Report: China to delay 3 petchem jv's

04 February 1999 06:21  [Source: ICIS news]

SINGAPORE (CNI)--Three China joint venture petrochemical projects with a combined investment value of $8bn (Euro7bn) are to be delayed, according to Asian Wall Street Journal Thursday. That follows a decision by Chinese authorities to cut investments in new facilities and modernisation projects to help control industrial overcapacity.

The daily did not name the projects. It cited Xinhua news agency and Chinese ministry reports as its sources.

There are six foreign joint venture petrochemical projects pending approval from Beijing or pending financial arrangements:

• Shell's 800 000 tonne/year cracker and downstream facilities in Nanhai, Guangdong province, with China National Offshore Oil Corp and other China companies.
• BP-Amoco's and Shanghai Petrochemical's 650 000 tonne/year olefins complex in Jinshan, near Shanghai.
• BASF's and Yangzi Petrochemical's 600 000 tonne/year complex in Nanjing, Jiangsu province.
• The Dow Chemical Co-Tianjin Petrochemical complex in Tianjin.
• The integrated refinery-petrochemicals complex in Fujian between Fujian Petrochemical Co, Exxon Chemical/Esso and Saudi Aramco.
• Phillips Petroleum-Lanzhou Chemical Industry Co's complex in Lanzhou. [Lanzhou Chemical, formerly a unit of China Petrochemical (Group) Corp, is now under China National Petroleum Corp].

Of those, Shell's $4.5bn (Euro$4.0bn) project probably is least likely to be affected, having received approval from the State Council.

The deal was signed in The Hague by Shell chief executive Evert Henkes and CNOOC director Wang Yan, witnessed by former Chinese Premier Li Peng and Dutch Prime Minister Wim Kok.

A spokeswoman for Shell Chemicals in London also recently reiterated that Shell's plan to complete the project at the end of 2003 was unchanged.

However, CNI understands that some of the China participants in that venture have yet to finalise their financial arrangements.

Meanwhile, Zhang Jingming, a Shanghai Petrochemical Co (SPC) spokesman, said its joint venture with BP-Amoco might have to be completed in stages, with the acrylonitrile project coming onstream first.

That project includes a 650 000 tonne/year cracker scheduled to start-up in 2003-4.

Doug Digman, who is in charge of Phillips Petroleum's proposed cracker with Lanzhou Chemical, told CNI that the project proposal has been submitted to Beijing, and the partners are awaiting approval.

He added that products such as hdPE are in great demand with large volumes still being imported.

Phillips Petroleum operates a 100 000 tonne/year hdPE plant in Shanghai with SPC. The US company has a 40% share of that venture, and SPC 60%.

Analysts said the cuts are needed to balance dwindling demand and oversupply in China of all the products listed by government.

They see Shell's and BASF's projects proceeding, but at a slower pace, and BP-Amoco's possibly being built in phases. The other three projects, they said, could see approval taking longer and, possibly, new schedules being set for them.

By: Leslie Chua
+65 6780 4359

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