Background | Oil | Natural Gas | Coal | Electric Power | Environment | Profile | Links
Located across the Taiwan Strait from mainland China (80 miles at the closest point), Taiwan is a leading economic and trading center, with one of the busiest ports in the world (Kaohsiung). As Taiwan lacks sufficient domestic energy sources, it is almost totally dependent on energy imports.
Note: The information contained in this report is the best available as of August 2005.
After peaking in the second quarter of 2004, Taiwan's economy has been growing at a slower rate recently. Real GDP growth is expected to be 3.8 percent in 2005, down from 5.7 percent in 2004. Dampening factors include a slowdown in the export sector, high global oil prices, weakening external demand and uncertainty in the high-tech sector. Taiwan's economy is heavily oriented toward the manufacturing of consumer electronics products.
Taiwan was admitted to membership in the World Trade Organization (WTO) in November 2001, concurrently with China's admission. Unlike China, Taiwan was admitted to the WTO as a "developed country," which imposes more stringent requirements for reducing barriers to foreign competition. Taiwan recently has lifted some restrictions on direct trade with and investment in mainland China, which is expected to increase cross-strait commercial ties.
Oil is by far the dominant fuel in Taiwan's energy mix, accounting for 46 percent of total primary energy consumption in 2003. Coal also plays an important role (36 percent of total energy consumption), followed by nuclear power (9 percent), natural gas (7 percent), and hydroelectric power (less than 2 percent). Taiwan has very limited domestic energy resources and relies on imports for most of its energy requirements. The country's industrial sector accounts for about 42 percent of total energy demand, but this share is expected to decline slightly, since Taiwan's economy is moving toward newer, less energy-intensive industries. The transportation sector accounts for one-third of total energy demand.
Chinese Petroleum Corporation (CPC), Taiwan's national oil company, is the dominant player in all sectors of the country's petroleum industry, including exploration, refining, storage, transportation, and marketing. However, significant competition began in July 2000 with the opening of a refinery at Mailiao owned by Formosa Petrochemical Company (FPC), a subsidiary of the private Taiwanese petrochemical firm Formosa Plastics Group. Taiwan's legislature passed the Petroleum Administration Law in October 2001, which removed CPC's quasi-governmental policy implementation functions, and which will permit the eventual sale of a majority stake in the firm. When privatization eventually moves forward, foreign firms will be allowed to acquire stakes in CPC on an equal basis with domestic investors.
According to January 1, 2005 estimates by the Oil and Gas Journal, Taiwan's proven oil reserves are approximately 4 million barrels. Total oil production for 2005 is expected to be 8,404 bbl/d, of which 800 bbl/d is crude. Oil consumption for 2005 is estimated at 1,045,000 bbl/d. The majority of the oil is consumed by the industrial sector. Most of Taiwan's crude oil imports come from the Persian Gulf, though West African countries also are important suppliers. To prevent supply disruptions, Taiwan's refiners are under a regulatory requirement to maintain stocks of no less than 30 days of consumption. Refiner-held strategic petroleum stocks are the norm in Asia, and Taiwan's policy is similar to those of Japan and South Korea.
To meet domestic oil demand, CPC participates in overseas oil exploration projects. The company currently has seven fields in four countries, with the largest fields in Ecuador and Indonesia. In October 2004, CPC and the government of Chad signed a letter of intent to jointly prospect for oil in Chad. CPC hopes to produce as much as 100,000 bbl/d from this project.
Despite the lack of formal ties between Taipei and Beijing, Taiwan and China have developed a cooperative relationship in the field of energy. CPC and Beijing's state-owned China National Offshore Oil Corporation (CNOOC) signed a deal in 1996 to jointly explore a 5,939-square-mile area in the Tainan Basin of the Taiwan Strait. Taipei officially ratified the deal in March 1998 and the two companies signed a $25 million production sharing contract (PSC) in May 2002. CPC received approval in March 2004 to open representative offices in Shanghai and Beijing, only to suspend the plans in July 2004, reportedly due to the immaturity of the mainland market and the sensitive relations between China and Taiwan. Two wells drilled under the PSC in 2003 and 2004 were both dry. The third and final well under the PSC has yet to be drilled.
Prior to the construction of the FPC Mailiao refinery, Taiwan imported a significant quantity of refined petroleum products. Now the country's refining capacity exceeds its domestic consumption of petroleum products, making Taiwan a net exporter. Responding to growing fuel demands in the region, as well as a domestic shift away from oil-fired power generation, Taiwan is seeking to export more of its fuel refining production. Taiwan's refining capacity has increased by about 69 percent during the past 10 years. Three refineries owned by CPC -- Ta-Lin, Kaohsiung and Tao yuan -- have a total capacity of 770,000 bbl/d, according to the Taiwan Ministry of Economic Affairs. The first phase of production from FPC's Mailiao refinery began in mid-2000 at 150,000 barrels per day (bbl/d), reaching full capacity of 450,000 bbl/d in 2002.
CPC's petrochemical production is based at its Kaohsiung Refinery and the Linyuan Petrochemical Plant. On July 1, 2005, there was an explosion at the No 3 naphtha cracker in Linyuan. CPC plans to keep it shutdown until mid-September 2005 in order to facilitate repairs. CPC is currently planning a petrochemical technology park to be constructed in the Yunlin Offshore Industrial Zone. The complex would include a 300,000 bbl/d refinery, a naphtha cracker, several associated petrochemical units and infrastructure. The project is expected to get underway in 2005 and to be put on stream in 2010. In June 2005, Abu Dhabi's International Petroleum Investment Corp. (IPIC) signed a memorandum of understanding (MOU) with CPC to invest up to $2.4 billion in the complex. A final agreement between the companies is expected to be reached by the end of 2005. The Formosa Plastics Group is planning to invest NT$120 billion (appx. $3.7 billion) to build a 600,000 bbl/d refinery at Yunlin. With this additional capacity, Formosa would replace CPC as Taiwan's top oil products supplier.
CPC is also responsible for Taiwan's natural gas exploration, production and imports. Taiwan had net imports of 258 billion cubic feet (Bcf) of liquefied natural gas (LNG) in 2003 -- up more than 4 percent from 2002. Total natural gas consumption in 2003 was 298 Bcf. CPC anticipates an increase in natural gas demand due to the construction of additional power plants and government plans to triple LNG consumption by 2010.
Indonesia and Malaysia are Taiwan's current LNG suppliers; however, concerns have grown over the stability of the Indonesian supply, particularly after Indonesia's Petramina canceled ten LNG cargoes to Taiwan in late 2004. CPC has since worked to diversify its LNG supply. In June 2005, CPC signed a 25-year LNG purchase agreement with RasGas of Qatar to begin in 2008.
CPC operates Taiwan's only LNG receiving terminal at Yungan, Kaohsiung. However, Taiwan's energy sector liberalization program has made possible the construction of competing LNG import terminals. Several private Taiwanese and Japanese firms formed a consortium, Tung Ting Gas, to pursue an LNG regasification project in Tao-Yuan county. Construction of the terminal began in mid-2001 by Japan's Chiyoda and Taiwan's CTCI, in the hope of winning an LNG supply contract. When Tung Ting failed to received the contract, work on the project was suspended. Meanwhile, CPC's new LNG import terminal in Tatan is scheduled for completion in 2009 and will increase Taiwan's LNG importing capacity from 4.5 to 7.5 million tons.
Coal is used in Taiwan for electric power generation, as well as for the steel, cement and petrochemical industries. Domestic coal production stopped in 2000, so Taiwan meets its 55.8 million short ton (Mmst) demand with imports, mainly from Indonesia, Australia and China. In June 2005, China Steel signed a contract to import over 4.4 Mmst of coal from Russia. In September 2004, Taiwan agreed to buy up to 176 Mmst annually of treated coal from Alaska, known as K-Fuel.
Taiwan Power Company (Taipower), the state-owned electric power utility, currently dominates Taiwan's electric power sector. Taipower's monopoly status technically ended after a 1994 measure which allowed independent power producers (IPP's) to provide up to 20 percent of Taiwan's electricity. IPPs are required to sign power purchase agreements with Taipower, which distributes the power to consumers. After joining the WTO in 2001-2002, foreign firms were permitted 100 percent ownership of firms in the sector.
The privatization of Taipower, which has been delayed several times, is currently scheduled for 2006. Under the basic framework envisioned, Taipower would retain a monopoly on transmission and distribution networks, while its generation assets would be split into several firms. Taipower would also retain exclusive control over nuclear and hydropower plants. The planned privatization is to an extent the result of rapidly rising power demand in Taiwan, and Taipower's inability to build sufficient capacity, which led to a power crisis during the summer peak-demand months in 1999. Although it maintains a monopoly over the electricity market, Taipower has not enjoyed high profits. In 2004, in fact, Taipower's net income dropped 74 percent from the previous year. One reason for the falling revenues has been a freeze on energy rate increases that has been in place since 1983. In addition, the Democratic Progressive Party (DPP) has required new IPPs to use natural gas, rather than cheaper alternatives like coal or nuclear power. In late 2005, the government is expected to permit a rate increase to account for higher fuel costs. If this does not occur, Taipower will likely have significant losses in 2005.
At the end of 2004, Taipower reported a total installed capacity of 34,598 MW, of which 72 percent was thermal, 15 percent was nuclear, and 13 percent was hydropower. Taipower also reported nuclear generation reaching 37.9 billion kilowatthours in 2004 from its three plants (Kuosheng and Chinshan in the north and Maanshan in the south). The future of nuclear power in Taiwan remains controversial. The Democratic Progressive Party government came into office in early 2000 promising to approve only natural gas-fired power projects in the future, and to increase natural gas' share of Taiwan's power generation to roughly one-third by 2010. This raised the question of what to do about the 2,700-MW Kungliao nuclear power plant, which is currently under construction. The DPP government attempted to terminate the project in October 2000, but action by the legislature and courts forced a resumption of construction in February 2001. In March 2005, the first of two reactors, which were delivered to the site in 2002, was installed. The first reactor is scheduled to begin operation in July 2006. The second reactor is expected to be up and running by July 2007. Although Taipower set a record low for the cost of nuclear power generation ($0.02/KwH) in 2004, the current government does not plan to support additional nuclear generating capacity and may introduce a nuclear phase-out law. Meanwhile, some officials have started to question the designation of natural gas as the "fuel of choice" for electricity generation. In 2004, the cost of LNG increased more than 50 percent, making it the most expensive fuel choice.
Taiwan's first major IPP, the 2,400 megawatts (MW) coal-fired Mailiao plant owned by the Formosa Plastics Group, began operation in 1999. It currently sells about three-quarters of its output to Taipower. The 1,320-MW coal-fired Ho Ping Power Station began commercial operation in 2002. It is a joint venture including Taiwan Cement Corporation and Hong Kong's China Power and Light Corporation. Several other IPP projects have been approved.
In June 2004, a 800-MW coal-fired power plant to be built at Changhua in central Taiwan was approved. The plant will be built by Taipower and will come online in two stages in 2011. Additionally, Taipower is building the 4,384-MW combined-cycle Tatan Power Plant. Two oil/gas-fired units are expected to be installed by October 2006, with the four remaining gas-fired units to come online by May 2010.
The Taiwanese government encourages the use of renewable energy sources, including wind power, solar energy and biomass. It expects these sources to account for 10 percent of the country's generation capacity by 2010. In the first phase of its wind power project, Taipower plans to install 60 units with 99 MW of capacity. In the second phase, it is aiming at 63 units with a total capacity of 126 MW. New hydro projects are expected to come online in January 2006 (Kukuan Power Plant Rehabilitation Project), December 2007 (Bihai Power Project), and January 2009 (Shibao Power Project). Beginning in fiscal year 2006, the government plans to allocate NT3 billion ($96.8 million) each year to finance the research, development and application of renewable energy.
Taiwan is grappling with the environmental ramifications of building one of Asia's richest economies through a decades-long commitment to economic growth. Environmental issues include the pollution of air and water in urban areas, stores of nuclear and toxic wastes, loss of fisheries and coastal ecosystems, and an overall degradation of the country's natural landscape.
Per capita energy use in Taiwan is on par with several of its neighboring countries in Asia. However, energy intensity levels in Taiwan compared to other developed countries tend to be relatively high. This is due primarily to the country's heavy concentration of energy-intensive manufacturing industries. Taiwan's per capita carbon dioxide emissions have been increasing, and in 2003 represented more than four and a half times the amount of per capita carbon dioxide emissions in China (12.4 compared to 2.7 metric tons). Taipei has the most obvious air pollution, primary caused by the motorbikes and scooters used by millions of the city's residents.
Although Taiwan did not sign the Kyoto protocol, the government is working to reduce carbon dioxide emissions. In June 2005, the Ministry of Economic Affairs (MOEA) announced plans to cut carbon dioxide emissions by 170-million metric tons per year as of 2025. The MOEA plans to impose restrictions on emissions from Taiwan's top 200 energy consumption enterprises, including the Formosa Plastics Group and the China Petroleum Corporation. In 2005, the enterprises must establish voluntary reduction volumes. In the medium term (2008-2015) and long term (2016-2025), the enterprises' factories must decrease the density of their carbon dioxide emissions by 10 percent and 16 percent, respectively.
Sources for this report include: Asian Wall Street Journal; CIA World Factbook; Dow Jones News Wire service; Economist Intelligence Unit; Global Insight Asia Economic Outlook; Oil & Gas Journal; Petroleum Intelligence Weekly; Platt's Oilgram News; Reuters News Wire; U.S. Energy Information Administration; U.S. Department of State.
President: Chen Shui-bian (since May 2000)
Population (2005E): 22.7 million, heavily concentrated along the west coast
Area: 14,000 square miles (slightly larger than Maryland and Delaware combined)
Major Cities: Taipei (Capital), Kaohsiung, Taichung, Tainan
Major Religions: Mixture of Buddhist, Confucian, and Taoist 93%, Christian 4.5%, other 2.5%
Languages: Mandarin (official), Taiwanese (Min), Hakka Chinese dialects
Ethnic Groups: Taiwanese, 84%; mainland Chinese, 14%; aborigine, 2%
Currency: Taiwan Dollar (TW$)
Exchange Rate (08/12/05): US$1 = TW$31.89
Gross Domestic Product (2004E): $306 billion
Real GDP Growth Rate (2004E): 5.7% (2005F): 3.8%
Inflation Rate (consumer prices, 2004E): 1.6% (2005F): 2.0%
Unemployment Rate (2004E): 4.4%
Total Reserves, Non-Gold (2004E): $241.7 billion
Current Account Balance (2004E): $19 billion
Merchandise Exports (2004E): $173.2 billion
Merchandise Imports (2004E): $156.7 billion
Merchandise Trade Surplus (2004E): $16.5 billion
Major Exports: Consumer electronics, machinery, chemicals & allied products, iron & steel, plastics
Major Imports: Crude oil, capital goods, consumer goods, agricultural and industrial raw materials
Major Trading Partners: United States, Japan, Europe, Hong Kong (China)
Minister of Economic Affairs: Yi-Fu Lin
Proven Oil Reserves (1/1/05E): 4 million barrels
Oil Production (2005E): 8,404 barrels per day (bbl/d), of which 800 bbl/d is crude oil
Oil Consumption (2005E): 1,045,000 bbl/d
Net Oil Imports (2005E): 1,036,596 bbl/d
Crude Oil Refining Capacity (1/1/04E): 920,000 bbl/d
Natural Gas Reserves (1/1/04E): 2.7 trillion cubic feet (Tcf)
Natural Gas Production (2003E): 34 Billion cubic feet (Bcf)
Natural Gas Consumption (2003E): 298 Bcf
Net Natural Gas Imports (2003E): 264 Bcf (all LNG)
Coal Reserves (12/31/96): 1.1 million short tons (Mmst) (active coal production ceased in 2000)
Coal Consumption (2003E): 60.7 Mmst
Net Coal Imports (2003E): 60.7 Mmst
Electric Generating Capacity (1/1/03E): 30.1 gigawatts
Electricity Generation (2003E): 166 billion kilowatthours
Total Energy Consumption (2003E): 4.2 quadrillion Btu* (1% of world total energy consumption)
Energy-Related Carbon Dioxide Emissions (2003E): 280.3 million metric tons (1.1% of world total carbon dioxide emissions)
Per Capita Energy Consumption (2003E): 184.8 million Btu (vs. U.S. value of 339.9 million Btu)**
Per Capita Carbon Dioxide Emissions (2003E): 12.4 metric tons (vs. U.S. value of 20 metric tons)
Energy Intensity (2003E): 10,039 Btu/ $ nominal-PPP (vs. U.S. value of 10,168 Btu/$ nominal-PPP)**
Carbon Dioxide Intensity (2003E): 0.56 metric tons/ $ nominal-PPP (vs. U.S. value of 0.63 metric tons /$ nominal-PPP)**
Fuel Share of Energy Consumption (2003E): Oil (45.7%), Coal (36%), Nuclear (8.8%), Natural Gas (7.1%), Hydro (1.7%)
Fuel Share of Carbon Dioxide Emissions (2003E): Oil (45.2%), Coal (48.7%), Natural Gas (6.2%)
Major Environmental Issues: Air pollution; water pollution from industrial emissions, raw sewage; contamination of drinking water supplies; trade in endangered species; low-level radioactive waste disposal.
Major International Environmental Agreements: Taiwan is not a party to any of the selected agreements.
* The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar and wind electric power. The renewable energy consumption statistic is based on International Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions are also based on IEA data.
**GDP based on CIA World Factbook estimates based on purchasing power parity (PPP) exchange rates
State Energy Companies: Chinese Petroleum Company (CPC), Taiwan Power (Taipower)
Oil Refineries (1/1/05 capacity): Kaohsiung (270,000 bbl/d), Ta-Lin (300,000 bbl/d), Tao-Yuan (200,000 bbl/d); Mailiao (150,000 bbl/d)
Major Ports: Kaohsiung, Keelong, Hwalien, Taichung, Suao
LNG Terminal: Yungan
For more information from EIA on Taiwan, please see:
EIA -- Country Information on Taiwan
Links to other U.S. federal and state government sites:
CIA World Factbook - Taiwan
U.S. Department of Energy - Office of Fossil Energy - Taiwan
U.S. Department of State - Taiwan Background Notes
U.S. Department of State - Consular Information Sheet - Taiwan
State of Hawaii Country Profile - Taiwan
The following links are provided solely as a service to our customers and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.
Republic of China -- Government Information Center
Republic of China -- Office of the President
Republic of China -- Ministry of Economic Affairs
Taipei Economic and Cultural Office -- Information Division
American Institute in Taiwan
Chinese Petroleum Corporation (CPC)
Formosa Plastics Group
You may be automatically notified via e-mail of updates to this or other Country Analysis Briefs. To join any of our mailing lists, go to http://www.eia.doe.gov/listserv_signup.html and follow the directions given.
Return to Country Analysis Briefs home page
File last modified: August 19, 2005
Contact: Charles Esser