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September 1, 2006 at 3:20 am #4150
1) Formosa company plans to shut a residual fluidized catalytic cracker, or gasoline-making plant, for repairs.
The refiner will close one of its two RFCCs, with a capacity of 73,000 barrels a day on Aug 9, spokesman Lin said. “The unit will be shut for between one to two weeks,” he said.
2) Formosa Petrochemical Corp., Taiwan’s only publicly traded oil refiner, said it has postponed the startup of Asia’s largest chemical plant because of labor and raw material shortages.
Formosa has delayed the opening of its the naphtha- processing unit, or cracker, at least six months to April, Taipei-based company spokesman Lin Keh Yen said in a telephone interview yesterday. The plant will produce 1.2 million tons a year of ethylene, used to make plastics and textiles, increasing Asian output 3.9 percent.
The unit of Formosa Plastics Group, controlled by Taiwan’s richest man Wang Yung ching, may miss out on rising chemical prices, driven by industrial production in China, investor Charles Hsu said. Exxon Mobil Corp., BP Plc and Royal Dutch Shell Plc, the world’s largest investor-owned oil companies, are all expanding chemical production in Asia.
“It’s positive news for the company’s rivals,” said Hsu, who helps manage US$700 million at First Global Investment Trust Co. in Taipei, including Formosa Petrochemical shares. The delay may reduce the company’s profit growth next year, he said.
Record oil prices have caused project delays and cost overruns across the energy industry as investment in fields, refineries and chemical plants stretches the supply of engineers, welders and steel pipes. Shell said last month that the cost of a plant that makes liquid fuel from natural gas in Qatar may soar to US$18 billion, triple earlier estimates.
Formosa’s cracker project, built on reclaimed land near Mailiao in western Taiwan, is part of a US$4.3 billion expansion, which includes increasing the capacity the company’s oil refinery by 20 percent to 540,000 barrel a day.
“The delays were caused by a shortage of labor, engineering personnel, and raw materials,” Lin said, “We’re now targeting to start up the plant at the end of the first quarter.”
Formosa’s decision may cut Asian prices of naphtha, the oil-product that’s used to feed the plant. Naphtha has risen 27 percent this year in Singapore, lagging the 32 percent in Brent crude oil.
“This is potentially bearish news for naphtha in the short term, especially when rising exports from India is contributing to an oversupply,” said N. Ravivenkatesh, a consultant at Purvin & Gertz Inc. in Singapore.
Profit from turning naphtha into ethylene has risen this year. Ethylene for delivery to northeast Asia has gained 26 percent to US$1,250 a ton on Aug. 4, according to industry pricing service ICIS.
Asia’s current ethylene capacity is 30.5 million tons a year and includes crackers in China, Japan, South Korea, Taiwan, Singapore, Thailand, Indonesia and Australia, said Lai Heng Mun, Singapore-based analyst at industry consultant Chemical Market Associates Inc.
The biggest single plant is the 900,000 tons a year plant in Shanghai owned by BP Plc, China Petroleum & Chemical Corp., and Shanghai Petrochemical Co., which opened in 2005.
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