Formosa mulls Guatemalan refinery

Formosa Petrochemical Corp (台塑石化), the nation's only publicly traded oil refiner, said it is evaluating the feasibility of building an oil refinery and power plant in Guatemala, one of Taiwan's 24 diplomatic allies.

"We will send a team to Guatemala soon to look into the investment environment there," said a Formosa Petrochemical official who declined to be named.

Costs, transportation, government incentives such as subsidies or preferential loans and other conditions will be carefully evaluated by the company before making a final decision, the official said without providing a specific timeframe.

During a visit to Taiwan last month, Oscar Berger, the president of Guatemala, was given a tour of Formosa Petrochemical's Sixth Naphtha Cracker in Yunlin County, accompanied by President Chen Shui-bian (陳水扁).

The Guatemalan government later said that it hoped Formosa Petrochemical would invest US$7.2 billion in building an oil refinery with the capacity to produce 360,000 barrels of oil per day, along with a power station, a port and oil storage facilities, the Formosa official said.

Formosa Petrochemical produces approximately 700,000 barrels of oil per day in Taiwan.

Business risk is also one of the factors to take into account, he said.

For example, San Sun Hat & Cap Co (三勝製帽), a leading local hat manufacturer, opened a factory in Haiti in 2000 to assist the government in improving diplomatic ties with the Caribbean country. The company then incurred debts when the Haitian factory was forced to suspend operations during a coup in 2004.

Formosa Petrochemical emphasized that its evaluation of the Guatemalan projects was at a preliminary stage.

During a four-nation tour of Latin American allies, Vice President Annette Lu (呂秀蓮) on Tuesday traveled by helicopter with Berger to Puerto Quetzal on the Pacific Coast, where the Guatemalan government hoped the firm would build a refinery.

Shares of Formosa Petrochemical closed up 0.47 percent to NT$85.4 (US$2.61), outpacing the benchmark TAIEX, which lost 1.01 percent yesterday.

The private-run refiner saw its sales increase last month 17.17 percent from a year ago to NT$61.61 billion. Sales for the first six months of the year rose 14.54 percent from the same period last year to NT$293.85 billion.

Formosa Petrochemical, which is a unit of Formosa Plastics Group (台塑集團), commands about 30 percent of the domestic gasoline market. It exports about 65 percent of its gasoline for higher profits.