CPC to launch new petrochemical project with UAE funding

State-run Chinese Petroleum Corp (CPC, 中油) will kick off a billion-dollar petrochemical project on Thursday with investment from the United Arab Emirates (UAE), a newspaper said yesterday.

The Kuokuang Petrochemical Co (國光石化), which is being set up by CPC, will submit its environmental evaluation report on Thursday and hold its first board meeting on Friday, the China Times daily said.

Kuokuang will discuss with the UAE a possible joint venture to begin in June and may form the joint venture before the end of this year, with CPC and the UAE each taking 50-percent stakes in Kuokuang.

As Taiwan's environmental evaluation takes two years and building the petrochemical complex will take an estimated eight years, CPC plans to build one petrochemical complex in the UAE and another complex in Taiwan.

"In the UAE, the land is owned by the government. So if the joint venture is formed before the year end, construction of the complex in the UAE can begin next year and production can start four years later," the daily said.

CPC approached the UAE's International Petrochemical Investment Corp a year ago to invest in Kuokuang Petrochemical Co.

Kuokuang will have an initial investment of US$6 billion. Its petrochemical processing zone will have refineries, naphtha crackers and downstream petrochemical plants.

Analysts said that CPC is seeking out a joint venture with the UAE because Taiwan, which imports all of its crude oil, wants to guarantee a supply of oil.

The nation maintains close trade ties with the UAE despite a lack of diplomatic ties.

Last September, President Chen Shui-bian (陳水扁) made a secret visit to the UAE to promote bilateral relations.

As a result of Chen's visit, the UAE has allowed China Airlines (華航) to launch regular Taipei-Abu Dhabi flights starting on April 25.