CPC to ink investment deal

Chinese Petroleum Corp (中油) said it will sign an agreement this month with 12 partners to invest in a NT$370 billion (US$11.6 billion) project to increase production of fuels and chemicals.

State-owned Chinese Petroleum will take a 49 percent stake in the new company, while 10 Taiwan petrochemical companies and two financial services companies have pledged to take the rest, Chinese Petroleum spokesman Liao Tsang-long (廖滄龍) said yesterday.

The project, including a 300,000 barrels-a-day crude oil refinery, will replace a facility in Kaohsiung which the nation's largest oil refiner promised to shut by 2015 because of opposition from residents due to pollution.

The new plants would use more efficient technology and help Chinese Petroleum to compete with rival Formosa Plastics Group (台塑集團).

"The plan is very important for Chinese Petroleum as the company tries to stay competitive," Liao said.

He refused to name partners in the joint venture.

Fubon Financial Holding Co (富邦金控), China Development Financial Holding Corp (中華開發金控), the Chi Mei Group (奇美集團) and the Far Eastern Group (遠東集團) are among the companies planning to take stakes in the Chinese Petroleum-led venture, a Chinese-language newspaper reported yesterday.

The state-run company is expanding capacity also because of increasing demand for fuels and petrochemicals. Chinese Petroleum and its competitor Formosa Petrochemical Corp (台塑石化) together refined 16 percent more crude oil in the first 10 months of last year than a year earlier, the Bureau of Energy under the Ministry of Economic Affairs said last month.

The project in Yunlin County on Taiwan's west coast will include an oil refinery, a plant that turns naphtha into ethylene and 27 units that produce other chemicals for plastics and textiles, company officials said in September. It will have capacity to make 1.2 million tonnes of ethylene a year.

Formosa Plastics last month signed a contract for a NT$89 billion loan to help fund expansion of its petrochemical factories in Mailiao, an area in western Taiwan. Investment in the venture will total NT$652.8 billion.