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Formosa Petrochemical Shuts Down Unit at Mailiao Oil Refinery After Fire
Formosa Petrochemical Corp., Taiwan’s only publicly traded oil refiner, said it has halted its 540,000 barrel-a-day refinery at Mailiao after an oil leak triggered a fire at a residual processing unit.
The fire broke out at the No. 2 residue desulfurization unit at 7:58 p.m. local time yesterday, and no-one was injured, the company said in a stock exchange filing. Formosa aims to restart two-thirds of the refining capacity within two days, company spokesman Lin Keh-yen said today.
“We suspended production at the refinery on safety grounds,” Lin said by phone from Taipei. “Direct losses” from the fire is estimated at NT$500 million ($15.6 million), the company said in a statement on its website.
The blaze was the second accident at the refiner’s Mailiao complex this month. Formosa’s refinery in the township has three crude distillation units with a combined daily capacity to process 540,000 barrels. The company operates three ethylene plants with a combined annual capacity of 2.935 million metric tons. A crude distillation unit heats crude and separates it into fuel products.
Formosa may become a “target” of criticism after two accidents within a month, said Max Chan, a Taipei-based analyst at Capital Securities Corp, who has a “‘neutral” rating on the stock. “Third-quarter sales may be reduced by 20 percent.”
Formosa halted its No. 1 ethylene plant, which has an annual capacity of 700,000 tons, at the Mailiao complex on July 7 after a fire, Lin said earlier this month. Ethylene is a raw material for plastics, chemicals and synthetic fibers.
Shares Fall
The refiner’s shares fell 1.7 percent to close at NT$76 in Taipei trading as of 1:30 p.m. The benchmark Taiex index climbed 0.3 percent.
Formosa Plastics Group, the parent of Formosa Petrochemical, should conduct “a comprehensive inspection” on plants at Mailiao, said Liu Chien-kuo, an opposition Democratic Progressive Party lawmaker from the Yunlin county, where Mailiao is located.
Taiwan’s Labor Affairs Council has told Formosa Petrochemical to halt production at fire-affected plants, including those connected to the residual processing unit with pipes, Lin Chin-chi, a director at the council, said by phone today. Resumption of output will require approval from the council, he said.
To contact the reporter on the story: Yu-huay Sun in Taipei at ysun7@bloomberg.net.
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