BP mulls expansion of Chongqing plant with China Petrochemical

17-Jan-08

BP Plc and China Petrochemical Corp. are in discussion to mull expansion of a 350,000 metric tpa acetic acid plant in Chongqing, southwestern China to meet growing demand. A ``framework accord'' may be signed by Jan. 18 during Prime Minister Gordon Brown's visit to China later this week. The Yangtze River Acetyls Co.,(Yaraco) is a joint venture in Chongqing, formed in December 1995, at an investment of US$200 million. BP has a 51% stake in the project, Sinopec Sichuan Vinylon Works (a unit of Sinopec Group) has 44% stake, while the balance 5% is held by a local government company. Operations were commenced in 1999. A further investment of US$25 mln was made two years later in a separate 80,000 tpa esters chemical plant. The two companies expanded the venture's acetic acid production capacity from 200,000 tons to 350,000 tpa in 2005. BP and China Petroleum & Chemical Corp., the listed unit of Sinopec Group, will begin operating another acetic acid venture in eastern China in 2009 to produce 500,000 tpa. The partners will each invest 250 million yuan for equal stakes in the venture that will be at Nanjing. Global chemical makers are competing to gain from rising demand in China, where the economy grew by over 11% in the first three quarters of 2007. Foreign companies are boosting investments in chemical ventures because government curbs on fuel prices make oil-refining projects less profitable.