Formosa Petrochemical Corp (台塑石化), Taiwan's second-biggest fuel supplier, plans to increase fuel exports to the US and Europe to compensate for falling domestic sales and reduced earnings arising from government price controls.
The refiner will export diesel containing 10 parts per million (ppm) of sulfur to Europe to take advantage of more stringent emissions standards that take effect in the EU next year, chairman Wilfred Wang (王文潮) said at the company’s annual shareholders meeting in Taipei yesterday.
Domestic oil product sales fell 6 percent to 7.02 million kiloliters (44.2 million barrels) last year as higher prices curbed demand. Formosa Petrochemical will also increase shipments of gasoline with 30ppm of sulfur to the western US, the company said in its annual report to shareholders.
“We want to optimize the value of our products,” spokesman Lin Keh-yen (林克彥) said at the meeting.
Overseas fuel sales climbed 21 percent to 14.2 million kiloliters last year and shipments abroad accounted for 43 percent of revenue, the company said in the report.
Formosa Petrochemical, capable of processing 540,000 barrels of crude oil a day, on Thursday raised gasoline and diesel prices to match those of state-run refiner CPC Corp, Taiwan (CPC, 台灣中油), the nation’s biggest fuel supplier.
The Cabinet this week lifted a ceiling on fuel prices charged by the government-owned refiner on concern the company’s losses will widen as crude costs surged.
“The increases in domestic fuel prices have been failing to keep pace with surging international oil costs,” Lin said. “If we gave up the domestic market, we would earn NT$10 billion or NT$20 billion more” a year, he said.
The firm earned about US$14 processing a barrel of crude oil into fuels for the overseas market last year, and “so far it’s better this year,” said Lin.
Formosa Petrochemical posted its first profit decline in six quarters after crude costs surged. Net income fell 21 percent to NT$9.82 billion (US$323 million) in the three months ended March 31, from NT$12.4 billion, the company said in a filing to the Taiwan Stock Exchange on April 29. Crude oil in New York almost doubled over the past 12 months.
CPC may post a loss of NT$110 billion this year if fuel prices are unchanged, company spokeswoman Jessica Tang said last month. The refiner reported a loss of NT$22 billion in the first three months, after recording a profit of NT$11.8 billion last year, the Web site of the Taiwan Stock Exchange said.
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