Taiwan has arranged for about 8 million barrels of crude oil, or about one-third of its monthly needs, to be shipped from the Red Sea this month to bypass the Strait of Hormuz and ease domestic supply pressures, CPC Corp, Taiwan (CPC, 台灣中油) said yesterday.
The state-run oil company has worked with Middle Eastern suppliers to secure routes other than the Strait of Hormuz, through which about 20 percent of the world’s oil and liquefied natural gas typically passes, CPC chairman Fang Jeng-zen (方振仁) said at a meeting of the legislature’s Economics Committee in Taipei.
Suppliers in Saudi Arabia have indicated they can transport crude oil to the Red Sea through pipelines, while those in the United Arab Emirates are evaluating routing oil through pipelines to Oman for sea shipments, Fang said.
Photo: Tu Chien-jung, Taipei Times
One tanker carrying about 2 million barrels has already been loaded and is docked in the Persian Gulf, but has yet to depart due to the conflict in the Middle East.
To mitigate risks, CPC has also been diversifying its crude oil sources, including exploring supplies from West Africa and assessing imports from Southeast Asia, Australia and the US, Fang said.
At the same meeting, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said the government is planning to provide financial support to help CPC address its mounting losses.
The company has been forced to absorb increases in crude oil prices on multiple occasions in recent years, including since the US and Israel launched an attack on Iran at the end of February, to keep domestic fuel prices stable.
To buffer the impact of the spike in crude oil prices triggered by the war, CPC has already run up losses of NT$9 billion (US$283.15 million), bringing its accumulated losses to NT$79.2 billion as of Tuesday last week, the Ministry of Economic Affairs estimates.
The losses have left the company with a net worth of only NT$86.1 billion, and lawmakers questioned Kung on plans to bolster CPC’s finances.
Kung said three approaches would be used, including increasing the company’s capital by NT$350 billion over four years.
Of that, NT$168.7 billion has already been included as part of the government’s fiscal budget request for next year, he said.
The ministry would also help CPC find NT$300 billion in new financing to improve cash flow and refinance some of the company’s debt, he said.
The other approach would be to provide subsidies to the company, but the amount and the source of the funds are still being discussed, Kung added.
