Saudi Basic Industries Corp has signed a deal with Sinopec to expand the scope of their partnership with a petrochemical complex in northern China that will cost more than US$2.5 billion.
Under the new agreement, a 50-50 joint venture will cover production of ethylene, the main petrochemical building block, and other products in Tianjin Municipality. It will be SABIC's first major investment in the Chinese mainland.
Their initial joint-venture plan announced in January in Beijing had estimated total investment of about US$1.7 billion for the Tianjin complex. The earlier pact didn't include ethylene operations but only the production of ethylene derivatives.
The latest agreement was signed on Saturday in Jeddah, Saudi Arabia, coinciding with the visit of Chinese Vice President Xi Jinping.
The complex's overall annual production capacity, to be completed in September 2009, will be about 4 million tons of different petrochemical products including 1.2 million tons of ethylene and other products such as polypropylene and butadiene, SABIC said.
The latest agreement also calls for joint work in other future projects in China depending on each party's capabilities in addition to cooperation in engineering services, project implementation and product marketing and material procurement.
By 2015 China will account for 25 percent of global demand for key petrochemical products, which can be used in plastics, packaging and automotive parts, according to Exxon Mobil Corp.
SABIC, the world's largest petrochemical firm by market value, added United States assets with the purchase of GE's plastics unit last year and expanded in Europe through the purchase of Royal DSM NV's petrochemicals division.
(Shanghai Daily June 23, 2008)
