Malaysia

Taiwan oil refiner mulls controversial Pengerang plant, denies pullout

November 22, 2012

File photo of work going on for Petronas’ deepwater terminal project in Pengerang. Taiwan firm Kuokuang had promised to invest in a petrochemical complex in Pengerang set up by Petronas.File photo of work going on for Petronas’ deepwater terminal project in Pengerang. Taiwan firm Kuokuang had promised to invest in a petrochemical complex in Pengerang set up by Petronas.KUALA LUMPUR, Nov 22 — Taiwanese oil refiner CPC Corp has denied scrapping a proposed multi-billion ringgit petrochemical plant in Pengerang, Johor, saying the controversial project is still undergoing a feasibility assessment despite opposition from environmentalists.

Taiwan’s Chinese-language Economic Daily News reported last Thursday that CPC subsidiary Kuokuang Petrochemical Technology planned to build a NT$10 billion (RM1.06 billion) methyl methacrylate plant at Taichung Port because the Malaysian project had stalled. Methyl methacrylate is used to manufacture resins and plastics.

Taiwanese news portal wantchinatimes.com reported that CPC vice-president Chen Ming-huei had told Malaysia’s Oriental Daily News that he was unaware of any Taiwanese reports that Kuokuang had dropped its plan to invest in Malaysia.

Chen clarified Kuokuang was still evaluating the Pengerang project and had not decided on pulling out its proposed investment.

He said in principle, Kuokuang would focus on research and development of high-end products in Taiwan and mass production overseas.

The report said he described Kuokuang’s investments in Taiwan and those in Malaysia as separate matters.

Chen also said Taiwan has only a limited amount of land, and mass production of petrochemical products requires a place like Pengerang that has large tracts of land available for manufacturing.

Pengerang is the site of Malaysian national oil firm Petronas’ Refinery and Petrochemical Integrated Development (RAPID) facility which is also facing protest from locals and environmentalists.

Analysts said Kuokuang hoped to build a petrochemical complex covering the full petrochemical supply chain in Malaysia, but progress has been slow because of difficulties in securing land, the report said.

The report said facing problems in Malaysia, Kuokuang decided to first invest in facilities producing high value-added petrochemical end-products in Taiwan, and it is expected to sign a NT$55.4 billion investment deal to put plants in Taiwan’s main port areas, including the one in Taichung.

The report added that Kuokuang is planning to differentiate itself from local firms by using eco-friendly and more advanced petrochemical materials and techniques to improve the competitiveness of its products.

Oil and natural gas authorities in Johor also said they have not received any word from CPC that it was withdrawing its investment plan, the news report said.

Kuokuang had originally planned to build a naphtha cracking and petrochemical complex in Changhua in central Taiwan but was forced to scrap the project last year because it did not pass local environmental assessments, eventually deciding to move it abroad, the report added.

Prime Minister Datuk Seri Najib Razak announced last May that a Taiwanese petrochemical firm had promised to invest in a petrochemical complex in Pengerang set up by Petronas.

The investment plan, estimated at US$120 billion, will include an oil refinery and a naphtha cracker.

Taiwan Economics Minister Shih Yen-shiang later confirmed that the Taiwanese firm Najib was referring to was Kuokuang.