Companies

Operations begin at Sinopec petrochem plant in Tianjin

By WAN ZHIHONG (China Daily)
Updated: 2010-05-12 09:54

JV with Saudi Basic Industries Corp seeks to tap fuel oil demand

TIANJIN - Sinopec, China's largest refiner, officially put into operation a 34-billion-yuan ($4.98 billion) petrochemical complex in Tianjin on Tuesday, a move designed to tap growing demand for fuel oil and chemicals.

The facility is able to refine 10 million tons of crude per year and produce one million tons of ethylene annually.

The ethylene manufacturing project is a 50-50 joint venture between Sinopec and Saudi Basic Industries Corp (SABIC), a major petrochemical producer in the world's largest oil-producing nation, Saudi Arabia.

It is also the largest cooperation project between the two companies.

After the start-up of the project, Sinopec will expand its oil refining facility in Tianjin to 15.5 million tons per year, and increase ethylene production to 1.2 million tons annually, according to the company.

The project will help increase Tianjin's annual gross domestic product by more than 4 percent. And it will also generate an additional 100 billion yuan in investments downstream in related industries, according to Sinopec.

Products manufactured by the project will mainly be sold on the domestic market, but exports are also likely in the future, company executives said earlier.

Construction of the Tianjin project is in line with Sinopec's strategy of constructing large integrated petrochemical production sites, said Sinopec Chairman Su Shulin.

The project underscores the important ties between China and Saudi Arabia.

The two countries will further boost cooperation in petrochemical manufacturing and large project construction, said SABIC Chairman, Prince Saud Bin Thenayan Al Saud.

Analysts said cooperation with the Saudi Arabian company is beneficial for Sinopec.

"With SABIC taking part, Sinopec can get a sustainable crude supply for the project," said Lin Boqiang, a professor at Xiamen University.

Sinopec last year started operations on an integrated oil refining and petrochemical complex in Quanzhou, Fujian province.

The project is jointly owned and operated by Sinopec, US oil major ExxonMobil and Saudi Aramco, the national oil enterprise of Saudi Arabia.

The petro-complex will mainly process crude from Saudi Arabia.

China has now become one of the top three markets for the Middle Eastern country's oil exports, and the country is one of the fastest-growing markets around the world, said analysts.

Around half of Chinese oil demand is met by imports. At present, the Middle East, Africa and the Asia-Pacific region are the three main oil import regions.

China's net oil imports are expected to total 210 million tons this year.

The volume would be about 11 million tons, or 5.5 percent, higher than last year, said Huang Li, an executive with the National Energy Administration.

Total oil consumption this year will remain above 400 million tons, and the refinery industry will recover as a result of the increase in auto demand and a recovery of the logistics and transportation industries, she said.