State-owned Taiwan Power Company, or Taipower, has issued a Request forExpression of Interest for its first international long-term LNG supplycontract, seeking 1.8 million-2.4 million mt/year of LNG for 15 years orlonger.
Taipower issued the tender at the end of last year, requesting for LNGwith a gross heating value of of 1,034-1,180 Btu/Scf to be delivered to thecompany's planned Taichung receiving terminal.
The terminal is slated for completion in the second half of 2023, whichis 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 localtime (0900 GMT). The company plans to shortlist potential suppliers and issuea Request for Proposal by the end of the third quarter of 2018, with contractnegotiations to start in the fourth quarter.
The company's requirement is underpinned by Taipower's planned Taichungcombined cycle Unit 1 and Unit 2 power plants totaling 2.6 GW of generationcapacity. Taipower is currently solely supplied by CPC Corp., Taiwan's onlyLNG importer.
Taipower's move to secure long-term supply underscores the Taiwanesegovernment's announcement in 2017 on shifting the country's energy mix tophase out nuclear power generation and reduce carbon emissions. By 2025,gas-fired power generation is expected to constitute 50% of total electricitygenerated.
In 2016, 82% of Taiwan's total electricity generation came from thermalfuels: coal (45.4%), natural gas (32.4%) and oil (4.2%), according to theBureau of Energy, Ministry of Economic Affairs.
Taipower's total power generation in 2016 was 174 GWh, with gas-firedgeneration accounting for 36% of the company's total power generation.
Taipower is currently awaiting approval from the Ministry of EconomicAffairs for its feasibility study on the power plants and LNG facility, withexpectations to receive the approval in April 2018. Environmental assessment approvals for the power plants and LNG receivingterminal is expected to be secured by May 2019, while environmental assessmentapprovals for the breakwater is expected by January 2020. The commercialoperation date for the Taichung combined cycle Unit 1 and Unit 2 is plannedfor March 2024 and Jan 2025, respectively.
A total of three storage tanks of 160,000 cubic meters each will also bebuilt at the Taichung terminal, with the first storage tank expected to becompleted by August 2023. However, due to limited storage tanks in theterminal's initial start-up stage, the company will require a narrower GHVrange of 1,034-1,101 Btu/Scf. The terminal's berth is also planned for 170,000-cu m vessels, but hasfuture considerations for accommodating ships as large as 210,000-260,000 cum.
Taipower is also developing plans to link the upgraded Tung Hsiaocombined cycle Unit 4, Unit 5 and Unit 6 to its Taichung terminal and willissue a corresponding REOI for LNG supply to feed the three units at a laterdate.
The plans for the Tung Hsiao units also include the addition of two moreterminal storage tanks.
--Edwin Loh, edwin.loh@spglobal.com
--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com