FOCUS: SABIC, Sinopec Tianjin JV on fast track

03 April 2007 09:14  [Source: ICIS news]

SINGAPORE (ICIS news)--Saudi Basic Industries Corp (SABIC) and Sinopec have accelerated talks on the Tianjin cracker project after its joint venture (JV) with Dalian Shide stalled in the approval process, sources familiar with the negotiations said on Tuesday.

 

Sinopec has also proposed to sell SABIC’s polyethylene (PE) and monoethylene glycol (MEG) from Saudi Arabia via its centralised sales company in China as part of the negotiations to form a 50:50 joint venture, one of the sources said.

 

“Initially the joint venture talks were on downstream units, but this has been extended to the cracker,” he added.

 

Both companies resumed talks on the project last year after Saudi King Abdullah's visit to China. The first round of negotiations took place in 2004.

 

As talks were still ongoing, Sinopec has held back work on the project which could miss its third quarter 2009 start-up target, the source said.

 

Sinopec received final approval from the Chinese government for a 1m tonne/year cracker and derivative units at Dagang district, Tianjin, in December 2005. It also plans to double the capacity of an existing refinery at the site to 10m tonnes/year.

 

The proposed downstream units will produce 600,000 tonnes/year of (PE), 450,000 tonnes/year of polypropylene (PP), 400,000 tonnes/year of ethylene glycol/monoethylene glycol (EG/MEG) and 350,000 tonnes/year of phenol/acetone.

 

SABIC’s renewed interest in the Tianjin project could have stemmed from a delay for the go-ahead for its other $5bn (€4bn) cracker project in Dalian, Liaoning province.

 

Beijing, which gave Fushun Petrochemical the cracker green light earlier, was unlikely to approve another one in the same province in a five-year period, local consultants said.

 

SABIC’s partner Dalian Shide was hoping for a mid-term review next year which might lead to an approval.

 

But time appears to be running out for SABIC as it said in February it may find another location for the project after an 18-month wait.

 

SABIC’s pull-out might also kill the project as Shide said earlier that it might not proceed alone.

 

($1=€0.75)

By: Florence Tan
+65 6780 4359

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