The China National Offshore Oil Corp and its partner Royal
Dutch/Shell have agreed to borrow US$2.7 billion for the
construction of a joint petrochemical complex.
It represents the largest financing of a private project in the
Asia-Pacific region.
The loan accounts for 60 per cent investment in the
petrochemical project -- also the largest single foreign investment
in China's history.
The partners will equally pour the remaining 40 per cent, or
US$1.8 billion, into the 50-50 joint venture (JV).
The plant, in Huizhou in South China's Guangdong Province, is
due to commence operations in 2005. By then, it is expected to be
able to make 800,000 tons of ethylene and 2.3 million tons of
chemical products a year.
"The financing for the project has set a benchmark for financing
in the Asia-Pacific region," the China oil corporation said in a
statement on Friday.
Among the loans, Chinese banks are providing about US$2 billion
and eight foreign banks, including the Japan Bank for International
Co-operation, the Export-import Bank of the United States and
Gerling NCM of the Netherlands, are offering US$700 million.
Chinese banks have also pledged an additional US$250 million in
loans to be used when the construction of the project is near
completion. It is likely to increase the total loans to US$3
billion, the statement said.
According to the statement, annual sales of the JV are expected
to reach 1.7 billion yuan (US$205 million) upon completion of the
project.
China imports half of the ethylene it needs. Ethylene is the
basic petrochemical used in products ranging from compact discs to
clothing.
Industry analysts say Chinese demand for ethylene should grow by
more than 7 per cent a year in the near future, buoyed by healthy
economic growth.
(China Daily August 2, 2003)