Capacity expansions in China gear up to meet domestic demand

Asia is likely to emerge as the largest consumer of petrochemicals and plastic products, and the trend of the petrochemical industry shifting from North America and Europe to the Middle Eastern and Asian regions continues. The Asian region will constitute 50% of global consumption. While all Asian countries will continue to grow, China and India with their large population base would almost constitute 75% of the Asian demand. To meet this growing demand, ExxonMobil, Sinopec, Shell have planned expansions in China, to significantly increase the company's presence in China. ExxonMobil plans to replicate the multi-billion dollar state-of-the-art integrated refining complex currently being constructed in China's Fujian province, in the Guangdong province. Negotiations are underway with Sinopec for the Fujian petrochemical project at an investment of almost US$3.6 billion. The Fujian project is to be the first integration project in the petrochemical industry in China. The joint venture is evenly split between local and foreign investors: Sinopec and Fujian Petrochemical Company Limited (FPCL) joint venture share an evenly divided stake in the project; ExxonMobil and Saudi Aramco evenly share the other half. The Chinese government is to conduct a joint feasibility study for the Fujian integrated petroleum and petrochemical joint venture to develop a state-of-the-art refinery and petrochemical complex in Fujian, which is scheduled to come online in 2008. The project is designed to expand existing refining capacity from 80,000 bpd to 240,000 bpd while also constructing a new ethylene steam cracker with an annual capacity of 800,000 ton with potential total investment of over US$3 billion. Sinopec recently announced a US$$3-4 billion expansion plan for it's Tianjin plant near Beijing, to be completed by 2010, including: * Expansion of refining processing capacity from 6 million tpa to 14 million tpa at a total cost of approximately US$1.2 billion. * Construction of a new ethylene complex at an estimated investment of US$2.4 billion. The Royal Dutch/Shell and China National Offshore Oil Corporation Ltd. petrochem JV at an investment of US$$4.3 billion is scheduled to come online in late 2005. The plant is expected to produce 800,000 tpa of ethylene and 2.3 million tons of petrochemical products. With these capacity expansion, China is now geared up to meet approximately half of the country's petrochem needs through domestic production.