UAE based IPIC to invest US$2.4 bln for 20.7% stake in Taiwan

26-Jul-05

CPC is likely to give up a major portion of its 43% stake to investors in a refinery and petrochemical complex in southwest Taiwan project if it fails to secure funds from the government for its project. This is estimated to be a gain for International Petroleum Investment Co. (IPIC) along with others, if they become shareholders of the 300,000 bpd oil refining and 1.2 million tpa naphtha cracker project at Taixi in Yunlin county, slated to replace an ageing complex in the south by 2014. CPC plans to use the Taixi project to replace its 270,000 bpd refinery and 500,000 tpa No.5 cracker at Kaohsiung. The expansion plan of which, it cancelled due to objection from the local government. Other current shareholders are Oriental Union Chemical Co. and Chang Chun Group, with 20% each; China Man-Made Fiber Corp. with 10% and Ho Tung Holding Co. with 5%. The new shareholders are to acquire a major stake of CPC's proposed refinery and petrochemical complex, which would change the size of stakes held by the current investors. The UAE, represented by the government-linked foreign investment arm International Petroleum Investment Co. (IPIC), is mulling to invest about US$2.4 billion in the project for a 20.7% stake. The link with UAE would help CPC, a major naphtha and crude oil importer, secure cheap feedstock and crude supplies from the Middle Eastern producer. The rest of the stake then would be divided between two Taiwanese companies one of which is USI Far East Corporation. A memorandum of understanding has already been signed between the IPIC and CPC, but the final agreement is yet to be reached and will probably take until the end of this year. Thus the project that was due to start up in 2010 is expected to be delayed by a year because of slow progress in the negotiations as well as land issues and protests from green groups. However this project is likely to come on stream before the permanent shutdown of the Kaohsiung complex in southern Taiwan. To be able to hold its current position in the market it is predicted that CPC must keep up with the expansion plans of its rival, Formosa Petrochemical Corp. (FPCC), which is expanding its about 450,000 bpd refinery at Mailiao to approximately 540,000 bpd by 2007.