Formosa Plastics ethylene project is expected to settle in Ningbo during the year
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The Formosa Ningbo project is located in Beilun, Ningbo. Currently, some petrochemical intermediate raw material plants have been put into operation one after another. There is an urgent need for ethylene cracker and refinery to integrate the industrial chain. The “Greater Ethylene Project†is the second stage project of Formosa Plastics Ningbo, including 10 million tons refinery and 1.2 million tons ethylene cracker. The total investment of the project is about 10 billion US dollars. Once approved by the State Council, the project will be the largest foreign investment project in the mainland.
Before, whether the "large ethylene project" was a joint venture or a sole proprietorship, there have been many controversies and speculations. The above-mentioned Zhejiang officials said that after several contacts and negotiations between the two sides, preliminary consensus has been reached. As a "negotiating bargaining chip," the mainland will also authorize Formosa Plastics to build a Chang Gung Memorial Hospital in Ningbo, with an estimated investment of 60 million U.S. dollars.
In addition, the more than 1,000 hectares of land required for the Formosa Plastics Project has been basically finalized. EIA reports that have been reviewed by experts before have also been rectified and reported to the State Environmental Protection Administration.
The ethylene project Wang Yongqing's Ningbo complex has a long history. In 2001, Formosa Plastics Corporation's (FCFC) ABS project settled in Ningbo Meishan Petrochemical Industrial Park.
In September 2003, Wang Yongqing made a special trip to Ningbo to finalize 12 projects in the first phase. In June 2004, Wang Yungqing proposed the “Greater Ethylene Project†including 10 million tons of refinery, 1.2 million tons of ethylene cracker, and 600,000 tons of propylene plant. The total investment of 167,000 tons of butadiene plants and aromatic hydrocarbons amounts to 10 billion U.S. dollars.
Officials in Zhejiang Province said that the progress of the Formosa Plastics Ningbo Phase I project was “very smooth†and that the total investment has already reached nearly 2 billion U.S. dollars.
Formosa Plastics is located in the petrochemical area of ​​Ningbo Beilun Economic and Technological Special Zone. At present, more than ten subprojects have been completed and put into operation. However, these petrochemical intermediate raw material plants require upstream raw materials for ethylene. If they abandon their own strengths in petrochemicals, and have been relying on imports or the supply of ethylene products from other companies, they will increase Formosa's investment costs. At present, Ningbo Formosa Plastics Co., Ltd. urgently needs ethylene cracking plants and refineries for vertical integration to form an upstream and downstream industry chain.
However, due to various reasons, the "Greater Ethylene Project" was shelved repeatedly. "In addition to the land and environmental assessment procedures are not ready, the two sides have always had differences in joint ventures," said the Zhejiang official.
According to relevant reports, the mainland only approved Sino-foreign joint venture ethylene projects, and Formosa Petrochemical's ethylene project is a Taiwanese-owned project. Previously, due to business reasons, Formosa Petrochemical did not consider joint ventures with mainland companies to build the project and tended to operate solely.
Solely-owned or joint venture?
On the issue of joint ventures or not, "After several contacts and negotiations between the two sides, preliminary consensus has been reached that the large ethylene plant will be wholly owned by Formosa Plastics, and the refinery will be selected by the National Development and Reform Commission as a 'mother's house,' choosing from PetroChina and Sinopec. A joint venture partner, the specific proportion of investment has not yet been set, but the Formosa Plastics Holdings is positive.†Zhejiang officials revealed.
He said: "The reason why a refinery is going to be a joint venture is to worry about the impact on the mainland-related industries. Wang Yongqing even wanted to build a 28-million-ton refinery from the start. Formosa Plastics has advantages in technology and business management."
The official said, "Each of the two sides of the environmental assessment and land, there are no major problems."
The Formosa Ningbo project covers more than 1,000 hectares of land. Zhejiang officials revealed that after several communications, the land has no problem. “The 5,000 acres of land use the original US Concord Petrochemicals (Group) Co., Ltd. idle land, and there are some plans before The transfer of agricultural insurance to the industrial area is also preparing for demolition."
It is understood that the 5,000 mu of land of Xiehe Petrochemical Company originally hoped to carry out the ethylene project construction in the Ningbo Beilun Economic and Technological Development Zone. The signing time of the company and the Ningbo Municipal Government on the land was 1994. However, due to various reasons, the land has been idle.
In October last year, the Formosa Plastics Phase II environmental impact assessment report was submitted to the State Environmental Protection Administration for approval. It was jointly reviewed by eight environmental impact assessment agencies, including the China Academy of Environmental Sciences, the Ningbo Environmental Protection Science and Design Institute, and Sinopec Shanghai Environmental Protection Technology Center. “At the time, the experts reviewed a lot of opinions. Now that the EIA report has been rectified, it has been reported to the State Environmental Protection Administration again.â€
At present, the “Eleventh Five-Year Plan†of Ningbo City has formally included the Formosa Plastics Ningbo Phase II Project, and it is proposed to focus on refining and ethylene, and to develop synthetic materials, basic chemical raw materials, and fine chemical products to form a large scale. The petrochemical industry group built a national petrochemical industry base.
Mainland "six light"
Sinopec's one-million-ton ethylene project is also located in Ningbo. In March 2006, the National Development and Reform Commission approved the Zhenhai Refining and Chemical Plant with an annual output of 1 million tons of ethylene, with a total investment of RMB 22.4 billion.
“Formosa Plastics Project and Zhenhai Refining & Chemical Co., Ltd. do not conflict on oil sources,†said the Zhejiang official. “Formosa Plastics insists on the dislocation development of petrochemical companies like Zhenhai Refining and Chemicals. Located in Maiji, Taiwan.
"Six Light" is Formosa Plastics' base in Taiwan. In the early 1990s, Wang Yongqing built the first private “light oil cracker†in Taiwan, the so-called “Six Light†(Taiwan’s sixth light oil cracker), thereby establishing a complete petrochemical industrial system.
At the beginning of December last year, Formosa Beilun Port dedicated docks were accepted and accepted, and they have now been put into trial operation. In the future, once cross-strait direct flights are established, Formosa Plastics will be able to connect the Port of Maiao with Beilun Port and transport petrochemical raw materials and products across the Straits at a lower cost, thus forming a complete petrochemical industrial supply system across the Taiwan Strait.
Officials in Zhejiang Province said that the Formosa Plastics Ningbo project will become its “sixth light†on the mainland and will become Formosa’s headquarters for investment in the mainland in the future.
According to the current plan of the Formosa Plastics Industrial Park, industrial parks will include Formosa Plastics' fine chemicals, heavy chemical industry, textiles, electric power, and wharfs and other industrial projects. Once the project is approved, the upstream and downstream product lines will naturally form a connected relationship.
According to reports, the current production of ethylene in the mainland is only 40% of the amount used. If the Formosa Plastics Group can immediately invest, it can just catch up with this wave of economic growth.
At present, the mainland has become an important investment place for the Formosa Plastics Group (see attached table). In many investment projects, copying a "six light" in Ningbo is undoubtedly the core of its mainland investment distribution.
Information Formosa Plastics Group is a leader in traditional industries in Taiwan. It owns four listed companies, including Formosa Plastics (1301), South Asia Plastics (1303), Taiwan Chemicals (1326) and Formosa Plastics (6505), which were issued to shareholders in 2006. The cash dividend exceeded RMB 120 billion, setting a new record high.
Brokerage analysts said that after the Formosa Plastics Group completed the “six-light†four-phase expansion plan, the Group’s revenue and profit-making will reach new heights, and it must make large-scale investments overseas. Formosa Plastics senior executives once said that plans to invest in refineries and light oil crackers in the mainland must be implemented.