Taiwanese Companies Planning Over $18 Billion Ethylene and Petrochem Investment at Home and Abroad

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Researched by Industrialinfo.com (Industrial Info Resources; Houston, Texas). As world petrochemical majors boom along with new mega projects, it will require large volumes of oil to keep them fed and happy. You might begin to wonder if they know something about oil reserves and futures that everyone else does not know, or chooses not to know on a selective basis. This is particularly true of oil import dependent Far Eastern and South East Asian countries. At the same time as the inter-nation competition to secure supplies goes on like the new ‘great game,’ the hard-headed, risk-averse petrochem executives are launching new, long term projects, for which they must have modeled reliable and increasing imported oils supplies. They seem pretty confident about fixing their addiction. There does not seem too to be much possibility of a derelict ‘cracker belt’ repeating the desolation of the ‘rust belt.’

Aggressively initiating new projects is Taiwan’s state-owned Chinese Petroleum Corp (CPC) (Taipei), through a joint venture led by the newly established Kuokuang Petrochemical Technology (KPTC). The $12.46 billion petrochemical project will be the largest of its type in Asia. It will include a 300,000 bpd oil refinery, a naphtha cracker capable of producing 1.2 million tons of ethylene per annum, an aromatics complex producing 800,000 tpa of paraxylene, 23 plants for middle- and downstream operations, 14 cogeneration power units, and 13 docks. CPC owns 43% of the venture, with other Taiwan-based chemical corporations and financial companies taking up the balance.

The complex will be constructed on a 2,027-hectare site in Yunlin County and is set to increase the country’s competitiveness and add 0.91% to national domestic growth. It is estimated that the completed project will create output value of nearly $12 billion and provide 25,000 job opportunities and output value of $20.3 billion for related and downstream industries. It will also contribute $1.4 billion in taxes to the state.

To ensure feedstock resources and increase Taiwan’s strategic stored oil reserves, KPT has received positive signals from potential partners in the project from the Middle East.

KPTC, with a low emission, low energy plan, is about to apply for an assessment of the project by the Environmental Protection Administration and is hoping to start construction in the second half of this year, with work continuing to completion by 2014.

Also upfront in its aim to keep Taiwan as a leader in the petrochemical pack is Formosa Plastics Group (FPG) (Taipei), the world’s largest processor of plastics for pipes and imitation leather, with a plan to invest up to $400 million over the next four years on plants to make acrylic esters (paint and adhesives) and super-absorbent polymers (diapers).

The new investment will add to the company’s existing $20.4 million petrochemical complex in Mailiao, which currently has plants with a capacity to process 480,000 bpd of crude and produce 1.7 million tons of ethylene per annum. The oil refinery will be boosted to 540,000 bpd by the end of 2006, and construction on a new 1.09 million tpa ethylene plant is underway. For related news item, see December 31, 2004 – Taiwan’s Mailiao Petrochem Complex Completing $3.6 Billion Phase with a New $3.7 Billion Refinery Mooted on Nearby Site

The company is also seeking government approval to build a 1.09 million tpa ethylene plant on the Chinese mainland at Ningbo, with an estimated investment of between $3 and $5 billion. Up to now, the Taiwanese government has banned local companies from building ethylene plants in China, in order to protect local companies and prevent the diversion of investments.

FPG’s view is that with China currently importing 9.07 million tons of ethylene per annum and consuming a total of 14.5 million tpa of the product, with an annual increase in demand of 907,000 (10%) tpa, the shortfall will continue if the mainland does not build new plants.

The company already has a PVC plant in Ningbo and is test-running an acrylic ester factory and building polypropylene and super absorbent polymers plants in the same location. Its affiliate company, NanYa Plastics, has 30 plants in China making plastic pipes, synthetic leather, and components for printed circuit boards.

FPG is also looking at the U.S. as a growth market and could invest $1.1 billion in Texas over the next five years. It plans A 163,000 tpa polyvinyl chloride (PVC) plant and a 300 MW power plant with a petroleum coke feed, a cheaper alternative to natural gas, in the state.

An expansion of FPG’s ethylene production capacity in the U.S. is planned. The Point Comfort, Texas, plant currently accounts for 4.4% of North American ethylene capacity. The company manufactures PVC and a range of chemicals in other locations in the U.S. For related news item see September 13, 2005 – Formosa Plans More Than $600 Million in Capital Projects in the United States

These Taiwanese companies appear to have great confidence in the long-term availability of oil feeding the continually rising demand for ethylene and other petrochemicals.

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