BASF and Sinopec in US$500m plant boost
German chemical giant BASF says it has struck a deal with China Petroleum & Chemical (Sinopec) to spend US$500 million expanding the capacity of their joint-venture petrochemical plant in Nanjing, helping reduce China's reliance on imports.
The agreement will increase the plant's annual production capacity of ethylene, a key petrochemical building block, by 25 per cent to 750,000 tonnes, putting it closer in size to the 800,000-tonne Royal Dutch/Shell-Sinopec joint venture in Shanghai and the 900,000-tonne BP-Sinopec joint venture in Guangdong.
The agreement comes just nine months after the official opening of the Nanjing plant, underscoring the strength of China's demand for petrochemicals and its desire to become more self-sufficient.
The ethylene capacity expansion, together with several other downstream production enhancements, is expected to come on stream in 2009.
BASF-Yangtze Petrochemical, a 50-50 venture with Sinopec, is the largest single investment by the German firm. It involves US$2.9 billion in phase one development.
Driven by strong demand from manufacturing industries ranging from toys to garments, the nation's dependence on ethylene imports rose to 57 per cent last year from 22 per cent in 1990, according to the National Development and Reform Commission.
Despite being the world's third-largest maker of ethylene in 2004, China has seen its homegrown technology lag 10 years behind that of developed nations.
It needs the help of foreign firms as much for their technical know-how as their capital.
China plans to add 4.38 million tonnes of annual ethylene capacity by expanding existing plants by the end of 2010 and another 6.2 million tonnes by building new ones.
It produced 7.55 million tonnes last year.
