CNOOC and Shell Petrochemicals are preparing to begin work on a US$4 billion petrochemicals complex in Daya Bay, Guangdong Province with an annual production capacity of 800,000 tons of ethylene.
The chief executive of the new joint venture, Simon Lam, said in Shanghai yesterday that the project would "provide sufficient chemicals for Guangdong and other coastal areas in China."
Apart from the ethylene plant, Lam said the complex would set up facilities to produce about 1.5 million tons of chemicals. Its annual total products will reach 2.3 million tons, generating up to some US$1.7 billion in sales.
Shell Nanhai BV, as a partner of the joint venture, holds a 50 per cent stake, and CNOOC Petrochemicals Investment Ltd has the other 50 per cent.
The joint venture with a contract signed last October is at the design stage. Lam said the complex will be ready to start operations in 2005.
The project, some 80 kilometres from the Hong Kong Special Administrative Region, will cover an area of 4.27 square kilometres, and 8,000 farmers will need to be moved.
It is expected that some 60 per cent of the funding for the project will come from third party loans. Project investment memoranda and financing bids were issued to Chinese and foreign banks in early July.
"The feedback is very positive," Lam said.
The first investment of US$240 million has been put into the project and the second batch will go next September, he said.
The complex will import overseas oil as raw material but "whether domestic oil is used depends on price," he said.
Apart from the project to be launched in Guangdong, Shanghai is also building a 900,000-ton ethylene complex in Caojing Chemical Industry Zone with investment of about US$3 billion.
The Shanghai project is a joint venture funded by Shanghai Petrochemicals Company (SPC) and BP.
SPC now produces 600,000 tons of ethylene a year, which will rise to 900,000 tons by 2002, said an SPC source.
By 2005, Shanghai will have an annual capacity of 1.75 million tons of ethylene.
At present, China has an annual production capacity of more than 5 million tons of ethylene. As the projects in Shanghai and Guangdong are completed, the annual capacity will exceed 8 million tons.
(chinadaily.com.cn 09/12/2001)
