Four Taiwanese petrochemical companies said yesterday they had signed agreements with Chinese partners on a proposed US$4.5 billion petrochemical project in Fujian Province, China, aiming to build oil refineries and produce petrochemicals, including ethylene, in 2015 at the earliest.
However, the Ministry of Economic Affairs (MOEA) poured cold water on the companies’ enthusiasm, citing a ban on Taiwanese businesses constructing naphtha crackers — which can process naphtha or liquefied petroleum gas into ethylene and propylene, among others — in China.
The four companies — China Petrochemical Development Corp (中國石油化學工業開發), Ho Tung Chemical Corp (和桐化學), LCY Chemical Corp (李長榮化學) and USI Corp (台灣聚合化學品) — yesterday said in separate filings to the Taiwan Stock Exchange that their representatives joined the signing ceremony with officials from China Petrochemical Corp (中國石油化工集團) and the Fujian Provincial Government in Beijing on Tuesday.
The four companies have set up a joint venture, Gulei Petrochemical Co (古雷石化), to develop the project in Fujian’s Gulei Peninsula in Zhangzhou, the Central News Agency (CNA) reported yesterday, citing Preston Chen (陳武雄), founder of Ho Tung Chemical and chairman of the Petrochemical Industry Association of Taiwan.
The report said the Taiwanese venture headed by Chen would secure a 50 percent stake in the Gulei project. The remaining 50 percent would go to Fujian Petrochemical Co (福建煉油化工), which is a joint venture between China Petrochemical Corp, also known as Sinopec Group, and the Fujian Provincial Government, it added.
Chen did not respond to requests for comment yesterday, even though the CNA report also appeared on Ho Tung Chemical’s Web site.
The four companies said in their exchange filings that they would “actively conduct feasibility studies” on the Gulei project, adding “the investment will proceed only after it receives government permission and approval from the companies’ board of directors.”
In response, the ministry said the government has so far allowed Taiwanese companies to invest in the middle and downstream sectors of China’s petrochemical industry on a case-by-case basis, but is still evaluating the possibility of allowing local firms to build naphtha crackers in China.
“Prior to the loosening, domestic companies are still not allowed to invest in naphtha crackers there,” the ministry said in a statement.
Taiwan has barred local firms from building naphtha crackers in China because they could spur large fund outflows and affect investment in Taiwan.
In the CNA report, Chen said the companies would apply for approval of the investment in Gulei with the ministry and hoped to get approval from Chinese authorities by the end of November. The project is estimated to have an annual refinery capacity of 16 million tonnes of oil and 1.2 million tonnes of ethylene a year, it said.
The news of the Gulei project came as local petrochemical firms are seeking investment opportunities outside Taiwan after a plan to construct the Kuokuang Petrochemical Technology Co (國光石化) naphtha cracker complex in Changhua County’s coastal area was called off by the central government because of environmental protests in April.
This story has been updated from the version that appeared in print.