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Sinopec, BASF expanding Nanjing venture

By Wan Zhihong (China Daily)
Updated: 2009-07-08 07:59

A worker checks the facilities at the BASF-YPC plant in Nanjing, Jiangsu province. The joint venture plans to construct 10 new chemical plants and expand three existing plants as part of the overall expansion. [CFP]

Sinopec and German chemicals producer BASF yesterday agreed to jointly invest $1.4 billion to expand their joint venture in Nanjing in Jiangsu province, to tap the growing demand in the domestic market.

The expanded project will produce downstream specialty chemicals for the Chinese market, serving multiple industries such as construction, electronics, pharmaceuticals, automotive and chemical manufacturing, the two companies said in a joint statement yesterday.

Sinopec and BASF in March 2008 announced that they had reached an agreement to spend $900 million to expand the joint project. BASF yesterday said in a statement that the figure was increased "as both the scope and the costs of the investment have increased".

The investment at the joint venture, BASF-YPC Co Ltd (BYC), includes the expansion of the existing steam cracker, under which its capacity will be expanded to 740,000 metric tons a year from 600,000 tons. Steam cracker is a facility to produce ethylene, the raw material for plastics and synthetic fibers.

The investment also includes the construction of 10 new chemical plants, and the expansion of three existing plants, which will strengthen the market competitiveness of the joint venture by broadening the product scope and further leveraging the advantages of the integration, said the statement.

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"The expansion conforms to China's revitalization plan for the petrochemical industry, fosters the integration of BYC, broadens the portfolio of downstream products in Nanjing, meets the increasing demands in the east China region, and promotes the upgrading of China's petrochemical industry," said Wang Tianpu, president, Sinopec.

"With this step, BYC will be among the most competitive sites of Sinopec operations," he said.

Martin Brudermller, member of the board of executive directors of BASF SE responsible for Asia Pacific, said: "The expansion of BYC underscores our strong belief in the growth opportunities of the Chinese market and is another milestone in cooperative development. With the products from our plants, we will be able to help our customers in China make their industries, businesses and homes more energy efficient."

The Chinese government has approved the joint feasibility study report submitted by BASF and Sinopec for the expansion on July 1, said the statement.

Engineering work for the expansion is in full swing. The startup will take place in a staggered approach and the expansion will be operational from 2011 onward, it said.

BYC is a 50-50 joint venture between BASF and Sinopec, founded in 2000, with a total investment of $2.9 billion in the first phase.