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| Fig. 1: A map of major cities and ports involved in Taiwan's oil supply chain. (Image Source: H. Chen) |
Taiwan's strategic position in the Asia-Pacific region makes it a vital player in the global energy supply chain. Despite a lack of substantial natural oil reserves, Taiwan operates advanced refining facilities, particularly on the west coast, which play a pivotal role in ensuring energy security and economic stability. This essay explores the scale of oil refining activities in Taiwan, focusing on China Petroleum Corporation's operations, the historical development of Taiwan's oil industry, and an estimation of the cash value of refined oil based on recent data.
Taiwan has a long history of oil production, tracing back to 1877 when petroleum extraction began in Miaoli County. During the mid-20th century, the industry saw significant growth, highlighted by the establishment of its first deep well in Jinshui in 1959 and peak crude oil production in 1978. However, Taiwan's geographic limitations and resource scarcity have left it overwhelmingly reliant on imported crude oil. The Bureau of Energy reports that over 99.75% of Taiwan's oil consumption is met through imports, with domestic production contributing a mere 0.25%. [1] CPC's limited domestic output of 5.68 million barrels in 2023 pales in comparison to its total crude oil imports of 384.8 million barrels [1].
Efforts to enhance domestic production would require substantial investment in exploration and extraction technologies, but this strategy remains secondary to ensuring a steady import and refining supply chain.
Taiwan's refining industry is built around major facilities operated by CPC Corporation, notably the Dalin refinery in Kaohsiung and the Taoyuan refinery. (See Fig. 1.) Together, these refineries have a combined daily capacity of 600,000 barrels, with the Dalin refinery handling approximately 400,000 barrels per day. This capacity establishes Taiwan as a significant refining hub in East Asia, despite its heavy reliance on foreign crude. [1,2]
Refined oil products cater to domestic energy needs, powering transportation and industries. Excess refined products are exported, further bolstering Taiwan's economy. These operations reflect the importance of refining infrastructure within Taiwan's energy policies, which prioritize energy self-reliance and sustainability.
Daily Refining Capacity: 600,000 barrels/day. [2]
Global Crude Oil Price: Averaging $70.91 per barrel in 2021. [3]
Annual Throughput: 600,000 barrels/day X 365 days/year = 219,000,000 barrels/year
Total Cash Value: 219,000,000 barrels/year X $70.91/barrel = $15.53 billion USD annually
This calculation provides a conservative estimate of the gross cash value before deducting refining costs, taxes, and operational expenses. It is noteworthy that the fluctuating global crude oil prices, influenced by geopolitical factors and market trends, significantly affect these valuations.
The market value of refined petroleum products, such as gasoline, diesel, and aviation fuel, reflects their critical role in Taiwan's energy economy. According to CPC Corporation's 2023 financial data, the domestic sale of these products generated approximately NT $413.7 billion in revenue, driven by a combined volume of 16.79 million kiloliters. [2] Gasoline sales represented the highest revenue contributor at around 51.7% of the total, underscoring its prominence in Taiwan's transportation sector. [2] Diesel accounted for 27.3%, while both fuel oil and aviation fuel contributed approximately 10.5% each. [2] The revenue distribution highlights the importance of transportation fuels within Taiwan's economy, directly tied to mobility and industrial activity. Given the dominance of CPC and Formosa Plastics Group in the market, these companies play a pivotal role in maintaining stable supply and competitive pricing, which are essential for sustaining economic growth and energy security amidst global oil price volatility.
Taiwan's refining industry serves not only as an economic asset but also as a strategic one. By maintaining robust refining capacity, Taiwan strengthens its energy resilience amidst regional geopolitical tensions. However, reliance on West Coast ports such as Kaohsiung and Keelung for crude oil imports introduces vulnerabilities, particularly in the face of potential Chinese naval blockades. [1] Nonetheless, refined oil exports provide a meaningful contribution to Taiwan's trade balance, underscoring the industry's multifaceted value.
Taiwans oil refining sector, exemplified by its advanced facilities and strategic geographical position, is a critical component of the nation's energy and economic architecture. With a daily capacity of 600,000 barrels and an annual crude processing value estimated at $17.52 billion, the industry underpins both domestic energy security and regional trade influence. The historical evolution from minimal domestic production to a robust import-based refining model highlights Taiwans adaptability in addressing energy challenges. However, as the global energy landscape evolves, Taiwan must navigate potential vulnerabilities, such as dependency on foreign crude and geopolitical risks, while investing in innovation for enhanced efficiency and sustainability. By strengthening its refining capabilities and diversifying energy sources, Taiwan can further secure its position as a resilient and influential player in the Asia-Pacific energy market.
© Hugo Chen. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] M. Boone, "Securing Taiwan's Black Gold: A Crude Analysis," Global Taiwan Brief 8, No. 17, 2 (2023).
[2] "CPC Annual Report 2024," Chinese Petroleum Corporation, 2024, p 14, p 24.[3] "BP Statistical Review of World Energy 2022," Pritish Petroleum, June 2022, p. 5.