CHINA PETROCHEMICAL EXPANSION PROGRESSING

China's petrochemical expansion surge is picking up speed.

A worldscale petrochemical complex is emerging at Shanghai with an eye to expanding China's petrochemical exports, possibly through joint ventures with foreign companies, China Features reported.

In other action, Beijing and Henan province have approved plans for a $1.2 billion chemical fibers complex at the proposed Luoyang refinery, China Daily reported.

China Petrochemical Corp. subsidiary Sinopec and joint venture partners State Raw Materials Investment Corp. and the city of Tianjin let a $122.3 million contract to Foster Wheeler Trading Co. to provide technology, engineering, equipment, and materials for a 55,000 metric ton/year ethylene oxide equivalent plant and a 60,000 ton/year linear low density polyethylene plant. Both facilities are part of the 150,000 ton/year ethylene complex to be built at Tianjin (OGJ, July 8, p. 24.).

SHANGHAI COMPLEX

Commercial start-up of the ethylene unit under the third phase of construction at the Shanghai petrochemical complex (SPC) will vault China into eighth place among world ethylene producers, China Features' Zhao Qinghua wrote.

That third phase, estimated to cost $1.27 billion, is to be complete in 1992.

SPC then will have a capacity of processing 106,000 b/d of crude oil feedstock and yields of 450,000 tons/year of ethylene, 300,000 tons/year of plastics, and 350,000 tons/year of chemical fibers.

By yearend 1989, SPC had produced a cumulative 1.44 million tons of fibers, 870,000 tons of plastics, 940,000 tons of polymers, and 2.67 million tons of chemical intermediates.

PROJECT DETAILS

The complex on Hangzhou Bay 75 km southwest of Shanghai proper, has one ethylene plant, two chemical intermediates units, two polyester units, an aromatics plant, a polyvinyl alcohol fiber plant, a polyacrylic fiber plant, and a plastics unit.

First phase construction of SPC began in 1972 and was complete in 1976 at a cost of $800 million in government funds, Zhao wrote. It entailed installation of 18 production units, including three trains for sodium cyanide and derivatives.

Second phase involved installation of seven plants at a cost of $850 million in government loans. Construction began in 1980 and was complete in 1985.

Phase three construction, begun in 1987, centers on installation of the second ethylene unit. The 300,000 ton/year plant began trial runs in April 1990. When it is fully on stream, it will supply ethylene feedstock through a 54 km pipeline to the Shanghai chlor-alkali complex to produce polyvinyl chloride and other products.

Financing for construction of phase three called for $920 million in domestic funds and $350 million in foreign funds from lenders that included the Italian government and a 42 country banking group.

PROFITABLE OPERATIONS

SPC has proven profitable, Zhao wrote, with second phase loans repaid in 1988.

By yearend 1989, the complex had generated 10 billion yuan (about $2 billion in current dollars) in taxes and profits, 21/4 times combined investment in phases one and two.

SPC is linked to rail, highway, river, and ocean transportation routes and has a crude oil terminal capable of accommodating two 50,000 dwt tankers and a chemical terminal capable of handling 15,000 dwt and 5,000 dwt vessels.

By yearend 1990, SPC had completed construction of a 2.5 million ton/year coal terminal to feed a 22,500 kw coal fired power plant that's scheduled for completion this year.

EXPORT PROSPECTS

SPC is positioning itself for petrochemical exports in partnership with foreign companies.

Zhao reported officials with British Petroleum Co. plc visited Shanghai last November to explore opportunities for establishing a joint venture with SPC.

In the past, SPC had sold its products mainly domestically in light of chronic shortages of most petrochemicals in China.

With China's booming petrochemical expansion in recent years, however, those shortages have eased.

SPC now is looking to world markets for sales and aims to be an export oriented business in the 1990s, Zhao wrote.

Currently, exports account for 4% of total SPC production, including naphtha, benzene, plastics, acrylic acid, purified terephthalic acid, and ethylene glcyol sold to more than 20 countries and territories, including the U.S., Australia, Japan, South Korea, and Hong Kong.

To expand exports, SPC has established a trading company, Shanghai Jinshan Associated Trading Corp. (Sjatc), with ties to several national import-export companies. Sjatc, which has handled SPC exports since 1984, targets export sales growth of 1%/year of total SPC production the next few years, Zhao wrote.

MORE ADVANCED TECHNOLOGY

At the same time, SPC plans to add more advanced process units. In the first phase, most of the processes were based on Chinese technology and the plants built by Chinese contractors.

In the latter two phases, the reverse was true, with processes provided by Unocal Corp., Union Carbide Corp., UOP Inc., Mitsubishi Petrochemical Co., Lummus Crest Inc., Wacker-Hoechst GmbH, Himont Inc., and Italy's Scientific Design and contractors including Lurgi GmbH, Mitsui Engineering & Shipbuilding Co., Hitachi, Toyo Engineering Corp., Tecnimont SpA, and Snamprogetti SpA.

Downstream plants are being constructed in the neighboring areas of Shanghai and Zhejiang province based on feedstocks from SPC and bolstering the region's industrial infrastructure, Zhao wrote.

LUOYANG COMPLEX

Plans call for the Luoyang chemical fibers complex to be built during the eighth and ninth 5 year planning periods (1991-2000). The provincial government and China Petrochemical Industry Corp. decided the project will be funded mainly with foreign capital, China Daily reported.

The 95,000 b/d Luoyang refinery is to be complete by 1992. The refinery includes a 700,000 metric ton continuous catalytic cracker, China's biggest, and will produce aromatics for chemical fiber feedstock. The project will establish a chemical fiber industry in Central China.

Currently, most of the textile mills in the region are based on cotton. With the shift by textile mills to chemical fibers, about 570,000 acres of farmland can be shifted from growing cotton to grain production, easing regional shortages of farmland and food, China Daily said.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.