Energy: Oil & Gas 2023 Comparisons

Oil and natural gas are considered as “minerals” under the Mining Act in Taiwan and are thus considered state-owned wherever they are present in the territory of Taiwan and the exclusive economic marine zone. Accordingly, owners of land upon which oil and natural gas are present do not have ownership rights over such resources. All persons are required to obtaining a mineral enterprise licence per the Mining Act before engaging in any exploration and excavation of oil and gas deposits (Articles 2, 3(1)(53), 3(1)(54), and 69 of the Mining Act, and Article 15 of the Land Act).

The Ministry of Economic Affairs (MOEA) is the primary competent authority for hydrocarbon activity. Entities under the MOEA are responsible for specific aspects: The Bureau of Mines (BOM) is the competent authority for the administration of mining and mineral resources, and it is tasked with promulgating policies regarding the mining industry, exploration of mineral resources, registration of mineral rights and public hazard incidents at mining sites. The Bureau of Energy (BOE) is the authority responsible for Taiwan’s energy policies and oversees all energy-related enterprises in the country (Article 5 of the Mining Act, Article 3 of the Petroleum Administration Act, and Article 2 of the Natural Gas Enterprise Act).

China Petroleum Corporation (CPC) is the sole state-owned oil and gas company and is wholly owned by the Taiwan government. Its business includes petroleum refining, petroleum importation, natural gas utilities, and gas stations.

The Mining Act – covers the exploration and excavation of mineral resources within the territory of Taiwan, the rights of a mineral enterprise, and the relevant application formalities. It should be noted that significant amendments were made to the Mining Act on 21 June 2023.

The Petroleum Administration Act – regulates petroleum refineries, petroleum importers, and petroleum-related wholesale and retail operators. The statute also contains provisions regarding the issuance of relevant licences, the laying down of oil pipelines, and the collections for the government’s Petroleum Fund.

The Natural Gas Enterprise Act – regulates natural gas producers and importers, natural gas utilities, and the installation of their pipelines. The statute also contains provisions regarding the issuance of relevant licences and the laying down of gas pipelines.

As private investors are allowed to participate in the petrochemical industry in Taiwan, pursuant to the procedure outlined in 2.2 Issuing Upstream Licences/Obtaining Hydrocarbon Rights, any private entity may apply to the BOM to become licensed for exploration and excavation of minerals. However, due to the current market status, CPC is the sole entity that is engaged in the exploration and excavation of oil and gas resources in Taiwan.

Under the Mining Act, to engage in the exploration and excavation of oil and gas in Taiwan, an entity shall apply to the BOM to obtain the exploration licence, the excavation licence, register the relevant land as mining land, and obtain the relevant environmental protection related permits.

Please note that the following procedures are based on the latest amendments to the Mining Act that entered into effect on 21 June 2023.

A private entity intending to obtain an exploration or excavation licence shall submit the following application materials to the BOM along with a fee for the BOM’s review, approval, and registration:

• the application form;
• the mineral concession area map;
• the ore deposit description (for the excavation licence only);
• the conceptualised exploration/excavation plan, which shall include details regarding soil and water conservation, mine safety measures, and other items required by the authority – the excavation plan further requires the planned amount of minerals to be extracted and an estimate of the economic benefits; and
• the environmental protection plan for the area near the mine concession.

If the BOM believes that the mine concession area in an application for an exploration licence would be more appropriate for excavation, it shall notify the applicant to also submit an application for the excavation licence. Failure of the applicant to do so will result in the rejection of the exploration licence application.

The application to register land as mining land is a separate application for the aforementioned exploration or excavation licence applications. In general, the entity must have obtained the right to use the land through purchase, lease, or other legal means before applying to the BOM to register the land as mining land. The application materials to be submitted are:

• the mining and construction plan and drawings;
• the mine closure plan;
• a consent letter from the owner and use right-holder of the land and the aboveground structure (if private land), or consent letters from the land administration authority and other rights holders (if public land); and
• any other document indicated by the BOM (eg, copy of the cadastral registration and the cadastral survey maps for the mining land).

If the land is held by indigenous peoples or public land near land held by indigenous peoples, the applicant must also proceed through the relevant formalities under the Indigenous People Basic Law before the above registration is complete.

For the environmental protection related permits that are required before mining operations may commence, under the Air Pollution Control Act and the Water Pollution Control Act, the applicant will need to obtain the “Fixed (Air) Pollution Source Installation/Operation Permit” and the “Wastewater/Effluent Surface Water Emission Permit or Simplified Emission Permit Document”.

Government Fees

• The Mineral Enterprise Licence Fee – payable annually by every mineral enterprise licence holder pursuant to the Mining Act, save for certain special circumstances relating to mining operators working on offshore oil and gas sites. For exploration licence holders, the fee is NTD100 per 10,000 hectares (10,000 or any portion less than 10,000 hectares) of offshore oil and gas sites; NTD300 per hectare for oil and gas sites on land. For excavation licence holders, the fee is NTD450 per 10,000 hectares (10,000 or any portion less than 10,000 hectares) of offshore oil and gas sites; NTD1,350 per hectare for oil and gas sites on land.
• The Mineral Resource Rights Fee – payable annually by every oil and gas mineral enterprise licence holder pursuant to the Mining Act. The amount is based on multiplying the mineral production volume by 15-50% of the price of the mineral, and by a 10% payment ratio. The “payment ratio” for operators working on offshore oil and gas sites has yet to be announced by the competent authority as of the time of writing this article.
• The Air Pollution Prevention Fee – payable periodically by every oil and gas exploration, excavation, importation, and refinement entity. The amount is calculated by multiplying the volume of each pollutant emitted by the relevant rate for such pollutant.
• The Soil and Groundwater Pollution Cleanup Fee – payable periodically by every oil and gas exploration, excavation, importation, and refinement entity. The amount is based on the amount produced or imported and the stipulated fee for each cubic metre.
• The Water Pollution Prevention Fee – payable periodically by every oil and gas exploration, excavation, importation, and refinement entity. The amount is based on the relevant pollutants found in the water, a water quality coefficient, and the volume of water emitted.

For petroleum and petroleum-based operators only:

• The Petroleum Fund – payable by every oil exploration, excavation, importation, and refinement entity before conducting such activities. The pricing rate for importation of oil is between NTD123 and NTD185 per cubic metre, depending on the type of oil imported. For those engaging in exploration, excavation, and refinement of oil, the pricing is NTD130 per cubic metre.

Incentives

To encourage development, the BOM has released the “Work Rules for the Use of the Petroleum Fund to Incentivise Oil and Gas Exploration and Development”, which provides financial incentives to those that meet certain requirements and have made contributions to oil and gas technologies or are engaging in exploration and development.

The applicant requesting to receive the incentive must be a registered company and have an exploration/excavation licence obtained in Taiwan or abroad, and must meet the following conditions:

• primary business is the exploration and development of oil and natural gas, or otherwise can provide proof of the capability to engage in such business;
• at least 51% of shares are held by Taiwan nationals; and
• paid-in capital of more than NTD300 million.

The amount of incentive provided is capped by the following:

• no more than 50% of the total annual budget for providing incentives to exploration and development to a single exploration plan, unless the plan is assessed as particularly worthy by the assessment committee; and
• no more than 50% of the cost of the exploration plan to be borne by the applicant, and no more than 12% of the cost of the development plan to be borne by the applicant.

Income tax – same as other industries at 20%. There is no separate hydrocarbon income tax regime in place.

Business tax – same as other industries at 5%.

Customs – no customs fee for equipment, machinery, and materials used for exploration and excavation of offshore oil and gas sites. Customs fee is still required for all other imported oil and gas products, equipment, machinery, and materials; the actual customs fee depends on the imported item in question.

Commodities tax – none for upstream activities. However, if a crude oil or a natural gas factory is established, and such resources are processed in the factory to produce petrochemical products, there would be commodities tax levied according to the type of goods.

There is no preference in law or practice that would favour CPC over a private company with respect to upstream licensing.

As the relevant requirements are all stipulated by the central competent authority in Taiwan, there are no local content requirements.

Please refer to the response in 2.2 Issuing Upstream Licences/Obtaining Hydrocarbon Rights.

Per the Mining Act:

• Exploration period – four years, extensible once for two more years if applied between six to twelve months before expiration of the term (Articles 14 and 15).
• Excavation period – twenty years, and the right also persists before the competent authority has approved or rejected an application to extend the term.
• Mining concession area – not specifically limited by the statute; the area approved is determined by the competent authority based on the geological conditions of the site (Article 9).
• Minimum work requirements – no minimum work requirements in Taiwan, but if a mineral enterprise does not commence construction work within two years after obtaining the mining enterprise licence, or otherwise suspends its business for more than one year, the competent authority has the right to revoke the licence. In addition, the exploration/excavation enterprise needs to submit a report to the competent authority every January regarding the progress of the work during the past year and the work plan in the current year (Articles 42 and 67).
• Penalties – engaging in mineral mining work without being licensed as a mineral enterprise will result in criminal liability punishable by imprisonment and/or a fine, and the land affected shall be restored to its previous condition. Engaging in mining work outside of the concession area or selling mined minerals without the approval of the competent authority will result in a fine of NTD500,000 to NTD2.5 million per violation, along with the confiscation of the minerals (Articles 77 and 79).
• Relinquishment conditions and subsequent rights and obligations – in addition to the revocation of the licence by the competent authority, or the expiration of the licence at the end of the aforementioned term, the mineral enterprise may voluntarily choose to relinquish the mineral enterprise licence. Upon revocation or cancellation, the former mineral enterprise shall dispose of its assets within one year, aside from hazard prevention or mining interest protection equipment, which may not be disposed of without the competent authority’s approval (Articles 41 to 44).
• Domestic supply requirement – no such requirement is imposed in Taiwan.

Per the Mining Act and related regulations, the transfer of interests in upstream licences and assets shall be executed by the transferor and the transferee, submitting to the BOM the relevant documents with the application fee. The documents to be submitted include:

• the application form;
• the original mineral enterprise licence (unless a compulsory transfer is involved);
• the mineral concession area map;
• the exploration/excavation plan and drawings (not needed if transfer occurred due to inheritance); and
• relevant certification documents.

Just like a new mineral enterprise licence applicant, the transferee must be a company limited by shares and established pursuant to the Company Act of Taiwan. All rights and obligations of the transferor mineral enterprise, as well as that entity’s right to use the mining concession land, are all transferred to the transferee upon the approval of the transfer by the competent authority.

There is no production rate cap for the exploration and excavation of oil and gas; the Mining Act specifically excludes oil and gas from the requirement to stipulate the allotted excavation quantity cap on the mining licence.

Taiwan law does not distinguish midstream and downstream operations, so all parts of the industry other than the exploration and excavation of oil and gas resources will be uniformly classified as “downstream” operations.

The downstream operations therefore cover refineries, natural gas production, oil and gas exports, wholesale, and retail sales of oil and gas products. Oil refinement, oil imports, and all natural gas operations (production, import/export, and utilities use) can only be conducted by entities registered as a company limited by shares. Gas stations, LPG stations and fishing vessel refuelling stations must be operated by an entity established under Taiwan’s Company Act or registered pursuant to the Business Registration Act. No entity type restrictions are stipulated for other downstream operations.

Although private entities may freely apply to become a downstream operator per the process detailed in 3.3 Issuing Midstream/Downstream Licences, the only oil refiners and oil importers in Taiwan are CPC and Formosa Petrochemical Corporation (FPCC), the latter being a private company. CPC is also the sole natural gas producer, and the only two natural gas importers are CPC and Shinfox Natural Gas Co Ltd. On the other hand, there are numerous entities engaging in wholesale and retail sales of petrochemical-based energy. Even though CPC and FPCC are the two market leaders for retail sales of gasoline and diesel, there are several other private entities competing in the market. As of March 2023, there are over 2,700 entities engaging in LPG retail sales, and 25 entities in the natural gas utilities sector.

As mentioned in 3.1 Forms of Private Investment: Midstream/Downstream, private entities may freely enter any downstream market, and Taiwan law does not mandate the government to hold a monopoly (through CPC) in any downstream market.

Operators engaging in LPG distribution, tank/container filling, and retail sales do not need a licence. All other downstream operators must meet certain requirements and obtain a registration or licence before commencing operations.

Oil refinery operations – the entity must obtain an establishment permit, a factory registration, and an operation licence. In addition, the entity must also apply for a fixed pollution source installation permit, fixed pollution source operation permit, and a fuel usage permit (if necessary). Finally, the construction and installation of pipelines and storage equipment at the refinery plant will require separate permits from the competent authority. 

Gas stations – in addition to having the rights to use the land the gas station is situated on, a gas station operator needs to apply for approval to erect a gas station and a licence to operate a gas station, as well as join the local gas station operator industry union.

Gas stations – the “Regulations for the Management of Gasoline Station Installations” provide the various rules to be followed regarding the construction and operation of gas stations. For example, gas stations must display the types of gasoline sold and their prices for the day within five metres of the entrance, and such display must be of a certain size, free from line of sight obstructions, and illuminated at night.

LPG retail sales – the Petroleum Administration Act requires the retail operator to clearly indicate in its business premises the source of gas, the entity operating the business premises, and the retail pricing information. In terms of agreements with customers, the Executive Yuan has prepared a model standardised home-use LPG supply agreement and a list of required and prohibited stipulations in a standardised home-use LPG supply agreement. The standardised agreement covers pricing, extra fee items, equipment ownership (eg, the LPG cylinders and other peripherals), and the rights and obligations of the parties.

Natural gas utilities – the natural gas pricing calculation and pipeline installation fees drafted by a natural gas producer or importer for their customers must be sent to the competent authority for approval. The competent authority will form a committee of academics and consumer protection groups to review the above pricing proposals. In terms of agreements with customers, the Executive Yuan has prepared a model standardised natural gas supply agreement that covers the terms to be included, such as pricing, how pipelines are maintained, and the circumstances under which the gas supply may be suspended.

Commodities tax – petrochemical products derived from refining crude oil and natural gas are assessed for a commodities tax ranging from ~NTD600 to NTD7,000 per cubic metre or metric ton.

All other taxes for downstream companies are the same as for upstream companies described in 2.4 Income or Profits Tax Regime: Upstream.

There is no preference in law or practice that would favour CPC over a private company with respect to downstream licensing.

Taiwan does not impose any local content requirement on private downstream operators.

The key terms depend on the type of downstream licence in question. For a downstream licence to operate a gas station, as an example, the Regulations for the Management of Gasoline Station Installations provide the following.

• An application to update the information on the licence shall be submitted to the competent authority within 60 days after the event that caused the information change occurred (Article 33).
• Required facilities – underground storage tank, fuel dispensers with irreversible flow counters, and a business office structure (Article 13). Clear safety/warning signs with white text on a red background for switching vehicle engines off while refuelling and prohibiting smoking, etc (Article 14).
• Safety inspections – conduct safety checks daily/monthly/biannually depending on the requirements of the facilities present (Article 29).
• Prohibited conduct includes:
1. making undisclosed or counterfeit mixtures of gasoline and diesel products;
2. selling gasoline and diesel products other than from the fuel dispenser;
3. transacting gasoline and diesel products outside of the designated business scope;
4. installation of unapproved entrances and exits for vehicle movement and patronage;
5. injecting gasoline or diesel products into the fuel truck’s storage tank or a vehicle’s fuel tank that is over the designated volume; and
6. any other conduct that may affect public safety (Article 28).

The penalties for a gas station operator who fails to comply with the relevant provisions would be a fine of NTD100,000 to NTD500,000 and an order to rectify the issue within a limited time. The operator will be fined consecutively if the issue is not corrected within the stipulated time (Article 47).

Private downstream operators in Taiwan do not have a right to unilaterally take over land based on condemnation or eminent domain. However, the Taiwan government will assist the downstream operator to negotiate with the land owner with respect to land use and a compensation mechanism.

For example, if a natural gas utilities operator needs to lease or acquire certain land for the installation of pipelines, the operator may request the government to assist in negotiating with the land owner to obtain land use rights or land ownership. If the planned pipeline will pass through the outer edges of private land or structure, the operator shall notify the owner or user of such land or structure seven days in advance before commencing work; the operator shall attempt to minimise the impact on the location from the construction method of the pipeline, and provide repairs or compensation for any damage caused to the owner or user. In the event the owner or user objects to the pipeline plan, and government-assisted negotiation fails, the operator may still apply to the local competent authority for approval to commence work (Articles 21 to 23 of the Natural Gas Enterprise Act).

The competent authorities for transportation of hydrocarbons are the MOEA and the Ministry of Transportation and Communication (MOTC).

Companies laying oil and natural gas pipelines shall apply to the competent authority for approval, and the materials of the pipelines shall comply with national standards.

For the transportation of oil and gas by vehicle, hydrocarbon raw materials such as natural gas, LPG, diesel, etc, are all considered “hazardous substances” under Taiwan’s transportation regulations, thus their transportation by vehicle must comply with the following rules in the Road Safety Regulations:

• The driver needs to carry a:
1. temporary pass;
2. certificate indicating the container has passed inspection;
3. certificate indicating that the driver has undergone hazardous substance transportation training; and
4. safety data records.
• The vehicle should:
1. hang red triangle cloth flags in the front and back;
2. affix labels to the left and right side of vehicle indicating that hazardous substances are being transported; and
3. have onboard an unexpired fire extinguisher and personal protection equipment.
• In principle, the vehicle should stay on the outer lanes of a freeway and not change lanes.
• The driver should be mindful of potential safety issues, such as ensure the container seal is tightly in place, avoid impact, scratches, or hard landings while loading and unloading the hazardous substance, and stop driving during dangerous weather conditions.

Some of the above requirements do not apply for transportation of LPG containers below a certain weight by motorbikes. Motorbikes below a threshold engine displacement size may not transport “hazardous substances”.

Taiwan currently has no law or regulation on providing a third-party access rights to privately constructed infrastructure.

Outside of eligibility requirements of the downstream seller (see 3.3 Issuing Midstream/Downstream Licences) and the physical characteristics of the petrochemical product (eg, distillation range, octane number, flash point, viscosity, etc, as specified in Article 29 of the Petroleum Administration Act, and related regulations), there is no law in Taiwan setting specific restrictions on the local market sales channel or environment.

For a petroleum importer, it must present to the central competent authority an oil storage plan and a sales or usage plan before obtaining the importer licence. If the importer wishes to subsequently engage in exports, it must submit its current licence and document(s) indicating ownership or leasehold of oil storage facilities above a safe capacity level. The establishment of a petroleum exporter requires the applicant to present an export plan to the central competent authority for review before obtaining the exporter licence (Articles 9, 10, and 15 of the Petroleum Administration Act).

For the establishment of a natural gas importer, the applicant should present its import and storage plan, as well as document(s) regarding its storage facilities, to the central competent authority.

In principle, retail sales operators may freely transfer their business licences between one another.

For example, the licence to operate a gas station may be transferred from the previous operator to the new operator in a change of ownership or operator entity, but an application needs to be made to the competent authority to amend the licence registration. The documents needed for the process include the official copy of the gas station licence, the company registration, and a copy of the shareholder register of the new operator company, the shareholder register and shareholder meeting minutes of the previous operator, a notarised transfer of rights agreement, and the consent letter of the owner of the land on which the gas station is located.

The relevant statute for rules on foreign inbound investment is the “Statute for Investment by Foreign Nationals”. Please note that this statute specifically excludes investment by PRC individuals and entities, which is further described below. A foreign investor looking to set up a new company in Taiwan would proceed pursuant to the following procedure:

• apply to the MOEA for approval of the proposed company name and scope of business of the new company;
• apply to the Investment Commission of the MOEA for permission to invest;
• for certain industries with restrictions on investment by foreign entities, the foreign investor will also need to obtain the approval of the relevant industry’s competent authority – for the oil and gas industry, the only area with restrictions on foreign investment is natural gas utilities;
• make the inbound remittance of capital into the new company; and
• complete the company registration procedure with the MOEA.

The relevant statute for rules on inbound investment from the PRC is the “Measures Governing Investment Permits to the People of the Mainland”. While the procedure for investment approval is similar to the aforementioned steps, there are significantly more industries that restrict or prohibit investment by PRC entities. In the oil and gas industry, PRC investors may not invest in:

• oil refinement;
• oil-based renewable energy;
• biodiesel manufacturing;
• wholesale of petroleum and diesel;
• wholesale of petroleum products; or
• natural gas imports.

While there are rules restricting investment in certain foreign entities, they are not specific to the oil and gas industry. Companies in Taiwan have to comply with the “Regulations on Handling Corporate Investments Abroad” and the “Regulations on Permits for Investment or Technical Co-operation in the PRC”, both of which are general rules regarding investment in other jurisdictions.

The central competent authority for environmental matters is the Environmental Protection Administration (EPA) of the Executive Yuan. Municipalities and county governments have regional “Environmental Protection Bureaus” that handle local environmental issues, including those attributable to oil and gas operations in the region.

The principal environmental laws and regulations relevant to oil and gas businesses in Taiwan can be generally divided into three categories: Environmental impact assessment, air/water pollution prevention, and climate change.

Environmental Impact Assessment

The primary law for environmental impact assessment is the Environmental Impact Assessment Act, which sets out the competent authority, the structure of the assessment, and the penalties for violations. Detailed rules and clarifications about the assessment procedure are found in the Environmental Impact Assessment Enforcement Rules. All exploration and excavation of oil and gas resources, as well as the establishment of oil and gas-related factories, must pass the environmental impact assessment.

Air/Water Pollution Prevention

For the oil and gas industry, the Air Pollution Control Act and the Water Pollution Control Act are the main provisions regarding pollution emitted into the air and water sources respectively from manufacturing or business operations. Other related regulations include:

• Gas Station Gasoline Vapour Recovery Facility Management Regulations;
• Fixed Pollution Source Installation, Operation, and Fuel Use Permit Management Regulations;
• Co-firing Ratios and Component Standards for Fuel Used in Fixed Pollution Sources;
• Effluent Standards; and
• Water Pollution Control Measures and Test Reporting Management Regulations.

Climate Change

The Climate Change Response Act regulates inspections of greenhouse gas emissions, the net-zero emissions policy, and the new carbon credits system. Further details are addressed in 5.5 Climate Change Laws.

As mentioned in 5.1 Environmental Laws and Environmental Regulator(s), passing an environmental impact assessment is in almost all cases a condition precedent for a “major” hydrocarbon project in Taiwan. The scope covers the construction or addition of product manufacturing lines for fundamental petrochemical materials (eg, ethylene, propene, butane, and aromatics), the establishment of petrochemical intermediates manufacturing outside of industrial park areas, and the installation of oil & gas pipelines and storage tanks in port relay terminals.

Per the Environmental Impact Assessment Act, an environmental impact assessment procedure may include two separate phases.

• The entity behind the project submits an environmental impact explanatory report to the industry’s competent authority, who then passes it to the local competent authority for review.

1. The explanatory report should include the purpose and details of the project, the current state of the surrounding environment, the predicted environmental impact from the development, the proposed protective measures and possible alternatives, and the costs to implement the environmental protection work.
2. Unless the local competent authority believes the explanatory report is incomplete and must be supplemented, the competent authority has 50 days to review (with a possibility of an additional 50-day extension) the explanatory report and issue its conclusions. The possible conclusions include “approval”, “conditional approval”, “rejection”, and “require a phase 2 assessment”.

• The second phase starts with the operator posting the aforementioned environmental impact report in public areas near the project site for at least 30 days and convening a town-hall-style public meeting to explain the project.

1. After the public meeting, the competent authority will invite the industry’s competent authority, experts, related organisations, and representatives of local residents to set out the scope of the phase 2 assessment and discuss possible alternatives.
2. The project operator will prepare and submit to the industry’s competent authority an environmental impact assessment report based on the comments it has received from the industry’s competent authority, relevant organisations and groups, and from the local residents at the town-hall meeting. The scope of the assessment report is significantly expanded from the explanatory report and will require details on matters such as a comprehensive environmental management plan, measures to reduce or eliminate impact factors that are harmful to the environment, and responses to comments.
3. The industry’s competent authority has 30 days to convene the competent authority, experts, relevant organisations, and local residents to conduct an on-site survey and a public meeting, followed by drafting a record of the events and submitting the record to the competent authority for review.
4. The competent authority has 60 days to render its review conclusions after receiving the aforementioned records from the industry’s competent authority. The project operator will then need to revise the assessment report pursuant to the review conclusions and again send the report back to the competent authority for approval. Once the competent authority approves of the final draft of the assessment report, it may publicly disclose a summary of the report and the review conclusions.

Since 2004, there are no longer any rules or requirements in Taiwan that specifically apply to offshore development. The Mining Act applies to all offshore oil and gas development operations in the same way as their onshore counterparts.

If an oil & gas project operator would like to permanently suspend development of a project that has already passed the environmental impact assessment process (has not commenced operations or been suspended during operations), the general process is as follows.

• Operator to provide the industry’s competent authority with the reasons for which development cannot continue – depends on whether the project has already been granted a licence; the industry competent authority will either revoke the licence immediately or terminate the licence approval process. If the environmental impact assessment review by the competent authority is pending at this time, the industry’s competent authority will notify the competent authority to void the review.
• The competent authority will then visit the project site and confirm that the development has stopped. Once confirmed, the competent authority will publicly announce its decision to void the environmental impact assessment review.

For transfer of ownership of a mining project after the mineral enterprise has obtained a licence, approval by the competent authority is required. The newly amended Mining Act stipulates that the transferee must also be a company limited by shares, and both the mineral enterprise and the transferee company must apply to the competent authority for approval of the transfer of ownership. All rights and obligations (including liabilities) are transferred to the transferee company along with the mineral enterprise licence. If the project has passed the environmental impact assessment at the time of transfer, as long as the industry’s competent authority has notified the competent authority of the transfer, the Environmental Impact Assessment Enforcement Rules provide that the transferee company does not need to redo the environmental impact assessment after the transfer.

For projects that are being shut down after they have commenced operations, the above procedures may be generally applied.

The most important climate change law in Taiwan is the Climate Change Response Act and is the basis for the “Taiwan 2050 Net Zero Emissions” policy goal as well as a carbon fee and trading system.

Due to the broad policy push for net-zero emissions, the EPA is tasked with closely tracking carbon emissions of hydrocarbon-based facilities. On 8 August 2022, the EPA announced that all oil refinery operators (including those using oil shale, as well as any other fossil fuel-based power producer whose direct greenhouse gas production is at least 25,000 tonnes of carbon dioxide), must complete, before 31 August of each year, a greenhouse gas emission inspection, data records, and testing work of the entire factory for the preceding year. The greenhouse data shall then be submitted to the data platform designated by the EPA.

Taiwan’s carbon fee system, which is scheduled to go online in 2024, will be used to collect payments from entities operating pollution sources that output large volumes of emissions. Fees will be collected for both direct emission sources (eg, gas boilers) and indirect sources (eg, heating facilities) over separate phases, and the collected amount will be applied to a “Greenhouse Gas Management Fund” used to supplement the government authorities in enforcing carbon reduction policies and conducting research on emissions reduction technologies. While upstream entities will in all likelihood incur such carbon fees once they are implemented, the Climate Change Response Act provides a way for operators to proactively request the EPA for reduced carbon fee rates if they take the initiative to implement measures that successfully reduce greenhouse gas emissions to the EPA’s targets.

For the carbon trading system, carbon emissions quotas (based on the EPA’s above total emissions targets) will be issued to business operators at no cost, sold in competitive auctions or on a subscription basis. According to the Climate Change Response Act, operators that receive a designated emissions quota should obtain an account from the EPA and disclose the quota on the EPA’s carbon trading platform, which can then allow for a part of the whole designated quota to be transferred or transacted to others.

Pursuant to the Environmental Impact Assessment Act, a local government is considered the local-level competent authority for the environmental impact assessments and thus has the right to oversee those procedures, which means it may set restrictions on oil and gas development in its jurisdiction on environmental protection grounds – but within the context of an unsatisfactory environmental impact report.

Due to the dearth of unconventional upstream resources such as shale, heavy oil, and coal-bed methane in Taiwan, and by extension their lack of commercial feasibility, there is no specific law or regulation addressing such interests; they are in principle currently governed by the Mining Act.

Taiwan has no special laws or regulations relating to LNG projects. The scope of the Natural Gas Enterprise Act is covered in 1.4 Principal Hydrocarbon Law(s) and Regulations and the statute does not contain specific rules regarding LNG development projects. The environmental impact assessment procedure for LNG projects, such as LNG receiving (port) terminals, follows the same rules as those described in 5. Environmental, Health and Safety (EHS).

As mentioned in 5.5 Climate Change Laws, Taiwan’s “2050 Net Zero Emissions” policy goal and the accompanying push to move away from coal to natural gas (and mixed with hydrogen) for fossil-fuel-based power generation, as well as the development of CCUS technology, are expected to significantly affect the oil and gas industry. All remaining coal-based power plant facilities will be decommissioned and converted to use natural gas so that natural gas-based power generation would make up about 50% of all power generated in Taiwan by 2025. Thus, Taiwan has been actively expanding its existing LNG receiving terminals (two) and constructing additional terminals (five more) in anticipation of the increase in natural gas demand. The upcoming carbon fees and trading programmes are also described in 5.5 Climate Change Laws.

The MOEA, the EPA, and other government agencies announced late in 2022 a joint effort to promote CCUS technologies, which include conducting geological surveys, convening state-owned and private enterprises in promoting carbon-use demonstrations and CCS pilot zones, as well as implementing new provisions in the Climate Change Response Act regarding CCUS technologies. The short-term goal is for a reduction of 4.6 million tonnes of carbon emissions with the help of CCUS technologies by 2030, and a 40.2 million tonne reduction target by 2050.

Despite the aforementioned significant amendments to the Mining Act, it should again be noted that because Taiwan needs to import more than 90% of its oil and gas, and how the state-owned CPC has a dominant if not monopolistic position in many parts of the petrochemical industry in Taiwan, the amount of commercial interest in upstream activities, such as exploration and excavation of hydrocarbon deposits, has always been quite low in practice; the impetus of development is in the downstream import, refining, and sales of petroleum products.

As mentioned in 1.4 Principal Hydrocarbon Law(s) and Regulations and elsewhere in this guide, the Mining Act was significantly amended for the first time in 20 years on 21 June 2023 and it was in effect on the same day, which would implement notable changes to the mineral exploration/excavation application process, including requiring for the first time the consent of the land owner before the licence may be granted.