Desperate for oil, Formosa Petrochemical hails crude tanker arrival

Taipei, May 5 (CNA) A Liberian-flagged supertanker carrying 2 million barrels of crude oil will dock at Mailiao Port on Wednesday, giving Formosa Petrochemical Corp.'s (FPCC) underused refineries a timely boost, a company executive said Tuesday.

FPCC President Lin Keh-yen (林克彥) confirmed that the vessel, the FPMC C Lord (君善輪), a very large crude carrier (VLCC) operated by Formosa Plastics Marine Corp. (FPMC), is carrying crude oil from Saudi Arabia and will help ease the company's tight raw material supplies.

Supply disruptions linked to the conflict in the Middle East and the blocking of the Strait of Hormuz sent FPCC's overall refinery utilization rate plunging to about 43 percent in April, as several scheduled crude shipments failed to arrive.

The rate for its naphtha cracking facilities alone was about 33 percent in April.

However, refinery operations are expected to gradually recover with the arrival of the FPMC C Lord -- which transited the Strait of Hormuz in mid-April after Iran temporarily reopened the strategic waterway -- and FPCC's diversified procurement strategy, Lin said.

FPCC has projected that refinery utilization rates will climb to above 60 percent in May and further increase to 80 percent in June, helped by oil sourced from outside the Persian Gulf, including the Red Sea, Gulf of Oman, the Mediterranean, and West Africa, Lin said.

Lin said FPCC moved quickly to implement contingency measures after the outbreak of the conflict, including rerouting shipments and securing alternative crude supplies.

From late March through April, previously contracted crude cargoes failed to arrive because of the conflict, while replacement supplies could not be secured in time, leading to the sharp drop in refinery utilization rates, he said.

Even with the expected rebound in the use of refining capacity, Lin noted that FPCC's petrochemical operations also remain hindered by high costs and weak downstream demand.

He said FPCC shut down its No. 3 olefin plant on March 24, leaving only one ethylene plant in operation.

Despite emergency procurement efforts, Lin warned that the global crude oil market could face prolonged supply shortages if the conflict were to continue.