Formosa eyes $15-bil. petrochemical complex in Vietnam

Taiwan's Formosa Plastics Group was looking into plans to invest up to $15 billion in a major petrochemical complex in Vietnam, which would make it the largest foreign investment project in the country, even as the sector is suffering a downturn.

The project, slated for central Vietnam, has won initial approval from the government, the Viet Nam Investment Review reported on Monday.

But a spokesman for Formosa Petrochemical, a unit of Formosa Plastics Group, told Reuters the project was now only at a feasibility study stage.

"It is still in the process of evaluation and it is very preliminary. We were surprised when we heard it because we haven't submitted (the project) yet," said K.Y. Lin, spokesman for Formosa Petrochemical, the largest producer of ethylene in Asia, said.

The global petrochemical sector is in a slump, which some analysts say could last up to four years, more severe than recent downturns, due to weakening Chinese demand, oversupply and competition from more efficient Middle Eastern petrochemical makers that use cheaper gas, instead of naphtha, as feedstock.

This has forced Asian naphtha crackers to reduce processing rates to limit their losses.

The Viet Nam Investment Review report quoted Vo Kim Cu, vice chairman of the central province of Ha Tinh's People Committee, as saying the province had agreed to provide 1,000 hectares (2,470 acres) of land for the petrochemical project.

Construction of the complex is expected to start in 2010, the report quoted Cu as saying.

Viet Nam, which has no major oil refinery now, aims to raise its annual refining capacity to 30 million tonnes of crude oil, or 600,000 barrels per day (bpd) by 2020. Its first 140,000-bpd refinery, the Dung Quat plant, is expected to come onstream in next February.

Hanoi also aimed to develop a petrochemical sector to cut reliance on imports of products such as plastics and materials for the textile and garment industries.

In September state oil group Petrovietnam and Siam Cement SCC.BK, Thailand's top industrial conglomerate, began construction of another joint-venture petrochemical complex in the southern province of Ba Ria-Vung Tau at a cost of $3.77 billion.

The Ba Ria-Vung Tau complex will meet about 65 percent of the country's demand for polyethylene and polypropylene.

Another $1.5 billion naphtha cracker project by Singapore's SP Chemicals in the south central province of Phu Yen is also projected o come onstream from 2014, state media had reported.

Source:Reuters