December 23, 2009 at 11:08 am #2832
Formosa to Spend $803 Million to Upgrade Oil Refinery (Update2)
By Yu-huay Sun
Dec. 23, 2009 (Bloomberg) — Formosa Petrochemical Corp., Taiwan’s only publicly traded oil refiner, plans to spend NT$26 billion ($803 million) by the end of 2012 to upgrade its oil- processing plant to help meet regional fuel demand.
The refiner will enlarge the capacity of its existing three crude-oil processing units to a total of 593,000 barrels a day by 2012, Chairman Wilfred Wang told reporters in Taipei today. The company plans to invest an additional NT$130 billion in new refining units in Mailiao, western Taiwan, pending government approval, including a crude-oil processing plant, he said.
Formosa Petrochemical exports more than half of its products and competes with refiners including China Petroleum & Chemical Corp., whose parent said this month it has successfully completed a trial run of a 300,000 barrel-a-day plant. The investment will help boost our competitiveness, Wang said.
“The timing of the Formosa investment is good as it avoids the time when international capacity would rise a lot, including the second half of next year,” said Huang Lan-ying, a Taipei- based analyst at Capital Securities Corp., who has a “neutral” rating on the stock.
Formosa Petrochemical currently has a processing capacity of 540,000 barrels a day, while rival CPC Corp. can refine 720,000 barrels daily. A fourth crude unit will eventually be built, boosting Formosa’s daily capacity to 764,000 barrels, according to spokesman Lin Keh-yen.
Other planned projects include a delay coker and a hydrocracker, which converts heavy gas oils to gasoline and diesel, Wang said. A delay coker processes fuel oil into lighter products and petroleum coke.
The shares fell 0.4 percent to NT$81.7 in Taipei trading today. The stock has climbed 21 percent this year, lagging behind the 72 percent gain in the benchmark Taiex index.
The refiner’s nine-month profit dropped to NT$29 billion, or NT$3.04 a share, from NT$45.6 billion, or NT$4.78 a share, a year earlier, according to a stock exchange filing on Oct. 28, as the recession cut fuel demand.
The company expects its refining margin to improve next year from $5-$6 a barrel in 2009, Lin said.
Formosa Petrochemical and unlisted CPC also have units that process naphtha, an oil product, into ethylene for making plastics and fibers. Growing competition from Asian and Middle East producers will weigh on Formosa’s earnings from petrochemicals, Wang said. The global annual capacity of ethylene will increase by 9 million tons next year, he said.
Profit from petrochemicals may decline in 2010, after “an unexpectedly well market this year” because of stimulus packages by governments around the world, Lin said.
Chinese Premier Wen Jiabao engineered the nation’s rebound from the effects of the global financial crisis by pushing banks to lend and rolling out a 4 trillion-yuan ($586 billion) stimulus package that will run through 2010. The mainland is Taiwan’s biggest overseas market.
Formosa Petrochemical exports 55 percent to 60 percent of its refined products, Lin said.
To contact the reporter on this story: Yu-Huay Sun in Taipei at email@example.com Last Updated: December 23, 2009 03:39 EST
December 23, 2009 at 11:11 am #5881
Here is update on Taiwans Formosa Petchem’s expansion originally released in 2007 for the 93-100MBD expansion portion on the 3 existing crude units but this version includes a +127MBD (total 764MBD) & $US 802 million expansion on a 4th crude unit & new Coker with targeted 2012 completion, and making it larger than competitor China CPC with 720 MBD plant.
The global demand will obviously have big impact on this projects timeline since it exports 55-60% of its products.
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