Liberalization of the Petroleum Sector in the Energy Policy of Taiwan and its Future Development

Abstract

A comprehensive energy policy is one of the most important national policies for every country in order to maintain national security and economic prosperity. Taiwan, a small but populous island off the eastern coast of Asia, is no exception. To formulate and implement its energy policy, a country needs to pay special attention to several elements, which include: energy policies, political and economic situations, legal systems, the role of the government and its attitude, structure of the energy market and industries administrative and managing processes governmental agencies, and other social and political policies. All of these elements make an energy policy more practical within the objectives of energy efficiency, energy security and economic development.

The main thrust of the current energy policy in Taiwan in relation to petroleum has been the continued deregulation and liberalization of the market over roughly the last 20 years. Due to limited domestic energy resources, a stabilized petroleum market and energy security is the ultimate goal in Taiwan s petroleum policy while petroleum liberalization takes place. The privatization plan of the state-owned petroleum enterprise- the Chinese Petroleum Corporation (CPC), is the next major step to continue Taiwan's petroleum liberalization. The current privatization plan is stalled by a complex set of circumstances that can be corrected by drafting a more comprehensive policy that includes specific objectives, approaches and practical solutions to the obstacles. Privatization of CPC will enable Taiwan to move forward on collaborative projects with China for exploration and extraction of petroleum in the Taiwan/China Strait, enabling Taiwan to meet the ultimate goal of its energy policy: to establish a more competitive energy market through expanded international participation that will lead to a more secured petroleum market.

The need to import most of the crude oil supply in Taiwan has forced the domestic market to depend on foreign supplies and overseas exploration. Taiwan imports 80 percent of its crude oil from the Middle East, a source that cannot be relied on indefinitely and a dependence on foreign enterprises that should be reduced. This situation highlights the importance of diversifying energy sources that leads Taiwan to search for potential resources close to home. The Taiwan Strait and overseas reservoirs are contested areas that can be explored for possible joint projects between Taiwan and China. The unique political economic and cultural connections between both sides of the Strait lead to a promising energy partnership if certain circumstances can be clarified and overcome. Petroleum cooperation with China relies on the liberalization of Taiwan's energy market and will ultimately enhance Taiwan's energy security.

Subject Area

Law

Degree Date

2009

Document Type

Dissertation

Degree Name

S.J.D.

Department

Dedman School of Law

Advisor

John S. Lowe

Number of Pages

207

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