This project is an $3 billion integrated ethylene and downstream derivatives project in Tianjin, China. The contract was signed in the second half of June 1997. The pre-feasibility study was completed and the project proposal submitted to the State Development and Planning Commission (SDPC) in Nov 1999. The SDPC's approval is still pending. The owners predict a total project schedule (including feasibility, construction and start-up) of six to seven years, and estimate a possible start-up in 2010, although this depends upon the timing of approval.

The owners of the new plant will be US Dow Chemicals, the Chinese Sinopec and Tianjin Petrochemical Corporation (a subsidiary of Sinopec). Dow Chemical will own 50% of the plant and the Chinese companies the other half. Dow Chemical, based in Midland, Michigan, has sales of about $30 billion and claims to be the fifth largest chemical company in the world. It employs more than 50,000 people in 170 countries.

The first phase of the project involved an ethylene cracker and a number of derivatives plants. These will include facilities for manufacturing polyethylene, polystyrene, polyurethane and epoxy. The ethylene capacity is 650,000t/yr, which Dow wants to increase to 900,000t/yr, although there is a suggestion that this will not be enough with Chinese demand rising to 15 million tonnes by 2005. The complex will also includes a polypropylene plant and a through-production system from chlor-alkali to poly vinyl chloride (PVC). Polyethylene production is the most common use for ethylene in China. The advantages of having an ethylene and polyethylene plant on the same site lie in cost savings and security of supply - China has a continuing ethylene shortage.

The Chinese petrochemicals industry still has some residual legacies from Communism. One of these is its continuing status as one of the "commanding heights" of the economy. China remains a large net importer of petrochemicals, partly because of its underdeveloped industry, and partly because of its soaring demand. A second legacy is the Five Year plan. The Tianjin project was part of one of China's six main ethylene projects for the Nineth Five Year Plan (for 1996-2000), which also included a major ethylene joint venture with BP in Shanghai.

Due to a governmental call for western investment, the expansion of the Chinese petrochemicals sector is now being undertaken with the enthusiastic support of numerous multi-nationals, such as BASF, Chevron, BP. However, it is noticeable that such cooperation always takes place through joint ventures, in order to transfer expertise and profits as well as to ensure a measure of local control.

The China National Petrochemical Corporation (Sinopec) was founded in 1983, and is the largest petrochemical supplier in China. It is a state-owned corporation with 38 major oil refining and petrochemical operations and has 1,200 processing units in China. The company claims to account for 85% of the country's crude oil processing capacity and 82% of the nation's ethylene capacity. Tianjin Petrochemical Corporation is one of the main subsidiaries of Sinopec, and is mainly engaged in the production and sales of refined oil, petrochemicals and synthetic fibres.

Sinopec has already ensured that some of its joint ventures are listed, although this does not include the Tianjin Petrochemical Company. It is rumoured that Sinopec itself may move closer to an overseas listing in Hong Kong, London and New York. While this would improve the company's access to capital, it would also demand much stricter standards of accounting than the firm has hitherto enjoyed. Thus, the company could expect pressure to achieve lower debts and liabilities. This would be in line with its existing commitments to achieve greater profitability, but it may have difficult implications in terms of non-profitable operations, pension liabilities and corporate debts.

June 7, 2004 Dow Jones News Service

Sabic In Talks With Sinopec On Investing In Ethylene Proj

Saudi Arabia Basic Industry Corp. is in talks with China Petroleum & Chemical Corp. (SNP), or Sinopec Corp., on taking a stake in a major ethylene project in northern China's Tianjin city, a Sinopec official said Friday.

He said Sabic expressed an interest in taking a stake in
Sinopec's Tianjin ethylene project after Dow Chemical Co. (DOW) decided to withdraw.

Dow Chemical decided not to invest in the project after many years of negotiations, the Sinopec official said, without giving a reason. As reported, Dow Chemical said the 600,000 tons/year ethylene project was not big enough to be economically feasible.

Sabic's executive vice president, Abdullah Nojaidi, expressed Sabic's intention to invest in the Tianjin project when meeting with Sinopec president Wang Jiming in April this year.

The Sinopec official said under the current planning, the capacity of Tianjin's ethylene cracker will be larger than the earlier planned 600,000 metric tons a year. China-based industry officials said the current planned size could be 800,000 to 1 million tons/year.

Two weeks ago, Sabic's Asia Pacific chairman, Khalid Al-Mana, said his company was in talks to undertake two major petrochemical projects in China as part of its global expansion.

China-based industry officials said Sabic's other projects in China could involve expanding an ethylene cracker and building other petrochemical production units in northeastern China's Dalian city.

2007/3/9 Reuters 

SABIC's $5 bln China plant put back a year -sources

Private Chinese firm Shide and Saudi Basic Industries Corp. (SABIC) may have to wait another year for approval on a long-delayed $5.2 billion petrochemical complex, sources familiar with the situation said on Thursday.

SABIC, the world's largest petrochemical company by market value, said last month it may re-locate the complex, envisioned for northeast China's Dalian, if Beijing kept putting off approval for a project proposed as far back as 2003.

SABIC and Shide -- which makes everything from appliances to chemical building materials -- have been in talks for three years on the complex, now seen including a 10 million tonnes per year (tpy) oil refinery, a 1 million tpy ethylene plant and a 300,000 tonne oil terminal.

If it goes ahead, it will be China's first petrochemical project built by a private company, breaking a monolopy by domestic oil-producing leaders PetroChina and Sinopec Corp.

It would also give SABIC a coveted foothold in the world's second-largest oil consumer. The Saudi giant hopes China will help it achieve a goal of almost doubling output to 100 million tonnes by 2015.

Several industry sources told Reuters the government was holding off on the project because it had approved an 800,000 tpy naphtha cracker last year for PetroChina's Fushun subsidiary and was in no rush to allow another one so soon.

Fushun and Dalian are in northeastern Liaoning province.

"All we are waiting for is the approval of the National Development and Reform Commission and the State Council," a source close to the situation told Reuters, adding the project had undergone engineering, environmental and land assessments.

The Commission is China's top economic planning agency, and the State Council is the country's cabinet.

"The government postponed the project probably because they didn't want to add too much ethylene capacity in one province in such a short time," he said.

"But I can't see any reason why the government will not approve this project."

China's booming economy has made it Asia's largest importer of petrochemicals, sourcing 60 percent of its requirements from overseas. The country is already building petrochemical plants with BP Plc, BASF AG and Royal Dutch Shell, each costing $2.7 billion to $4.3 billion.

Resource-rich Shaanxi province is also seeking to strike a landmark alliance with PetroChina to build a $2.6 billion petrochemical plant with a 1 million tpy capacity.

SABIC said last April the project was on track, after Chinese President Hu Jintao stopped at the firm's headquarters during a visit to Saudi Arabia, which in 2006 shipped 23.87 million tonnes of crude to China as its largest oil supplier.

Then in February, SABIC's chairman surprised the industry when he said the company might go elsewhere.

"I don't think SABIC will give it up that easily," the source said.

Both companies and local governments are lobbying hard for approval. A government official told Reuters the NDRC was studying the plan.

It typically takes four years to prepare and build a complex once it gets the go-ahead, the sources said.

"If the government can approve it next year, when it starts up in 2012, the plant is expected to meet a rising cycle for petrochemicals."

Shide would hold 50 percent of the project -- unusual for a private firm in the Communist country's oil sector given the size of the investment -- while SABIC would hold the other half.

Industry officials have told Reuters that China had agreed to increase purchases of Saudi crude oil in 2007 by about 44,000 barrels per day, or 9 percent, from last year.

Saudi Aramco, SABIC's affiliate, recently agreed with Sinopec and Exxon Mobil Corp. to expand an existing refinery in the southeastern province of Fujian.


2007/5/25 Platts

SABIC to join hands with Sinopec over new China ethylene project

Saudi Basic Industries Corporation was likely to ink an agreement with China's state-owned oil and petrochemical major Sinopec to invest $ 1 billion in a new 1 million mt/year ethylene plant in North China's Tianjin, China's Ministry of Commerce said May 22. The proposal had yet to be finalized, an official from SABIC Shanghai said Friday.

Construction of the 1-mil mt/year Tianjin ethylene project kicked off in June 2006, and was scheduled to come onstream by September 2009, according to plans made by Tianjin Petrochemical, a subsidiary of Sinopec. Sinopec was set to invest Yuan 20.84 billion to build the new 1 million mt/year ethylene plant. Sinopec would also revamp a 2.5 million mt/year crude distillation unit to 10 million mt/year (201,000 b/d), which would be capable of processing imported sour crude oil.

Other new units to be built at the complex included a 2 million mt/year hydrocracker, a 2.6 million mt/year delayed coker, a 3.8 million mt/year gasoil hydrofining plant, a 800,000 mt/year jet fuel hydrofining plant, a 220,000 mt/year sulphur recovery plant, a
300,000 mt/year low-density polyethylene unit, and a 300,000 mt/year high-density polyethylene unit, amongst others.

Separately, Prince Saud bin Abdullah bin Thenayan Al-Saud, Chairman of SABIC opened two new offices for SABIC in Beijing and Shenzhen in China, according to a news release on the company's website on May 23. "In combination with SABIC's existing offices in Shanghai and Hong Kong, SABIC has strengthened its position in the world's most important and fastest growing polymers market and can now provide even stronger support locally to its customers in China," SABIC said. "China is currently SABIC's most strategically important export market globally and is also the fastest growing polymers market in the world. Over the next three years most of SABIC's new petrochemical capacity will be allocated to the rapidly expanding Asian markets, of which China is the most important."