Taiwan is planning to build up a domestic-owned fleet of LNG carriers to transport its LNG imports as the nation seeks to reduce coal power and phase out nuclear energy by 2025.
The world's fifth largest LNG importer may require as many as 16 vessels to meet the increasing LNG volumes, according to reports by a local news agency.
TradeWinds has learned that dry bulk companies such as U-Ming Marine Transport, Formosa Plastics and Kwang Ming Shipping, the dry bulk arm of liner operator Yang Ming Marine Transport, are keen to get into the LNG carrier business.
The drive behind what has been dubbed "own fleet own cargo" is to allow Taiwan to have better control over its LNG transportation needs. The country currently purchases LNG on a cost insurance freight basis.
The requirement is based on a study conducted by The Maritime and Port Bureau of the Ministry of Transportation and Communications on Taiwan's energy demand by 2025.
The ministry plans to include the transportation of LNG as a national project by March and is encouraging local shipping companies to include LNG carriers in their fleet portfolio, local news reported.
"The future direction of Taiwan's LNG import will be based on a free-on-board basis," said a shipping source based in Taipei.
"The LNG carriers project is still at the early stage. If the proposal is implemented, we probably will start seeing shipping companies enquiring on newbuildings from next year."
Another shipping source estimates that it would take five more years before a domestic company takes control of an LNG carrier.
"The shipping company needs time to train its crew to operate the ship-type and currently shipyards do not have early berths for LNG newbuildings," he said.
"Local shipping companies probably have to work with foreign owners on the LNG carriers as they lack the experience in operating the ships."
It is not known if the Taiwanese government is to offer grants or subsidies to shipping companies if they are to invest in the vessels.
"If Taiwan requires the gas carriers to be Taiwan-flagged or built at domestic shipyard[s], CSBC is likely to be the shipbuilder that will be asked to construct the LNG carrier newbuildings," said a shipbuilding observer.
"CSBC has never built LNG carriers before, but we understand that it will find a way to construct the vessels if the plan is implemented."
Taiwan has set a target to reduce coal power consumption to 30% and be nuclear-energy free by 2025. It plans to rev up the use of renewable energy by 20% and natural gas from 35% to 50%.
The democratically ruled island imported about 18m tonnes of LNG in 2020 and has two LNG terminals — one in southern Kaohsiung and the other in central Taichung — in operation. It is building the third terminal in northern Taoyuan, which will be ready by the end of 2025.
State-owned CPC Corp is the only LNG importer for Taiwan. But state-owned utility Taiwan Power Co also known as Taipower expects to start its first imports from 2023.
