24 August 2011 07:04 [Source: ICIS news]
By Pearl Bantillo
SINGAPORE (ICIS)--Taiwan’s Formosa group needs to conduct monthly inspections of about 70 plants, pipelines and equipment at its petrochemical complex in Mailiao, to minimise fire incidents that have plagued the site, an industry association official said on Wednesday.
The group will have to shell out heavy investments in manpower to carry this out, said Jack Shieh, general manager at the Petrochemical Industry Association of Taiwan (PIAT).
“We hope Formosa should pay more attention to maintenance of equipment. The problem is there are as many as around 70 different plants and those petrochemical facilities are quite complicated,” he said, adding that the company may need some assistance from foreign experts.
“A huge amount of money should be paid for such kind of inspections, including the change of the materials, equipment and labour cost. This is quite a heavy burden for Formosa,” he said.
Formosa officials were not immediately available for comment.
A shortage of manpower could be an issue that may have led Formosa to fall slack in its routine checks at Mailiao, Shieh said.
Formosa Plastics Corp (FPC), Formosa Petrochemical Corp (FPCC), Formosa Chemicals & Fibres (FCFC) and Nan Ya Plastics comprise the Formosa group.
With a quick succession of fire incidents that have hit the site since the start of the year, the Mailiao-based plants will need to be shut, by turns, for maintenance, as ordered by Taiwan’s central government.
The latest fire at the site in late July prompted the resignation of two top executives at FPCC, which operates the three crackers with a total capacity of 2.93m tonnes/year in Mailiao.
“All the units in the complex should be shut within the year,” said Shieh, adding that the sequence of shutdowns will be decided in accordance with Taiwan’s domestic requirement.
“The net effect should be a decrease of export quantity,” he said.
Formosa’s 540,000 bbl/day refinery only supplies a quarter of its production to the domestic market, while the bulk or 75% of total production is exported.
So far, only one of three lines at the refinery is operating.
“[Refinery] production has been cut to a significant extent. The impact might be on the petrochemical side,” said Shieh.
Some downstream petrochemical players in Taiwan that procure feedstock supply from Formosa will have to import raw material, he said.
The overall production capacity of the Formosa group accounts for about 70% of Taiwan’s petrochemical capacity.
More than two-thirds of Taiwan’s petrochemical output is exported, with some 10m tonnes of basic material being shipped to China.
Taiwan has the world’s ninth largest ethylene capacity at 4m tonnes/year, with Formosa’s capacity accounting for three-quarters of the total at 2.93m tonnes/year.
However, only one of three Formosa crackers is operating. The 1.03m tonne/year No 2 naphtha cracker is running at 100% capacity.
The 700,000 tonne/year No 1 cracker has remained off line since the 12 May fire at the Mailiao petrochemical complex, while the 1.2m tonne/year No 3 cracker was shut in the middle of August for a 45-day turnaround.
“This affects all the downstream demand of ethylene, olefins and aromatics raw material supply,” the PIAT official said.
Nonetheless, Shieh said that fire accidents are sometimes unavoidable for such a huge petrochemical complex.
“I don’t think it is the right decision for the government to order the shut down of the facility/operations in case of a fire,” he said.
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