Taiwan's LNG imports rise for third month on economy

The island purchased 2.02 million kiloliters, or 917,000 metric tons, in October compared with 915,000 tons a year earlier, e-mailed data from Taiwan's Bureau of Energy showed today. It paid US$423.4 million, or US$461.9 a ton, last month, equivalent to US$8.8 per million British thermal units. Taiwan's gross domestic product will probably grow 6.9 percent in the October-December period from a year earlier, after declining for five straight quarters, the statistics bureau said in Taipei on Nov. 26. Industrial output increased 6.6 percent in October, after rising 1.7 percent in September, the economic ministry said on Nov. 23.

“The pace of recovery will largely depend on the performance of the industrial sector,” said Alexis Aik, a consultant for FACTS Global Energy Group. “Generally, we do expect some recovery in demand for LNG over the next few months.”

Taiwan's power plants account for about 78 percent of gas demand on the island, Aik said in an e-mail today.

Spot purchases rose to about four cargoes last month from three in September, the energy bureau data showed. Taiwan imported LNG on multiyear contracts from Indonesia, Malaysia and Qatar. It received a total of 538,000 kiloliters of spot cargoes from Oman, Nigeria, Equatorial Guinea and Russia in October.

Short-Term Supplies

“The increasing requirements for spot or short-term cargoes by Taiwan also provides a positive indication” for the island, Aik said.

The commissioning of the second LNG terminal in Taiwan is boosting purchases, rather than a pick up in demand, Tony Regan, a consultant at Tri-Zen International Ltd., said in a mobile text message.

Prices for spot purchases averaged US$8.26 per million Btu, about US$3 per million Btu lower than what Taiwan paid for term purchases from Indonesia, calculations based on the data showed.

Spot LNG prices delivered to Asia may drop by more than 40 percent over the next 12 months to 18 months to below US$3 per million Btu from more than US$5 now, Wood Mackenzie Consultants Ltd. said in September. Term prices are typically linked to a basket of Japanese crude oils in Asia, and crude has gained 72 percent this year in New York trading.

LNG is natural gas that's been chilled to liquid form, reducing it to one-six-hundredth of its original volume 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.

Japan and South Korea were Asia's largest buyers of LNG last year, according to BP Plc.

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