In December 2001 BP, Sinopec and Shanghai Petrochemical Coprporation (SPC) formed a joint venture for the development of an ethylene cracker and derivatives complex in Shanghai, China. SPC is one of the largest petrochemical companies in China, as well as one of the biggest producers of ethylene. The Shanghai Secco Petrochemical Company Ltd (SECCO) will build the complex, expected to go into operation in 2005. In March 2001 the two companies approved an agreement for a joint feasilibity study.
Earlier, in October 1999, BP Amoco and Sinopec signed a framework agreement under which the companies agreed to accelerate the project and to attempt a joint feasibility study report, to negotiate a joint-venture contract and to fulfil other commercial agreements.
The mainland's demand for ethylene, along with its derivative products, continues to grow well beyond the country's manufacturing capability. In 1999, total petrochemical production was estimated to be worth $67 billion. In 2000, Chinese demand for ethylene exceeded seven million tonnes, but domestic production remained at 4.6 million tonnes. In 2010, the demand for ethylene is forecast to reach 12 million tonnes, which would result in a serious supply shortage. This joint venture is designed to satisfy those demands.
ETHYLENE CRACKER AND DERIVATIVES PLANT
The cost of the Caojing, Shanghai project is estimated to be $2.7 billion. In June 2000 the Chinese government's State Development and Planning Commission approved the raising of capacity from 650,000t/yr to 900,000t/yr of naphtha-fed ethylene cracker. The downstream plants are estimated to have a capacity of 600,000t/yr polyethylene; 590,000t/yr propylene; 500,000t/yr aromatics; 500,000t/yr styrene; 300,000t/yr polystyrene; 260,000t/yr acrylonitrile; 250,000t/yr polypropylene; and 150,000t/yr butadiene. Total output is expected to be almost 2.3 million tonnes per year.
Representatives of Shanghai Tian Yuan (Group) Corporation, Shanghai Gaoqiao Petrochemical Corp, Shanghai Chemical Industry Park Development Co Ltd, Paktank Asia Pacific Ltd and Sinopal (a joint venture of Air Liquide and Praxair) have all signed letters of intent to proceed with their development project. The financial arrangements are expected to be completed early in 2002. SECCO will now be tendering for design and construction contracts with the aim of breaking ground in the first half of 2002.
It has been announced that BP are investing $400m in Sinopec ahead of the expansion. This comes after the October 2000 announcement that BP has taken a 2.2% equity stake in Sinopec.
Established in February 2000, Sinopec is the largest petrochemical company in China. Sinopec owns 28 petrochemical companies and eight oil and natural gas companies and has combined assets of $47 billion. The company represents 52% of total Chinese ethylene production capacity, and is seventy-third largest of the top 500 companies in the world.