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Updated Tuesday, February 3, 2009 3:58 pm TWN, By Dinakar Sethuraman and Yu-Huay Sun, Bloomberg

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Taiwan's December LNG imports plunge 17% on slowdown

TAIPEI, Taiwan -- Taiwan, Asia's third-biggest importer of liquefied natural gas, bought 17 percent less of the fuel in December as the global recession cut demand from power producers.

The island purchased 1.2 million kiloliters, or 548,000 metric tons, of the cleaner-burning fuel, data from the Bureau of Energy showed today. In 2008, LNG imports rose 9.5 percent to 8.99 million tons, according to the bureau.

“The quick global economic downturn is depressing energy consumption,” Wei Juen-shen, a planning official at the energy bureau, said by telephone in Taipei today. “Gas demand from electricity generators dropped.”

Electricity sales at Taiwan Power Co., the island's monopoly grid operator, fell 6.6 percent in December from a year earlier, according to a company newsletter. Generators account for about 80 percent of Taiwanese LNG consumption.

Unit costs of the island's LNG imports dropped in December by about 18 percent to $507 a ton as the global financial crisis lowered prices in line with crude oil prices. Crude, a benchmark for LNG pricing, has declined by more than 70 percent in New York from a record last July. In 2008, unit costs of the LNG imports rose 43 percent to $747 a ton, the energy bureau's data showed.

The Taiwanese economy probably entered a recession in the fourth quarter, the statistics bureau said in November. It will release economic data for 2008 and update forecasts for 2009 on Feb. 19.

Taiwan purchased two LNG cargoes for immediate delivery from Nigeria in December, paying $920 a ton, equivalent to about $17.5 per million British thermal units, compared with about three cargoes a year earlier at an average price of about $12, the data from the energy bureau showed. Benchmark gas futures in New York were at $4.6 per million Btu.

LNG is natural gas that is chilled to liquid form for transportation by ship to destinations not connected by pipeline. On arrival, it's turned back into gas for distribution to power plants, factories and households.

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