VZCZCXRO6669
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHIN #1089 0890822
ZNR UUUUU ZZH
R 300822Z MAR 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 9420
INFO RUCPDOC/USDOC WASHDC
RUEHBJ/AMEMBASSY BEIJING 4982
RUEHGZ/AMCONSUL GUANGZHOU 9163
RUESLE/AMCONSUL SHANGHAI 8552
RUEHSH/AMCONSUL SHENYANG 5094
RUEHCN/AMCONSUL CHENGDU 1145
RUEHHK/AMCONSUL HONG KONG 6177
RUEHZU/APEC COLLECTIVE

UNCLAS TAIPEI 001089 
 
SIPDIS 
 
DEPT PASS AIT/W 
DEPT FOR EAP/RSP/TC 
STATE ALSO PASS USTR 
 
SIPDIS 
 
FROM AIT KAOHSIUNG BRANCH OFFICE 
 
E.O. 12958:N/A 
TAGS: ECON EIND TW
SUBJECT: Taiwan: Budget for Third Naphtha Cracker 
Expansion Project Axed 
 
REF:  Taipei 0551 
 
¶1.  On March 22 the Legislative Yuan's (LY) Economic 
Committee rejected the Third Naphtha Cracker expansion 
project in Linyuan Township, Kaohsiung County, planned by 
the state-owned Chinese Petroleum Corporation (CPC).  The 
Legislators on the Committee also refused to approve the 
project's USD73 million budget.  Hundreds of local 
residents, who had protested at the LY, welcomed the 
decision to stop the project from being built in their 
hometown. 
 
¶2.  DPP Legislator Chen Chi-li (Kaoshiung County), who 
initiated opposition against the expansion project, 
complained that the petrochemical industries operating in 
the Linyuan Petrochemical Zone, including CPC's facilities, 
had long polluted the area's environment and presented a 
serious threat to residents' health.  Chen noted that local 
residents were not opposed to CPC's investments in 
upgrading the existing production technology.  However, 
they disapproved that the new facilities would be built on 
a site so close to a residential area. 
 
¶3.  In response, Ho Li-jun, Planning Director of CPC's 
Petrochemical Division, noted that CPC is willing to 
downsize the expansion project and have the facilities 
constructed within the existing zone.  Ho went on to say 
that Legislators supporting the project are planning to 
negotiate with their LY colleagues to seek resumption the 
project.  Meanwhile, CPC also will arrange meetings to 
pursue project approval by residents.  Ho said that CPC 
will not implement the project until the local community 
approves it. 
 
¶4.  Ho noted CPC's cracker expansion project can 
substantially improve the development of Taiwan's 
petrochemical industry.  The new cracker facilities will 
ensure production material supply to local petrochemical 
downstream industries.  Additionally, when CPC successfully 
expands the project, four additional petrochemical 
downstreamers in southern Taiwan will also start their 
expansion projects planned for the Linyuan and Jenta 
Petrochemical Zones in Kaohsiung County.  According to Ho, 
the four prospective investors are Taiwan Styrene Monomer 
Corporation (TSMC), Grand Pacific Petrochemical Corporation 
(GPPC), Oriental Union Chemical Corporation (OUCC), and 
China Man-Made Fiber Corporation (CMFC).  TSMC and GPPC 
each will invest USD325 million to produce styrene monomer 
(SM), while OUCC and CMFC will invest USD550 million and 
USD470 million respectively to produce Ethylene Glycol. 
The four expansion projects are expected to generate 
approximately USD1.5 billion in production value each year. 
 
 
Thiele 
 
Young