contracts don't meet demand from Taiwan Power Co., the island's biggest electricity producer, which needs the fuel to cover delays in completion of a nuclear power station.

"There'll be a shortfall if the company solely relies on long term contracts," Lin said in a phone interview from Taipei Thursday.

CPC has turned to the spot market for LNG as Taiwan's demand for the fuel is forecast to rise 12.5 percent to 9 million tons in 2008 and to 10.5 million tons in 2010, boosted by electricity use by electronics makers. CPC imported about 7.8 million tons of LNG last year under spot and term agreements.

The company will probably buy as many as 31 spot LNG cargoes this year from 27 last year, accounting for about 23 percent of its total purchases of the fuel, Lin said in April. Typically, short term agreements cover supply contracts of less than three years duration.

The company is buying spot cargos from countries including Nigeria, Algeria, Malaysia and Trinidad and Tobago, as well as BP Plc's Tanguhh project in Indonesia, Lin said. A LNG cargo is about 50,000 to 55,000 tons.

Taiwan Power, which generates about 75 percent of the island's electricity, said in October 2005 that it will delay the start-up of a nuclear station by three years to 2009.

CPC currently has long-term agreements for 5.6 million tons. The company has three contracts with Indonesia and Malaysia for 5.6 million tons of LNG a year. A 25-year one with Ras Laffan Liquefied Natural Gas Co., a Qatari joint venture with Exxon Mobil Corp., will start in 2008.

Power producers account for about 75 percent of the island's natural gas consumption, while LNG meets more than 95 percent of Taiwan's gas demand.  [10/09/07]

 

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