10 August 2011 07:31 [Source: ICIS news]
By Pearl Bantillo
SINGAPORE (ICIS)--Taiwan’s Formosa Petrochemical Corp (FPCC) will keep five facilities in Mailiao, including two pipelines, shut for an indefinite period of time to ensure safe operations, following a string of fires at the petrochemical complex, a company spokesperson said on Wednesday.
These include a 700,000 tonne/year No 1 naphtha cracker, the propylene and hydrogen pipelines attached to the cracker, a 540,000 bbl/day refinery and an 80,000 bbl/day residual desulphurisation (RDS) unit that were directly affected by the fires, the FPCC spokesperson said.
“These plants that belong to FPCC are down now. We don’t know when they can restart,” she said, but declined to reveal further details of the shutdown schedule submitted to the Taiwanese government early on Wednesday.
FPCC’s sister companies, Formosa Plastics Corp (FPC), Formosa Chemicals & Fibre Corp (FCFC) and Nan Ya Plastics are also due to submit the maintenance schedules of their Mailiao facilities on 10 August.
The Taiwanese government will decide what to do with the rest of the petrochemical facilities at the site. The Mailiao petrochemical complex houses more than 66 plants, according to media reports.
When state refiner CPC was asked if it would be able to meet the shortfall likely to result from FPCC’s shutdowns, a CPC spokesperson said that a decision would depend on the Taiwan government.
“The supply of Taiwan’s energy needs will be decided by the Ministry of Economic Affairs. And as Taiwan’s state refiner, we will do everything we can to cooperate with the decisions made by the government,” CPC vice-president Chen Ming Huei said.
Most downstream petrochemical facilities at FPCC's complex in southwestern Taiwan are running at reduced capacity given the shortage of feedstocks because of a prolonged outage at the No 1 cracker.
In a few days’ time, FPCC’s 1.2m tonne/year No 3 cracker in Mailiao will be taken off line, but the company’s spokesperson reiterated that this shutdown is just for regular maintenance and the cracker would be back up after 45 days.
FPCC may see a 40-50% month-on-month decline in August sales, as the shutdown of its largest naphtha cracker in Mailiao will shave 65% of its total ethylene capacity, investment bank Morgan Stanley said in a recent note.
“Formosa group management indicated that the companies would procure feedstock from the spot market if needed to support downstream production. Our checks suggest that FPC and Nan Ya have at least three to four weeks of feedstock inventories on hand,” it said.
In the case of FCFC, a company source said that it will keep running its No 2 and No 3 aromatics units at near full capacity.
“It will be likely that we will need to buy October shipments of naphtha and isomer-grade xylene [IX] to maintain paraxylene [PX] production. We will probably also buy limited quantities of October PX to maintain purified terephthalic acid [PTA] operations,” the company source added.
FCFC’s current inventories of naphtha, IX and PX are sufficient to maintain operating rates through September, the source said.
Meanwhile, its No 1 aromatics plant remains shut pending further discussions with the government, he added.
FCFC produces a total 1.72m tonnes/year of PX from its three Mailiao-based aromatics units to feed its PTA production facilities, which have a combined nameplate capacity of nearly 2.9m tonnes/year.
Morgan Stanley has said that the Taiwanese government is unlikely to order a full shutdown of the Mailiao complex, but some capacities are likely to be shut in stages that will see overall utilisation rates fall to 50-60%.
Additional reporting by Bohan Loh, Gabriel Yip, Junie Lin, Chan Jing Yi and Trisha Huang
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