Sinopec stalls Dow Chemical ethylene project

China Petrochemical Corp. (Sinopec) has suspended a joint venture project with Dow Chemical Co. of the US to build an ethylene cracker for Sinopec subsidiary Tianjin Petrochemical Corp. Sinopec said the two companies couldn't agree on terms. A second ethylene cracker project also looks likely to be suspended, for a similar reason.


BEIJING�China Petrochemical Corp. (Sinopec) has suspended a joint venture project with Dow Chemical Co. of the US to build an ethylene cracker for Sinopec subsidiary Tianjin Petrochemical Corp. Sinopec said the two companies couldn't agree on terms. A second partnership project also looks likely to be suspended, for a similar reason.

Sinopec and Dow were expected to build a 600,000 tonnes/year ethylene cracker in Tianjin City. Dow Chemical submitted a prefeasibility study on the project to the Chinese government at the end of last year.

The status of the 600,000 tonnes/year ethylene cracker project between Phillips Petroleum Co. and PetroChina Co. Ltd.'s Lanzhou Chemical Industry Co. is also uncertain. The partners couldn't agree on a time frame for the project, with PetroChina arguing for the project's startup in 2005 and Phillips preferring a later date.

These are two of six ethylene crackers China is in talks to build with foreign investment in the next 5 years (OGJ, Mar. 13, 2000, p. 29).

The other four cracker project partnerships are: Yangzi Petrochemical Co. with Germany's BASF AG, with a planned ethylene output of 600,000 tonnes/year; Jinshan Petrochemical Co. with BP, 800,000 tonnes/year; Fujian Refining & Chemical Co. Ltd. with ExxonMobil Corp., 600,000 tonnes/year; and China National Offshore Oil Corp. (CNOOC) with Royal Dutch/Shell Group, 800,000 tonnes/year.

Of the six, the BASF-Yangzi project is most likely to be completed first. BASF and Yangzi expect to sign a joint venture contract by the end of 2000, which will enable the start of construction next year and allow the cracker to come online in 2005.

BP Amoco and Jinshan Petrochemical are conducting a feasibility study on the ethylene cracker to be built in Shanghai.

ExxonMobil and Sinopec have almost completed a feasibility study on the Fujian project, and are expected to submit the study to the Chinese government late this year.

Shell has sorted out all the contractual problems with local authorities in Guangdong province for its ethylene project. The company is expected to set up a joint venture with CNOOC later this year.

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