Taiwan’s energy system is sustained by ships that arrive to the island on a daily basis to deliver liquefied natural gas, or LNG. With about one third of Taiwan’s supply of LNG now evaporated following the outbreak of conflict in the Middle East, some in Taiwan are concerned that the island may be facing a shortage.
But Taiwanese officials are keeping calm and assuring the public that energy rationing is “absolutely” not necessary. Taiwan has already found alternative sources for natural gas through April and is currently working on May. If there is a dip in LNG supply, Taiwan has 13 gigawatts of installed coal-fired capacity which can be used as backup. But this scramble won’t come without a cost, experts told Domino Theory.
“While Taiwan has managed to secure cargoes in the short term, price volatility remains a serious concern,” Jong-Shun Chen (陳中舜), associate researcher at Center for Green Economy at the Chung-Hua Institution Economic Research, wrote in an email.
Since U.S. and Israeli forces began raining missiles on Iran on February 28, the unfolding conflict in the Middle East has exerted enormous pressure on the global energy market. Iran has effectively halted shipping through the Strait of Hormuz, preventing Qatari LNG tankers from leaving the Persian Gulf safely. Iranian drones also hit facilities in Qatar’s main site for LNG production last week, the Ras Laffan Industrial City, forcing QatarEnergy to declare Force Majeure.
Qatar’s last pre-conflict LNG shipments are arriving in Taiwan around mid-March. After that, the Taiwanese government and its state owned energy companies, namely Taipower and CPC, are filling in the gaps with alternative sources of gas.
Taiwan is acutely exposed to the disruption, Chen said. Not only does Taiwan maintain limited LNG reserves — between eight and 11 days — but it is also highly reliant on LNG for electricity generation. In 2025, LNG fueled over 50% of Taiwan’s power grid. The next largest contributor was coal at 26.6%.
Taiwan’s reliance on LNG will continue to increase. As a widely-traded fuel that burns more cleanly than coal, LNG can provide a buffer for rising energy demand. Taiwan is building new LNG terminals to accommodate this demand, which has grown from two LNG tankers every three days to one tanker per day. By 2030, demand will increase to three tankers every two days. “Taiwan will continue facing tight gas supply. For a country with no domestic natural gas production, this is an extraordinary policy choice,” Chen said.
Most of the LNG trade is tied up in decades-long contracts, but it can be bought in a pinch on the spot market, which is much more sensitive to price volatility. The JKM, the benchmark price for LNG in Asia, has more than doubled following the disruptions to Qatari LNG.
For this reason, the spot market is the “last resort” for Taiwan right now, said Yu-Hsuan Yeh (葉于瑄), an MPA candidate in climate, energy and the environment at Columbia University. Taiwan will first seek advanced supply from contract partners in the U.S. and Australia and coordinate with East Asian partners like Japan and South Korea. Japan, in particular, has become a major LNG reseller in the region, buying more LNG than it needs and reselling the excess to other players.
Taiwan has also bought LNG that was originally destined for Europe, according to Reuters.
Joseph Webster, a senior fellow at the Atlantic Council’s Global Energy Center, outlined the basic market logic of finding alternative LNG suppliers. “I would strongly suspect that Taiwan and other wealthy democracies in Asia and Europe are going to outbid other importers,” Webster said. “So really, the shortage, at least for now, is more financial than physical.”
Taipower, the national electric utility, could face financial strain reminiscent of the price shock after Russia’s invasion of Ukraine in 2022, said Chia-Wei Chao (趙家緯), research director of the Taiwan Climate Action Network. He noted that global oil prices have surged above $100 per barrel. If LNG prices return to the levels seen when oil crossed this threshold in 2022, fuel costs for Taiwan’s LNG-fired plants could rise about 40%. In fact, the cost of electricity is more sensitive to LNG disruptions these days because LNG now powers a greater portion of Taiwan electricity generation. Since the government regulates electricity prices, Taipower bears the brunt of surging fuel prices.
Geopolitical tensions in recent years, including the war in Ukraine, have led to 420 billion New Taiwan dollars in losses for Taipower, the company said earlier this year.
Balancing between the risk of further debt with the political cost of inflation is a persistent problem in Taiwan, Chao said. At the biannual electricity price review meeting that Taiwan is due to have soon, Chao thinks the best case scenario would be for the government to permit a hike in electricity prices up to the 6% annual ceiling and reallocate the burden of that hike to the semiconductor industry.
In the longer term, energy supply remains a concern, particularly now that Iran is laying explosive naval mines in the Strait of Hormuz. “That’s very alarming,” said Webster. “If they succeed in mining the Strait of Hormuz, at best, it will likely take weeks to reopen, and it could take months.”
Whether or not this crisis in the Middle East leads to a physical LNG shortage down the line in Taiwan, it highlights the island’s vulnerability to geopolitical shocks. Yeh-Tang Ricky Huang (黃業棠), the head of Climate Era Catalyst, a nonprofit focused on Taiwan’s decarbonization, put it this way: “If you are predominantly reliant on imported energy, you are going to run out at some point if the crisis persists.”
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