The country's top two oil firms, Sinopec and PetroChina, have obtained governmental approval to build six ethylene plants in China to meet surging domestic demand.

 

The projects mean capacity will be doubled to 15 million tons a year by 2010.

 

Ethylene is a product obtained from petroleum and natural gas and used in manufacturing many other chemicals.

 

Sinopec will set up three new ethylene crackers in Tianjin, Quanzhou in Fujian Province and Zhenhai in Zhejiang Province. They will have a combined capacity of 2.8 million tons a year, a senior official in charge of the oil refiner's petrochemical business told China Daily.

 

The other three will be built by PetroChina in Chengdu in Sichuan Province, Dushanzi in Xinjiang Uygur Autonomous Region and Fushun in Liaoning Province. The three plants will expand PetroChina's ethylene production capacity by as much as 2.6 million tons a year.

 

All the six new crackers will produce more than 800,000 tons per year, the source said.

 

Furthermore, Asia's biggest oil refiner Sinopec also plans to build another two crackers in Shanghai and Wuhan of Central China's Hubei Province. These are still waiting for approval from Beijing.

 

"The two in Shanghai and Wuhan are planned for the more distant future, and there is much uncertainty," the source said, without specifying a timetable.

 

Another industry source, who wished to remain anonymous, disclosed to China Daily that the Shanghai plant was designed with a 1-million-ton-per-year capacity and the one at Wuhan would be able to produce 800,000 tons a year.

 

Sinopec currently runs two ethylene production facilities in Shanghai, one of which is a 50-50 joint venture with global oil giant BP and has a capacity of 900,000 tons a year.

 

With the operation of the six new plants and the expansion of existing facilities by 2010, China will have an ethylene production capacity of 15 million tons a year, about 68 percent of which will come from Sinopec, the Sinopec official said.

 

Sinopec last year produced 5.6 million tons of ethylene while PetroChina's production stood at 1.89 million tons.

 

PetroChina's Dushanzi plant will be the first of the six new plants to begin production, expected as early as next year, the industry source said.

 

"The remaining five will be put into operation between 2008 and 2010," he said.

 

Sinopec yesterday started building its 26-billion-yuan (US$3.25-billion) petrochemical complex in Tianjian in North China. The Beijing-based refiner will build a new 1-million-ton-per-year ethylene plant and expand its refinery in Tianjin to 12.5 million tons per year, and construction is expected to be completed by September 2009.

 

The Tianjin cracker is part of several huge projects aimed at building up the city's government-approved new development zone, Binhai New Area, dubbed the "Pudong of North China" by international investors.

 

Sinopec's Quanzhou ethylene plant is part of combined investment between Sinopec, ExxonMobil and Saudi Aramco, which also includes crude oil processing facilities with an annual capacity of 12 million tons.

 

China now relies on imports for more than half of its ethylene consumption.

 

"The current ethylene production facilities under construction are far from enough to meet soaring demand in China," said Hou Jixiong, a senior oil analyst with Beijing-based Guotai Jun'an Securities Co Ltd.

 

China plans to spend 180 billion yuan (US$22.5 billion) in the oil refining and petrochemical sector in the next five years, Xinhua reported in March.

 

Duan Wende, vice-president of PetroChina, earlier this year said China aimed to build five 10-million-ton-per-year oil refining bases, two aromatic hydrocarbon production bases, four chemical fertilizer production bases and six large-scale ethylene production bases by 2010.

 

(China Daily June 27, 2006)