Taiwan's Formosa Plastics Group has confirmed plans to suspend all its plans for investment in China's petrochemical sector, including a proposed $6-7 billion petrochemical complex at the port of Xiamen, Fujian province.
Earlier press reports pointed to the suspension, but FPG would not comment at the time (OGJ, Sept. 21, Newsletter). It would have been Taiwan's biggest single investment in China. Taiwanese investments in China since relations improved in the late 1980s total more than $4 billion.
FPG apparently could not agree with Chinese authorities on whether ethylene produced at Xiamen would be exported or sold in China. FPG favored a 100% commitment to domestic sales, but Beijing favored exports. In addition, there was strong opposition to the project from Taiwan's government, another possible factor in FPG's decision. Taipei, complaining the project would transfer too much capital and technology to China, has warned FPG against the proceeding with the project since first proposed in 1990.
FPG may consider other, smaller petrochemical investments in China, perhaps in cooperation with other Taiwanese firms but the company has no firm plans at present. A likely location would be Shanghai. The Chinese government had offered to set aside 20 sq km of land at the Xiamen site in case FPG decided to revive the project later, but FPG declined to say whether that was an option.
Meantime, FPG hopes to begin construction soon on a $3.6-5 billion petrochemical complex in western Taiwan. It currently is having difficulty gaining access to land and water supply and obtaining environmental approvals. The project includes Taiwan's first privately owned naphtha cracker, a unit designed to produce 1.35 million metric tons/year of ethylene.
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