Formosa’s Mailiao complex expansion may face delay after fires

02 August 2010 10:33  [Source: ICIS news]

By Nurluqman Suratman

FormosaSINGAPORE (ICIS)--Formosa Petrochemical Corp may have to wait longer to secure a government approval for its planned expansion in Mailiao, after two fire incidents broke out at the complex last month, industry sources said on Monday.

Taiwanese Premier Wu Den-Yih had given the group an 6 August deadline to submit a report detailing the reasons for the incidents that shut operations at a 700,000 tonne/year cracker on 7 July and at a 540,000 bbl/day refinery and some downstream units on 25-26 July, according to local media.

Wu, who visited the Mailiao site and was welcomed by protesting local residents over the weekend, was quoted as saying that the refinery would not be allowed to restart until Formosa identified the cause of the incidents and “operational safety is fully guaranteed”.

Formosa declined to comment on the issue.

The company has plans to beef up its ethylene capacity by 300,000 tonnes/year and increase the capacity of its refinery to 580,000 bbl/day under the fifth phase of Mailiao complex expansion, said Jack Shieh, executive manager of Petrochemical Industry Association of Taiwan (PIAT).

The company can currently produce 2.93m tonnes/year of ethylene in its three crackers in Mailiao.

The planned Taiwan Dollar (NT$) 280bn ($8.75bn) expansion - which would involve 43 new projects, including petrochemical intermediates such as methyl methacrylate (MMA) and phenol - is currently being assessed by Taiwan’s Environmental Protection Administration (EPA), said Shieh.

“The expansion permit was supposed to be given to them [Formosa] by the end of the third quarter (of 2010) but because of the fires last month this could be pushed back by half a year,” said Danny Ho, a Taipei-based petrochemical analyst at brokerage Yuanta Securities.

Formosa, on the other hand, was hoping to get the government’s approval by the end of the year, said a company spokesperson.

"It was originally scheduled for the middle of the year but it was delayed because needed to complete its environmental assessment of our expansion plans," she said.

Formosa restarted one of the three 180,000 bbl/day crude unit in Mailiao last week, with plans to put another unit back on stream this week.

"They will reach full operations in one or two weeks. Normally, these CDUs (crude distillation units) will need to ramp up their production for 3-4 days," said the company spokesperson.

Meanwhile, the company’s No 1 cracker was expected to restart in end-September or early October, while the August maintenance at its 1.03m tonne/year No 2 cracker would have to be postponed.

($1 = NT$31.99)

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By: Nurluqman Suratman

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