By John Westbrook
OGJ Correspondent
TAIPEI, July 9 -- Taiwan's state-owned Chinese Petroleum Corp (CPC) has won a contract to supply 1.7 million tonnes/year of LNG to the Taiwan Power Co.'s Tatan plant.
CPC's winning bid of $298.2 billion (Twn.) or $8.65 billion (US) for the 25-year contract that begins in 2008 took industry watchers by surprise, as it was nearly 25% below the $400 billion (Twn.) or $11.6 billion (US) floor price that Taipower set and 6% lower than the next lowest bid.
Other companies competing for the contract were Tung Ting Gas Corp, Talin LNG Ltd., and United Resources Inc.
Local media cited CPC Vice-Pres. Roy Chiu as saying that CPC will purchase LNG required to fulfill the terms of the contract from Qatar Gas II, a joint venture of Qatar Petroleum and ExxonMobil Corp. The Qatari firm has offered to sell LNG to CPC on very favorable terms in what is being viewed as a move to replace Indonesia as Taiwan's primary source of LNG once CPC's existing contract to purchase 1.5 million tonnes/year of LNG expires in another 5 years.
When announcing the contract, CPC Pres. Wenent Pan said the company would spend more than $20 billion (Twn.) or $580 million (US) to build two receiving terminals and to connect pipelines.
One of the new terminals will be located at Taichung Port, with the other to be built at an as-yet-undisclosed site in northern Taiwan. Construction of the terminals and pipelines is scheduled to get under way in first half 2004.