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Taiwan's Taipower seeks 1.8-2.4 mil mt/year of LNG supply for 15 years

Singapore (Platts)--1 Jan 2018 1024 pm EST/324 GMT


State-owned Taiwan Power Company, or Taipower, has issued a Request for Expression of Interest for its first international long-term LNG supply contract, seeking 1.8 million-2.4 million mt/year of LNG for 15 years or longer.

Taipower issued the tender at the end of last year, requesting for LNG with a gross heating value of of 1,034-1,180 Btu/Scf to be delivered to the company's planned Taichung receiving terminal.

The terminal is slated for completion in the second half of 2023, which is synchronized with the first cargo delivery, the tender document showed.

An oil-linked contract pricing basis is preferred but is negotiable, according to the document seen by S&P Global Platts.

The deadline for submissions for the REOI process is March 15, 5 pm local time (0900 GMT). The company plans to shortlist potential suppliers and issue a Request for Proposal by the end of the third quarter of 2018, with contract negotiations to start in the fourth quarter.

The company's requirement is underpinned by Taipower's planned Taichung combined cycle Unit 1 and Unit 2 power plants totaling 2.6 GW of generation capacity. Taipower is currently solely supplied by CPC Corp., Taiwan's only LNG importer.

Taipower's move to secure long-term supply underscores the Taiwanese government's announcement in 2017 on shifting the country's energy mix to phase out nuclear power generation and reduce carbon emissions. By 2025, gas-fired power generation is expected to constitute 50% of total electricity generated.

In 2016, 82% of Taiwan's total electricity generation came from thermal fuels: coal (45.4%), natural gas (32.4%) and oil (4.2%), according to the Bureau of Energy, Ministry of Economic Affairs.

Taipower's total power generation in 2016 was 174 GWh, with gas-fired generation accounting for 36% of the company's total power generation.

Taipower is currently awaiting approval from the Ministry of Economic Affairs for its feasibility study on the power plants and LNG facility, with expectations to receive the approval in April 2018. Environmental assessment approvals for the power plants and LNG receiving terminal is expected to be secured by May 2019, while environmental assessment approvals for the breakwater is expected by January 2020. The commercial operation date for the Taichung combined cycle Unit 1 and Unit 2 is planned for March 2024 and Jan 2025, respectively.

A total of three storage tanks of 160,000 cubic meters each will also be built at the Taichung terminal, with the first storage tank expected to be completed by August 2023. However, due to limited storage tanks in the terminal's initial start-up stage, the company will require a narrower GHV range of 1,034-1,101 Btu/Scf. The terminal's berth is also planned for 170,000-cu m vessels, but has future considerations for accommodating ships as large as 210,000-260,000 cu m.

Taipower is also developing plans to link the upgraded Tung Hsiao combined cycle Unit 4, Unit 5 and Unit 6 to its Taichung terminal and will issue a corresponding REOI for LNG supply to feed the three units at a later date.

The plans for the Tung Hsiao units also include the addition of two more terminal storage tanks.

--Edwin Loh, edwin.loh@spglobal.com

--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com




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