Taiwan May Cut LNG Purchases by 11% This Year as Demand Falls

By Yu-huay Sun

Feb. 19 (Bloomberg) -- Taiwan, East Asia’s third-biggest importer of liquefied natural gas, may reduce purchases of the fuel by 11 percent this year as the recession cuts demand.

CPC Corp., the island’s only LNG importer, may buy about 8 million metric tons of the fuel this year compared with 9.03 million tons in 2008, C.S. Lin, a company vice president, said by telephone from Taipei today.

“Demand is falling, from power generators and industrial users as well,” Lin said.

Fuel demand from Taiwanese manufacturers and power plants has dropped as the global recession slashes exports, which account for more than of half of the island’s gross domestic product. Taiwan’s economy may shrink 2.97 percent this year after contracting a record 8.36 percent in the fourth quarter from a year earlier, the government said yesterday.

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.

Taiwan bought 17 percent less of the cleaner-burning fuel in December than a year earlier, data from the energy bureau showed on Feb. 3.

LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), 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.

To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net