Taiwan Today

CPC Corp., in conjunction with two local partners, looks set to begin operating an oil tanker fleet from next year pending government approval. The state-run oil company’s latest move follows a Cabinet review of its 2008 operations. Processing and transportation costs of crude oil and associated products were identified as critical factors contributing to CPC losses of over NT$100 billion (US$3.04 billion). Rival operator Formosa Plastics Group ships over 99 percent of its oil using company-owned tankers and enjoys a significant advantage in transportation costs. According to CPC, the company plans to turn this situation around by building its own oil tanker fleet. As CPC does not have a permit to run shipping operations, it will partner with privately owned firms Chinese Maritime Ltd. and U-Ming Marine Transport Corp. The three companies will pool NT$50 billion for the venture. CPC will hold a 48-percent stake in the new firm, with the balance divided between the other two. The venture’s preliminary plan sees the trio contributing NT$25 billion to NT$26 billion in the first stage for the construction of seven 300,000-ton very-large crude carriers and one 80,000-ton oil tanker. Further expansion will see the fleet grow to 35 VLCCs, surpassing Formosa Plastics to become Taiwan’s leading oil transporter. In preparation for the new business, Overseas Shipping Pte. Ltd., a U-Ming subsidiary, has signed a memorandum of agreement to purchase 300,000-ton VLCC “Starlight Venture” for US$80 million.(SFC-JSM)