22 May 2007 - 12:07
  • News Code: 105279

BEIJING: Saudi Basic Industries Corporation (Sabic), the world"s largest petrochemical firm by market value, may invest just over $1 billion in a petrochemical plant in China, a senior industry source said yesterday.

The deal, likely to be finalised in days, will mark a breakthrough for international companies seeking a foothold in China"s fast expanding petrochemical market as it comes at a time when Beijing appeared to be shifting to self-reliance in building the booming sector.

 

Under the pact Sabic would join its Chinese partner, state-run Sinopec Corporation in building a one million tonne a year naphtha cracker to produce ethylene, a key building block for petrochemicals, in the northern city of Tianjin, the source said.

 

Sabic would also own a 50 per cent stake in two production lines of polyethylene - raw material for plastics - and one mono ethylene glycol facility, an intermediate for chemical fibre, with total investment worth some $500 million, the source said.

 

"If the final talks on marketing go through, the deal should be finalised within days," the source close to the deal said.

 

Sinopec, Asia"s top refiner and China"s largest petrochemical producer, plans to spend a total of $3.1bn in its Tianjin project that also includes an expanded refinery at 240,000 barrels per day to supply feedstock naphtha.

 

Sabic has been on an expansion spree in Asia and is looking closely at India and China, each contributing a significant chunk of its Asia Pacific revenue.

 

It has been working for years to break into China, which imports nearly half of its petrochemicals use to feed a roaring economy.

 

Apart from hooking up with powerful state giants, Sabic has been in talks for three years with private Chinese firm Shide to build a $5.2bn complex - a 200,000 bpd refinery, a 1m tpy ethylene plant and a 300,000 tonne oil terminal - in northeast China"s Dalian.

 

Chinese giants Sinopec and PetroChina are set to add at least half a dozen mega-sized petrochemical crackers costing some $20bn by the end of the decade, extending a building frenzy started 10 years ago.

 

Global players BP, Shell, ExxonMobil and BASF were picked then for their technology, financing and savvy management.

 

PIN/Gulf-Daily-News.Com

News Code 105279

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