Kuokuang Petrochemical Technology Co (國光石化科技), a venture led by Taiwan's state oil company, may shift a planned NT$401 billion (US$12 billion) chemical project to the Middle East because of opposition at home from conservationists and fishermen.
Failure to obtain government clearance or acquire land may force a move from the preferred site in Yunlin County, company president Roy Chiu (邱吉雄) said.
Kuokuang, 43 percent owned by Chinese Petroleum Corp (CPC, 中油), may add to investments of as much as US$5 billion planned with partners in the Middle East, he said.
"That'll be our last choice" because it "won't contribute anything to Taiwan's gross domestic product," Chiu said in Taipei on Dec. 28. "We're considering Saudi Arabia, Oman and Abu Dhabi."
Giving up Yunlin would be Chinese Petroleum's second failure to build an ethylene plant in Taiwan this decade. The company needs to make up for lost capacity from a facility in Kaohsiung scheduled to close down by 2015 because of complaints from residents over pollution.
Investment in the Middle East would help Taiwan build political ties in the region. None of the 24 nations that maintains formal ties with President Chen Shui-bian's (
"If they build it in the Middle East, it would be for diplomatic considerations," said Jeffrey Bor (柏雲昌), an economist at the Chung-hua Institution for Economic Research (中經院) in Taipei.
A plant in the region would mean getting feedstock for the company would be easier, said Wang To-far (王塗發), a member of the legislative Economics and Energy Committee.
Taiwan imports almost all its crude oil and more than 90 percent of its natural gas.
If completed as planned in 2015, the Yunlin plant would boost Taiwan's economic output by 0.9 percent, Chiu said.
The Yunlin project hasn't passed the government's environmental impact assessment because of speculation it will increase emissions of greenhouse gases, Chiu said. Kuokuang also needs to negotiate with 850 fishing families to leave the planned site, he said.
"I oppose building the plant in Taiwan," Wang said. "Taiwan's greenhouse gas emissions are already very high."
Taiwan ranks third in the world -- behind the US and Australia -- in per capita greenhouse gas emissions, Wang said.
CPC is counting on the project in Yunlin to compete with Formosa Plastics Group (台塑集團), which has newer refining units and petrochemical plants.
The state-controlled firm's 2005 profit was 15 percent of that of smaller rival Formosa Petrochemical Corp (台塑石化), whose share price gained 27 percent last year to NT$71.60.
CPC and Formosa Petrochemical are Taiwan's only oil refiners. They also have units that process naphtha into petrochemicals including ethylene, a raw material used in making plastics. Naphtha is distilled from crude oil.
CPC originally planned to start on its own in 2004 on the Yunlin project, with a 300,000 barrel-a-day crude oil refinery and an ethylene plant with an annual capacity of 1.2 million tonnes, Chiu said.
The refiner later invited local companies, including Oriental Union Chemical Corp (東聯化學) and Fubon Financial Holding Co (富邦金控), to join the project. The partners set up Kuokuang in January last year to carry out the plan, according to CPC's Web site.
Relocating the project to the Middle East may mean lower costs for land acquisition and quicker completion, Chiu said.
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