Sinopec Looks for Foreign Investment Partners in $1.9 Billion Ethylene Project

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Researched by Industrial Info Resources (Sugar Land, Texas) China Petroleum and Chemical Corporation (Sinopec) (NYSE:SHI) (Shanghai) is talking to a number of foreign companies about investment in its $1.9 billion ethylene plant project at the Wuhan Petrochemical complex in Hubei Province, central China. Although approval for the project has been given by the state’s top planning body, the National Development and Reform Commission (NDRC), Sinopec has already invested in ethylene plants in Tianjin and Zhenhai and is stretched for project investment capital.

The 800,000 tons per annum (tpa) ethylene project includes the construction of eight major production plants and auxiliary production facilities, including an 800,000 tpa ethylene plant, a 300,000 tpa linear low density polythene (LLDPE) plant, a 300,000 tpa high density polyethylene (HDPE) plant, a 100,000/380,000 tap ethylene oxide/ethylene glycol (EO/EG) plant and a 400,000 tpa polypropylene (PP) plant.

With the support of the 800,000 tpa ethylene project, related municipal and provincial departments have worked out an overall planning for the Wuhan New Petrochemical City, which has passed the environment impact assessment (EIA) made by the National Environmental Protection Administration (NEPA) last year. According to the planning, the Wuhan New Petrochemical City will be located at Beihu, Hongshan District, occupying 76.7 square kilometers with an expected investment of $4.75 billion.

A project to develop production capacity using technological and process innovations has been launched in Wuhan Petrochemical to double its total processing capacity from 4 million tpa to 8 million tpa, in order to provide sufficient quality raw materials for the 800,000 tpa ethylene project. Feedstock for the ethylene plant would come from Sinopec’s Wuhan refinery.

Among the foreign companies to join Sinopec, China’s largest refiner by capacity, in discussions on possible investment in the project are SK Corporation (Seoul), South Korea’s largest refiner, and Formosa Plastics Group (Taipei), Taiwan’s leading chemical producer. The discussions are reported to be at the ‘review’ and ‘preliminary’ stages. Sinopec will only be in a position to announce a construction schedule for the project when the talks have been concluded and there is closure on investment issues.

The Wuhan ethylene project will be the first large-scale petrochemical production base in Central China and presents a good window of opportunity for foreign companies to engage in China’s booming domestic petrochemicals market. The project will further enhance Wuhan as an economic center and will benefit from the Wuhan’s leading economic position in central China.

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