Under the US$2.7 billion deal, BP Chemicals controls 50 per cent of the Shanghai-based joint venture. Sinopec takes a 30 per cent stake while Sinopec subsidiary Shanghai Petrochemical Co takes the remaining 20 per cent.

The venture is expected to be set up in mid-September, with the aim of developing the capacity to produce 900,000 tons of ethylene a year.

Sinopec President Wang Jiming said: "The project is the largest joint venture between the two companies, and we believe it will greatly improve the competitiveness of China's petrochemicals industry.''

With the deal, BP, one of the foreign shareholders in Sinopec, has become one of the biggest foreign investors in China.

BP Chemicals (China) President Graham Hunt said: "The good relationship between the two companies, reinforced by the deal, will lay a solid foundation for us to expand co-operation in the future.''

BP's success is mirrored by Sinopec's other foreign shareholder, Exxon Mobil, which is at work on another large petrochemicals project.

Earlier this week, Sinopec said it plans to build a 600,000-ton-a-year ethylene cracker in a Sinopec refinery in East China's Fujian Province, with Exxon Mobil and Saudi Aramco. Sinopec takes half the stake while the other two share the rest.

Sourcing half its petrochemicals product demand from imports, China has forged links with foreign giants to help it build large petrochemicals plants.

The country is expected to double its ethylene capacity to about 8 million tons within the next five to six years through the launch of several joint complexes.

In Nanjing, capital of East China's Jiangsu Province, Germany's BASF AG and Sinopec are constructing a US$2.65 billion integrated petrochemicals site to turn out 650,000 tons of ethylene annually by 2004.

The 50-50 joint venture is to be the nation's third largest petrochemicals plant after the US$4 billion project between the China National Offshore Oil Corp and the Royal Dutch/Shell Group in Guangdong Province.

The Guangdong complex is to output 800,000 tons of ethylene annually by 2005.

Matt Flanagan, director of the Beijing office of Accenture's Global Energy and Chemicals, said joint ventures were a win-win solution for both companies, combining the strength of domestic firms' brands with the technology and management of foreign companies.

(China Daily 09/01/2001)