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CPC Corporation Taiwan

Upstream Operations

Upstream Operations

Upstream Operations

UPSTREAM OPERATIONS EXPANSION OVERSEAS DRIVES STRATEGY: EXPLORATION AND M&A ARE DUAL PATHS TO PROGRESS EXPLORATION AND PRODUCTION: OVERSEAS IS KEY

Taiwan has only very limited energy resources of its own and depends on imports for almost all its fossil fuel needs. CPC has therefore focused on achieving more effective expansion of its upstream operations byacquiring and developing its own reserves – and ramping up production at sources abroad – to help stabilize the supply of oil and natural gas into the domestic market and so ease the impact on the public of globalprice fluctuations. This development has taken place in the context both of the government’s policy for strengthening Taiwan’s energy security mechanisms and of promoting international cooperation in energyrelated matters.

In order to improve its overall strategic positioning and stay in alignment with the corporate philosophy of ‘active expansion, focused development’, CPC has adopted exploration strategies aimed at gradually increasingits ratio of self-owned and self-controlled energy reserves within the full sourcing range. Achieving this means, in summary: expanded development of overseas resources while exploiting the indigenous ones to theirmaximum capacity; boosting exploration activity through both M&A and joint-ventures; and the training and retention of talent – an important renewable resource, and one essential to success.


TAIWAN’S ONSHORE OIL & GAS: CONTINUING CONTRIBUTION

In 2017 CPC completed a 2D seismic survey of the Pingtung Plain, covering an area of 113 sq. km in the northern section while geological surveys and reconditioning of two wells extended over 70 sq. km elsewhere. Production from 27 wells in southern and southwest Taiwan yielded 266 million cubic meters of natural gas and 5,407 kiloliters of condensate.

In a new development, certain areas that have geothermal energy potential are being assessed while discussions with Taipower on cooperation in geothermal exploration as well as power generation are now in progress.


TAIWAN’S OFFSHORE SEARCH: ONGOING ASSESSMENT

CPC is cooperating with Husky Energy of Canada in the exploration of deep-water blocks in the Tainan Basin; this arrangement allows CPC to both acquire deep-water exploration technology and to mitigate its risk. Husky has completed the 3D seismic survey and will continue its explanation of the data processing results as well as those of the evaluation of the geophysical data; on that will be based the decision as to whether or not enter the next phase of exploration.


EXPLORATION IN THE TAIWAN STRAIT AND EAST / SOUTH CHINA SEA

CPC has completed its drilling program in the Taichao contract block and has decided to abandon the well as electronic logging showed no trace of oil or gas. Any future cooperative strategy for this contractarea will depend on the results of further exploratory drilling.

CPC has also started 2D seismic surveys and data processing after signing a contract with China National Offshore Oil Corporation (CNOOC) and France’s TOTAL for joint exploration in the Taiwan Strait’s deep-water area.


OVERSEAS EXPLORATION AND PRODUCTION: FURTHER DEVELOPMENT

By the end of 2017, CPC was engaged with international oil companies in joint exploration of 17 fields in 7 countries, involving the operation of 1,000 producing wells. In the same period, the yield obtained by CPC as its share of the output of 13 producing fields in Ecuador, Indonesia, Niger and the USA amounted to just over 4.5million barrels of crude oil and 137 million cubic meters of natural gas. This output consisted of both conventional and tight oil and gas: lifting those large volumes of high-quality hydrocarbons entailed the deployment of ultra-low pressure enhanced oil recovery (EOR) methods and similar technologies.

In Chad, where CPC is the operator of three oilfields, 2017 saw the company acquire the license to formally enter into the development and production phase. The program is being accelerated in order to activate production by end-2019 and so achieve the twin goals of boosting the company’s self-controlled oil andnatural gas resources as well as making Taiwan’s energy supply still more stable.


SEEKING OPPORTUNITIES FOR COOPERATION OVERSEAS

It is likely that over the next 10 years Taiwan’s existing onshore oil and gas fields will become successively exhausted, and this constitutes a call for action to avoid a crisis. CPC is therefore putting a lot of continuous effort into both domestic and foreign exploration and production as wgoing after suitable merger and acquisition (M&A) opportunities. In particular, and in compliance with both the government’s New Southbound Policy and the international trend towards clean energy, CPC is engaged in both purchase and M&A opportunities with natural gas fields in ASEAN territory and south Asia. The company’s wider exploration initiative encompasses fields in Southeast Asia, Australia, the Middle East (especially Iran), Central and South America and offshore areas of West Africa. CPC’s interest in non-conventional fields is mainly concentrated on M&A of American shale formations and purchasing newly-developed sites. The core objective inherent in acquiring more oil and gas fields through purchase and M&A is to initially augment and later replace, when they run out, Taiwan’s very limited indigenous hydrocarbon resources.


LOGICAL AGGREGATION OF SELF-OWNED OIL ANDGAS ASSETS

CPC’s upstream operations were launched in 1959 and today comprise exploration and production in both onshore and offshore oil and gas fields in Taiwan, the Taiwan Strait and overseas. In the main successful, they have to date yielded oil and gas to the value of over NT$200 billion. Looking to the future, the CPC corporate vision is that of becoming a high asset-value international oil and gas business: it is now consistently engaged in upstream international cooperation and M&A activity centered on exploration and boosting its self-controlled oil and gas reserves. The company will endeavor to acquire fields with good production potential, above all those with low risk, and to sign contract rights in currently-producing locations. In parallel with this, there are initiatives to both develop diversity in the company’s scope of business and to be a player in the fastgrowing green energy industry.