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CPC Corporation, Taiwan (CPC) is the foremost energy enterprise in the Republic of China.

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Technology & Innovation

Home > Technology & Innovation > Products and Pricing > Natural Gas

Natural Gas

Natural Gas

Natural gas, like petroleum, is a hydrocarbon resulting from the gradual transformation and metamorphic breakdown of ancient deposits of organic substances – the fossilized remains of once-living organisms. These typically lie within much-fractured rock formations some 3,000 - 4,000 meters underground.
The major component in natural gas is methane and this makes it flammable, achromatic, insipid, colorless and non-toxic. It is mostly comprised of one carbon atom only and is therefore regarded as low-carbon energy.
As energy sources go, natural gas is a relatively clean fossil fuel: when ignited, its carbon dioxide emission is only about half that of coal. Modern technology enables  natural gas to be readily transported and become a widely used, clean source of energy.
 
How LNG is priced internationally and at home
 
Liquefied natural gas (LNG) pricing has traditionally been tightly linked with that of crude oil. For example, in the Far East – which includes Japan, Taiwan, South Korea and China - LNG contract prices are widely determined by the JCC system; JCC stands for Japan Crude Cocktail or Japan Crude Clearance, a monthly moving average of Japan’s crude oil import price that is publicly announced by the Customs Authority. CPC currently has 3 LNG import contracts - with Indonesia, Malaysia and Qatar – and all are linked to the JCC or the ICP (Indonesia Crude Price, another crude oil price mechanism), The pricing of Taiwan's imported LNG is therefore affected by fluctuations in the price of crude oil – very different from the Henry Hub system that is the market pricing basis for natural gas in the USA.  
 
CPC reviews changes in the cost of imported LNG monthly in accordance with the government-regulated gas pricing system for the domestic market: if the range of movement in the price of gas is within 3% for one month or less than 6% accumulated over the last three consecutive months, CPC is authorized to unilaterally announce the price adjustment and report it to the Ministry of Economic Affairs (MOEA) subsequently. If the range of adjustment exceeds that described, CPC must seek MOEA approval for the change before making it public.
 
Liquified natural Gas carrier