BP Amoco PLC and a unit of China National Petrochemical Corp. (Sinopec) have agreed to boost planned capacity at their proposed Shanghai ethylene complex by a third to 850,000 tonnes/ year.
The increase, designed to accommodate faster-than-expected growth in ethylene demand in East China, will jump the project's price tag by a third as well, to a total of $3 billion.
BP Amoco and Sinopec affiliate Shanghai Petrochemical Corp. (SPC) signed a memorandum of understanding in October last year in London to build an ethylene cracker in Shanghai.
Although ownership has not yet been finalized, an earlier report said the two companies would each hold 50% in the plant.
The partners began a feasibility study this year. Construction is scheduled to begin in 2002, with completion expected in 2005.
SPC is in the midst of expanding capacity of one of its ethylene crackers to 700,000 tonnes/year from 400,000 tonnes/year, which will be completed by 2002. It will be further expanded to 1 million tonnes/year by 2005. The company's other ethylene cracker, with a capacity of 150,000 tonnes/year, will be expanded to 450,000 tonnes/year by 2005.
By 2005, SPC will become China 's largest ethylene producer, with its total capacity-including that of the proposed cracker with BP Amoco-reaching 2.3 million tonnes/year.
China's ethylene boom
The agreement with BP Amoco is the third China has signed with foreign companies for projects intended to help meet its soaring ethylene demand.
The other two are ventures of Royal Dutch/Shell and China National Offshore Oil Corp. and Germany's BASF AG and Sinopec's Yangzi Petrochemical Corp.
The country's ethylene capacity is expected to climb to 5 million tonnes/year by the end of this year from the current level of 4.3 million tonnes/year.
Consumption is expected to rise to 7.5 million tonnes this year, to 10 million tonnes by 2005, and to 13 million tonnes by 2010.
To meet demand, China is in talks with several companies to form joint ventures to build a total of six ethylene crackers with combined capacity of 4.05 million tonnes/year. Dow Chemical Co., Phillips Petroleum Co., and Exxon MobilCorp. are among those pursuing plans to build ethylene plants in China.
