Taiwan might not face immediate supply disruptions in crude oil and liquefied natural gas (LNG) due to the escalating US-Israeli war on Iran, but it must enhance its energy resilience by diversifying its sources to avoid surges in imported fuel costs as inflation fears grow.
Taiwan is heavily reliant on imported fuel, with 96 percent of its overall energy supply coming from overseas — primarily crude oil, coal and LNG — due to lack of local natural resources, Energy Administration statistics showed. Taiwan is not the only country facing energy supply issues; Japan and South Korea are also striving to diversify energy sources and increase domestic supply to minimize shortage risks.
Taiwan has secured 20 LNG shipments to fuel the country for this month and next month, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) told a media briefing on Monday. The ministry aimed to increase the supply to 22 vessels within the week, Kung said, brushing off worries about LNG supply disruptions in the short term.
About one-third of the nation’s LNG is imported from Qatar, with 60 to 70 percent coming from areas less affected by the conflict, Kung said. Iran has vowed to attack any ships that try to pass through the Strait of Hormuz, essential for Qatar’s LNG exports and about 20 percent of global crude oil consumption. Qatar has suspended LNG output due to the conflict.
Kung said it was “impossible” that local households would experience supply disruptions, as household consumption accounts for only about 5 percent of LNG consumption. LNG power generation is critical to Taiwan, accounting for 42 percent of electricity generated in 2024, according to the Energy Administration.
The tensions raised concerns over Taiwan’s LNG supply resilience, as the nation only has 11 days of LNG reserves, compared to about 100 days of crude oil reserves.
It can be difficult to obtain extra LNG from global exporters, given a rigid infrastructure of long-term contracts and low market flexibility.
While Taiwan might not face a short-term risk of energy supply shortages, energy costs are rising as new supplies are acquired from the spot market, which is characterized by high price volatility and greater delivery uncertainty.
Global LNG prices are 50 percent higher than the same period of last year, according to Reuters.
Taiwan and neighboring countries could still face a higher inflation risk if the conflict drags on. Taiwan’s consumer price index rose 1.75 percent last month, still below the central bank’s 2 percent inflation alert, but surging energy costs would push consumer prices past the red line.
Kung on Monday said the government would not consider hiking electricity rates during a meeting on energy costs scheduled for later this month. He said keeping consumer prices stable is the ministry’s priority.
Taiwan has been attempting to diversify its energy sources to rein in inflation and keep its economy moving. The country is increasing energy supply from the US and other countries to boost energy resilience, the Energy Administration said last week, before US strikes on Iran.
CPC, Taiwan Corp last year signed a 25-year LNG supply agreement with Texas-based Cheniere Energy Inc, the agency said. About 15 to 20 percent of Taiwan’s LNG supply should be imported from the US by 2029, up from 10 percent, the administration said.
To minimize the long-term risk from imported energy, the government needs to beef up its energy transformation efforts and support renewable energy supply domestically. Renewable power accounted for 12.8 percent of power generated last year, Taiwan Power Co statistics showed.
South Korea and Japan have pledged to increase green energy financial support with subsidies to private companies as part of their efforts to reduce reliance on imported energy. Taiwan needs to pick up pace in rolling out new policies such as incentives or special funds to drive renewable energy generation.
