CSPC Petrochemical Complex, Daya Bay, Guangdong, China

In November 2002 China National Offshore Oil Corporation (CNOOC) and Shell Company made a final investment decision to proceed with development of a joint venture world scale petrochemical complex, to be built in China. The joint venture company is called CSPC.

The venture is investing $4.3 billion to build an integrated petrochemical complex which is centred around an 800,000t/y naphtha cracker. In total the complex will produce some 2.3 million t/y of product. The complex is being built in the Daya Bay Economic and Technical Development Zone, Guangdong Province, China, and start up is slated for the third quarter of 2005.

Work on all major plants and facilities is under way. At the end of March 2004 overall construction was more than 52% complete. CSPC has awarded a total of 143 contracts with a total value of $2.3 billion.

SITE DEVELOPMENT

Good progress is being made on the development of the project, according to the latest newsletter published by CNOOC and Shell. By the end of March 2004, the majority of the concrete work for the cracker will be complete and installation of furnaces, steel structures and other equipment will begin. The majority of foundations for pipe racks and equipment for the low density polyethylene (ldPE) and polypropylene (PP) have been completed. Work is under way on the concrete and steel structures for ethylene oxide/ethylene glycol (EO/EG) plants and the styrene monomer/propylene oxide (SM/PO) plants.

JOINT VENTURE COMPANY

Each company has a 50% stake in the project. CSPC will build, own and operate the petrochemical complex as well as market material mainly to the domestic market.

DEFINITION PHASE

The final investment decision was made in 2002 following a 20 month Definition Phase. At the same time, in November 2002, the project entered the implementation phase, which involves detailed design and construction and eventually commissioning and start up of the complex.

PRODUCTS FROM THE CSPC COMPLEX

Apart from the 800,000t/y ethylene plant, other production units are:

• 240,000t/y polypropylene
• 200,000t/y linear low density polyethylene/high density polyethylene
• 250,000t/y low density polyethylene
• 550,000t/y styrene monomer
• 250,000t/y propylene oxide
• 320,000t/y mono ethylene glycol
• 60,000t/y propylene glycol
• 135,000t/y polyols

In addition, integrated support facilities and utilities will also be built.

PROJECT MANAGEMENT CONTRACT

During 2001 CSPC awarded a project management contract to a consortium of US-based Bechtel Petroleum Chemical, China's Sinopec Engineering (SEI) and Foster Wheeler Energy of the UK. The consortium is known as BSF. The project management contract with BSF for the overall project services provision during the implementation phase was signed in December 2002.

CONSTRUCTION OF ETHYLENE PLANT

During the final quarter of 2002 CSPC awarded Japan's JGC, in partnership with Stone & Webster of the US, an EPC contract for the 800,000t/y ethylene plant. The contract is valued at $500 million. Construction of the unit began in May 2003, marked by a 'construction commencement ceremony'. The ethylene unit will utilise Stone & Webster's Advanced Recovery System and Ultra Selective Conversion technologies.

CONSTRUCTION OF STYRENE MONOMER/PROPYLENE OXIDE, PROPYLENE GLYCOL/POLYOLS PLANTS

The EPC contract for the styrene monomer/propylene oxide (SM/PO), propylene glycol/polyols plants was awarded to the joint team of Japan's Chiyoda, France's Technip-Coflexip and Japan's Mitsubishi Corp. The contract is valued at $274 million.

Shell's process technology will be used for the production of the SM/PO. Shell's technology for manufacturing PO is said to be significantly more environmentally friendly than the conventional chlorohydrin route.

CONSTRUCTION OF POLYETHYLENE AND POLYPROPYLENE PLANTS

During the first quarter of 2003, CSPC awarded Italy's Tecnimont a $220 million contract for the construction of polymer plants. Tecnimont is responsible for building the low density polyethylene (ldPE), linear low density and high density polyethylene (lldPE/hdPE) and polypropylene (PP) units.

ETHYLENE OXIDE/ETHYLENE GLYCOL (EO/EG) PLANTS

A joint team comprising Tecnicas Reunidas, CTCI and UTE was awarded the contract for the construction of the ethylene oxide (EO) and ethylene glycol unit (EG) units.

FIELDBUS PROJECT

Yokogawa Electric Corporation was awarded a contract, valued at $50 million, to work as the main automation contractor on the CSPC petrochemical complex. Yokogawa will supply process control and manufacturing information system solutions to the entire complex including an integrated production control system. Yokogawa is working with CSPC and BSF on the basic design phase to unify the design and architecture for the control and information management systems.

VIRTUAL PLANT SIMULATORS

During the middle of 2003, Aspen Technology (AspenTech) announced that it had been awarded a contract by Yokogawa Electrical Corporation to supply a series of operator training simulators for the CSPC petrochemical complex. AspenTech will provide seven simulators which will be used on all key units in the complex. The simulators will be used for operator training before start-up and then for refresher training and operations improvement.

INTEGRATED UNITS

Sepco Electrical Power Construction Corporations was awarded the contract to supply steam and power generation units, demineralised water and condensate storage and transfer systems.

VALVE CONTRACT

Tecnicas Reunidas has selected OMB's forged steel gate, globe and check valves to be included in the 320,000t/y ethylene oxide/mono ethylene glycol (MEG) plant it is building. OMB was awarded the contract after a competitive bid.

INFORMATION MANAGEMENT

CSPS Nanhai Petrochemical has awarded Aveva a contract to supply an asset data facility. Based on Aveva's VNET technology, it will be implemented as an integrated plant information portal supporting construction, commissioning, engineering handover and plant operations. Aveva was formerly known as CADcentre.

Aveva will be working closely with the engineering consortium comprising US-based Bechtel Petroleum & Chemicals, China's Sinopec Engineering and Foster Wheeler of the UK. The consortium is known as BSF.

SUPPLY OF INDUSTRIAL GAS TO CHEMICAL COMPLEX

At the beginning of February 2004, Praxair and CSPC announced that they were finalising an agreement for Praxair to supply oxygen and nitrogen to CSPC's petrochemical complex.

Under the terms of the agreement Praxair will supply high-purity oxygen and nitrogen from two new air separation units that will be built adjacent to the CSPC site. Praxair is due to begin supplying gas to the complex in May 2005.

RESETTLEMENT

According to the Land Grant Contract signed between CSPC and Huizhou Municipal Government, the latter has been responsible for resettling 1,485 households, which have been moved to new villages close to Huiyang town. Compensation has been paid to all the families affected. Preparations for phase two resettlement are under way for people living within 500m of the perimeter of the project site.

CSPC has also developed a procedure to ensure that people who have been resettled have an opportunity work on the construction phase of the project. Contractors are expected to give priority to resettled villagers for employment and provide training where relevant. In addition CSPC, with support from the Daya Bay labour bureau, has set up a database listing resettled people of working age. This will be used by CSPC, contractors and government to match skills with jobs.