High labour and raw materials expenses drive up cost of Sino-foreign complex
Investment in the mainland's first Sino-foreign integrated refining and petrochemical joint venture has jumped to US$4.5 billion from the US$3.5 billion estimate in 2004, due to rising labour and raw material costs and the inclusion of an extra facility.
The final contract of the mega-project in Fujian province, signed on Sunday between China Petroleum and Chemical Corp (Sinopec), Exxon Mobil Corp and Saudi Aramco, involved an investment of about US$5.1 billion, an Exxon Mobil spokeswoman said. That included an estimated US$600 million petrol station joint venture.
It exceeds a US$4.3 billion petrochemical joint venture in Shenzhen between Royal Dutch/Shell and Sinopec, which came on stream in mid-2005, as the largest Sino-foreign investment in the refining and petrochemical sector.
'The main reason for the higher project cost of the complex is soaring labour and raw materials costs, although the addition of a 700,000 tonne-a-year paraxylene facility also played a lesser role,' the spokeswoman said.
Paraxylene is a base chemical used to produce man-made fabric fibres and bottles.