Formosa Plastics Looking at $13 Billion China and Guatemala Investment

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Researched by Industrial Info Resources (Sugar Land, Texas). Following an outward looking strategy, Formosa Plastics Group (FPG) is looking at a number of major overseas projects including an oil refinery in Guatemala and a petrochemical and refinery complex in China. These and other projects are designed to counteract the effects of slower growth in Taiwan’s domestic markets.

FPG intends to invest $6 billion in an integrated oil refinery and petrochemicals complex in Ningbo in eastern China. The project will have 10 million tons per annum (tpa) refining capacity and a naphtha cracker with an ethylene production capacity of 1.2 million tpa and an aromatics production unit. CNPC (China National Petroleum Corp) or Sinopec (China Petroleum and Chemical Corp) are possible partners in the projects. Estimated cost of the refinery is about $1.5 billion.

Although government approval is said to be pending on the project FPG has already invested about $2 billion on production of a range of products including polyvinyl chloride, styrene, acrylonitrile butadiene and epoxy resins. Polypropylene and super absorbent polymers plants are expected to be completed in August 2007 and October 2007 respectively, FPG also intends to build a 200,000 tpa phenol plant to combine production of raw material cumene and derivative bisphenol A.

News of the $7.2 billion Guatemalan refinery came out of a visit to the country by FPG founder Wang Yung-ching in the last week of June, when he met President Oscar Berger. The 360,000 barrels per day (bpd) refinery project may also include a dedicated power plant and port facilities and warehouses. FPG will send a team to conduct a detailed study on the feasibility of the major investment. With the cost of constructing refineries soaring pushed by demand from China, Taiwan and the Middle East FPG may wait to give the go ahead unless the need for the refinery is needed to fill an emergency.

Taiwan has also agreed to donate $40 million for the repair and expansion of a highway, $10 million for prisons improvement and 25 postgraduate scholarships in business and engineering. Guatemala is one of the 24 countries maintaining diplomatic links with Taiwan.

FPG is the world’s second largest polyvinyl chloride producer and group sales rose 15% to $50 billion in 2006, which was slower than the 19% rise in 2005 and the 36% rise in 2004.

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