Regional LNG: Taipower closes LNG supply bids - Update

State utility Taiwan Power Co said on Tuesday it has received four bids for a tender worth an estimated T$400 billion (US$11.5 billion) to supply liquefied natural gas (LNG) to the island for 25 years, Reuters reported.

Taipower will choose among a Royal Dutch/Shell venture, Taiwan's state-owned Chinese Petroleum Corp, Tung Ting Gas Corp and United Resources Inc to supply gas for its Tatan power station with a final decision expected in April or May.

"Now we will start to review their applications in accordance with the tender documents, which will take about one to two months," said an official with Taipower.

The company held two rounds of bidding in 2001 to supply the 1.7 million tons of LNG a year, but failed to attract the minimum of three bids both times as the 2004 mandated start-up date was considered too close. The winning bidder will now have until 2008 to begin supplying LNG to the island.

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Anglo-Dutch oil giant Royal Dutch/Shell, which submitted the bid through TaLNG Co -- a 50/50 venture with Taiwan's Asia Cement Corp -- said it would source the LNG from gas fields offshore Russia's Sakhalin Island.

Those gas fields are under development by Sakhalin Energy Investment Company, a joint venture of Shell Sakhalin Holdings BV, Mitsui Sakhalin Holdings BV and Diamond Gas Sakhalin BV, it said in a statement.

"We are delighted to have this opportunity to bid for supply of LNG to Taiwan, which we consider an important growth market in the Asia Pacific region," Peter de Wit, Shell Gas & Power's regional business director Asia Pacific, said in the statement.

Taiwan imports virtually all of its oil and gas needs and is the third-largest consumer of LNG in Asia after Japan and South Korea, consuming 5.9 million tonnes in 2002. LNG made up only six percent of the island's total energy needs in 2001.

"LNG demand is expected to more than double by 2010 consistent with Taiwan's emphasis on implementing environmental protection measures," de Wit said.

Taiwan's natural gas demand is expected to rise 8.5 percent each year over the next 20 as more gas-fired power plants begin operations.

The government says there will be one private natural gas-powered plant coming onstream in 2003 and three next year.

An official with United Resources Inc said its LNG would come from gas fields developed by ventures between British-based BP Plc and Indonesia's state oil company Pertamina.

Taipower's LNG contract offers a rare opportunity for foreigners to break into Taiwan's energy market, which is dominated by Chinese Petroleum Corp , the owner of the island's only LNG import terminal.

The Tatan power plant in northern Taoyuan county has eight generating units and a designed capacity of 4,000 megawatts. (*)