CPC denies it plans to scrap Malaysia project

REPORT OR RUMOR?:The refiner said its Malaysian subsidiary was still assessing the plan and confirmed that it would sign NT$55.4b deal for petrochemical plants in Taiwan

Staff writer, with CNA, KUALA LUMPUR and TAIPEI

Mon, Nov 19, 2012 - Page 3

State-run oil refiner CPC Corp, Taiwan (CPC) yesterday denied reports on Saturday that it was scrapping a planned investment project in Malaysia, saying the plan was still undergoing a feasibility assessment.

CPC vice president Chen Ming-huei (陳明輝) told Malaysia’s Oriental Daily News that he was unaware of any Taiwanese reports that Kuokuang Petrochemical Technology Co, the CPC subsidiary making the investment, had dropped its plan to invest in Malaysia.

The Chinese-language Economic Daily News reported on Thursday that Kuokuang planned to build a NT$10 billion (US$343 million) methyl methacrylate plant at Taichung Port because its investment project in Malaysia had stalled. Methyl methacrylate is used to manufacture resins and plastics.

Analysts said Kuokuang hoped to build a petrochemical complex covering the full petrochemical supply chain in Malaysia, but progress has been slow because of difficulties in securing land, the report said.

Facing problems in Malaysia, Kuokuang decided to first invest in facilities producing high value-added petrochemical end-products in Taiwan, and it is expected to sign a NT$55.4 billion investment deal to put plants in Taiwan’s main port areas, including the one in Greater Taichung.

The report added that Kuokuang is planning to differentiate itself from local firms by using eco-friendly and more advanced petrochemical materials and techniques to improve the competitiveness of its products.

Chen said Kuokuang is still evaluating its planned investment in Pengerang in the southern Malaysian state of Johor and has not decided to pull out of the Southeast Asian country.

He said that Kuokuang in principle would focus on research and development of high-end products in Taiwan and mass production overseas and described Kuokuang’s investments in Taiwan and those in Malaysia as separate matters.

Chen said Taiwan has a limited amount of land and the mass production of petrochemical products requires a place like Pengerang that has large tracts of land available for manufacturing.

Oil and natural gas authorities in Johor also said they have not received any word from CPC that it was withdrawing its investment plan.

Kuokuang had originally planned to build a naphtha cracking and petrochemical complex in Changhua in central Taiwan, but was forced to scrap the project last year because the project did not pass local environmental assessments, eventually prompting it to move overseas.

Malaysian Prime Minister Najib Razak announced in May that a Taiwanese petrochemical firm had promised to invest in a petrochemical complex in Pengerang set up by Petronas, Malaysia’s state-run oil firm. The investment plan, estimated at US$120 billion, will include an oil refinery and a naphtha cracker.

Minister of Economic Affairs Shih Yen-shiang (施顏祥) later confirmed that the Taiwanese firm Najib was referring to was Kuokuang Petrochemical Technology.

However, the Pengerang project has drawn fierce opposition from local residents, who staged a protest the month it was announced over environmental concerns.