State-run CPC Corp, Taiwan (CPC, 台灣中油) will expand its partnership with CNOOC Ltd (中國海洋石油), China’s third-largest oil company, on offshore drilling in East China Sea, the company said yesterday.
“Currently CPC has contracts on quarries 2, 3, 4, 5 in the East China Sea with multiple partners. We’re in the midst of canceling some of these partnerships to focus on full collaboration with CNOOC,” Chu Shao-hua (朱少華), CPC’s newly appointed president, said at a media briefing yesterday
Chu formally became the company’s president yesterday after his predecessor, Chen Bao-lang (陳寶郎) retired in September.
At yesterday’s swearing-in ceremony, Chu said the company was in talks with its partners about the cancelation terms, adding that area 2 is the only non-disputed territory and hence CPC would proceed with offshore exploration there first.
The expanded collaboration with CNOOC is part of CPC’s plan to restore profitability in view of the company’s dire financial situation.
From January through last month, the company posted a record financial loss of NT$83.2 billion (US$2.53 billion), with the full-year loss expected to total more than NT$90 billion, Chu said.
“The price freeze before the presidential inauguration which resulted in NT$46.7 billion in losses, the subsidy measure after the presidential inauguration, which added NT$36.5 billion in losses, and the economic downturn which cut into CPC’s petroleum export, are the three main reasons behind the massive losses.” he said.
The oil refiner said it planned to engage in extensive oil exploration in the East China Sea, the South Sea and other areas to enhance profitability.
In 2002, CPC and CNOOC announced that they would set up a 50-50 venture to explore a 15,400 km² area around Nanri Island Basin for oil and gas deposits, but progress was delayed under former president Chen Shui-bian’s (陳水扁) government.
Discussion between the two companies was resumed when President Ma Ying-jeou (馬英九) took office on May 20. According to Chu, the companies plan to expand the joint-exploration area to 70,000km² to 80,000km².
CPC’s long-term goal is to diversify its product mix by increasing high-priced products such as gasoline and diesel from 55 percent to 61 percent, and decrease low-priced crude oil from 25 percent to 16 percent by 2012 through improvements in its refining processes.
By 2012, the company plans to replace its outdated, inefficient and high polluting third naphtha cracker factories in Kaohsiung County’s Linyuan Township (林園) with new ones, which are expected to reduce pollution by 16 percent.
Lastly, CPC hopes to become a global player in the energy market by 2015, Chu said.
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