The project, co-funded by China Petroleum and Chemical Corporation (SINOPEC), will cost US$2.6 billion in investment, with each sharing a 50 percent stake.

"The project is a milestone in BASF's investment in the Asia-Pacific Rim," said Juergen Strube, chairman of the Board of Executive Directors of BASF.

BASF plans to derive 20 percent of group sales from Asia's dynamic markets by 2010 and 70 percent of this amount is to be derived from local production. "The new Verbund site in Nanjing will make a major contribution to this effort," said Strube.

"China has been reckoned as a country which is playing an important role in BASF's Asia strategy," he said.

The chairman said BASF-YPC (Yangzi Petrochemical Corp) Company Ltd, a joint venture, has been established to operate the project.

This 50-50 joint venture is the largest Sino-German chemical company with an investment of US$2.9 billion, covering a space of 220 hectares.

"BASF-YPC Co Ltd is our first strategic joint venture with multinationals after the successful listing of SINOPEC Corp in Hong Kong, New York and London simultaneously," said Li Yizhong, chairman of SINOPEC Corp.

According to Li, the project will further improve the domestic supply and demand of chemical resources and strengthen SINOPEC's competitive edge in the international market.

Upon its completion in 2005, the joint venture will have an annual production capacity of 8.7 million tons of high quality products, including ethylene, ethanediol, polytene and propenoic acid ester.

Strube said BASF decided to explore the prospects for the chemical project in Nanjing within five years by cooperating with Chinese partners. It was only last year that the company received permission to build such an integrated production site with SINOPEC.

He said China constitutes the world's fastest growing market for chemical products and has the greatest potential. "We want to serve this market as soon as possible by launching our ethylene cracker project," he said.

Insiders said China's demand for ethylene is growing and at the moment, much of it is imported. Shanghai has cooperated with BP to launch a 900,000-ton ethylene project in its Caojing-based chemical industry zone and Shell is also building a 600,000-ton ethylene plant in Guangdong Province. When these projects are completed, China is expected to have an annual capacity of producing 5.5 million tons of ethylene by the year 2005.

Strube said BASF's ethylene output, by then, will occupy about 10 percent of China's amount and a considerable portion of imported chemical products will be replaced by local production.

(China Daily 09/29/2001)