Formosa to opt out of Ningbo project in Mainland China

14-Apr-08

Formosa Plastic Group (FPG), subsidiary of Formosa Petrochemical Corporation (FPCC), has decided to relinquish plans to participate in a mega ethylene project in Beilun Petrochemical Zone of Ningbo City. The complex had been planned with an annual crude oil refining capacity of 10 mln tons and ethylene capacity of 1.2 mln tons, just like FPG's existing complex in Mailiao offshore industrial zone. With the opening up of direct cross-strait shipment, FPG will be able to transport its petrochemical products from Mailiao to China and therefore may not have to implement its mega ethylene project in Ningbo, China. Interestingly, the Ningbo project had unresolved issues from the start: The Chinese Government had originally proposed Formosa Plastic Corporation take a 50% stake in the JV. Formosa, however, coveted a 100% stake in the project in mainland China. Formosa faced challenging times dealing with domestic petrochemical producers who were opposing the project. Besides, there were a number of other issues as well. China National Petrochemical Corporation (CNPC) is expected to take over this project.