Taiwan Sets Up Plans to Ensure Sufficient Supplies of Oil

In the midst of the highest growth in crude price within a period of nine months, Taiwan has sufficient oil supply to make sure that it has stocks for the present time, recently said by the officials of the Ministry of Economic Affairs. The increase in crude oil price is mainly attributed to the tensions happening in the Gulf of Persia.

The MOEA said that as an answer to the increasing cost of oil, CPC Corp., the oil refiner operated by Taiwan, has organized a task force in partnership with them to be able to pay careful attention to the condition.

The officials further said that the oil stock of Taiwan is currently at a safe stage since its inventory is presently good for 110 to 120 days. The amount is greater than the legal requirement of 90 days.

Iran halted its oil shipments to France and the United Kingdom since the 19th of February following the planned sanctions of the European Union against. The oil embargo is mainly caused by the allegations that iran is working on a project involving the production of nuclear weapons.

Together with the earlier threat of Iran to block the Persian Gulf’s Hormuz Strait, oil prices have increased as a result of the recent crude prices for delivery in April ending at $109.77 at the New York Mercantile Exchange.

According to the MOEA, oil prices may possibly rise and fall between $106 and $116 since the market anticipates an upward price increase caused by the geopolitical volatility.

The officials also said that the Middle East imports 65% of the country’s oil. Saudi Arabia and Kuwait provides 30% and 13% of that oil stock respectively. As for Iran, it only contributes 4% of Taiwan’s oil inventory.

If the condition in the Gulf of Persia worsens and impacts the supplies of oil, the CPC and MOEA have already organized back-up plans which include obtaining oil from other nations like Indonesia and Russia.

In the meantime, CPC recently announced an increase in diesel and gas prices by NT$0.3 or US$0.01 by the 27th of February after the rules in pricing of the government’s measures for price stabilization measures were set in place in December of 2010.

The measures ask the CPC to subsidize 50% of the increase in gas prices if the crude costs reach more than $100. The remaining 50% will be passed on to the consumers.

Even if the ministry is considering the measures as part of the reason why the CPC lost around NT$6.7 billion during the month of January, Shih Yen-Shiang, an Economics Minister, said that there is no time duration for a possible adjustment due to the issue’s sensitivity.

By Chris Termeer