Taiwanese Formosa to invest $9.4bn in US ethane facility

Petrochemical plant
Source: DollarPhotoClub

Taiwanese chemical giant Formosa Plastics Group disclosed on Monday (25th January) that intends to invest as much as $9.4 billion to build a new ethane cracker in the U.S. in a bid to capitalize on cheap American shale gas.

This would be the fourth such plant the Tai Pei-conglomerate owns in the U.S., with two similar facilities in Texas producing 1.66 million tons of ethylene per annum. The company is also building a third manufacturing site in Texas, which is set to yield 1.2 million tons of ethylene from 2018.

Spokesman and Executive Vice President Lin Keh-yen of Formosa Petrochemical Corp, FPG’s petrochemical arm, said the company submitted an application to the state government in Louisiana last September to proceed with an environmental impact assessment for the facility.

“It is a very big project, and hopefully, we can get approval as early as the end of 2017,” Lin told the Nikkei Asian Review on Monday. “It will take about four years to build the site, so it can start producing in 2022.”

“It would be extremely cost-effective for FPG to expand in the U.S. due to cheap shale gas available there,” Leo Lee, an analyst at Yuanta Investment Consulting, told Nikkei Asian Review, adding: “Even if the oil price plummeted, some Asian companies still buy ethylene from the U.S. since it’s still cheaper this way.”

Speaking to reporters, FPG Chairman William Wong explained that the recent decision is in line with the company’s strategy of overseas expansion, with the U.S., Vietnam and China being the three top target areas.

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