Sinopec, INEOS ink deals for petrochemical ventures

China Petroleum & Chemical Corp. (Sinopec) and INEOS Group have entered a series of agreements to collaborate on three joint ventures (JV) aimed at expanding production of petrochemicals to help meet rising demand in China’s domestic market.

Signed on July 28, the three separate JV collaboration deals—worth an estimated $7 billion—will collectively involve a combined 7 million tonnes/year (tpy) of both existing and future petrochemical production capacity in China, INEOS said in a release.

As part of one deal, INEOS will acquire 50% of Sinopec subsidiary SECCO Petrochemical Co. Ltd., which produces 4.2 million tpy of olefins, polymers, and other derivatives—including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene, and toluene—across a series of plants at its 200-hectare complex inside the Shanghai Chemical Industry Park, a 29.4-sq km national professional development zone specializing in petrochemicals situated at North Shore, Hangzhou Bay (OGJ Online, Apr. 27, 2017).

Under a second agreement, INEOS and Sinopec will form a new but yet-to-be-named 50-50 JV to focus on increasing China’s production capacity of acrylonitrile butadiene styrene (ABS) by up to 1.2 million tpy via construction of two new 300,000-tpy ABS plants—one in Tianjin, and the second at a location to be later decided—both of which will be equipped with INEOS’ proprietary Terluran ABS technology, INEOS said.

The planned ABS JV will also become responsible for operation of INEOS Styrolution Group GmbH’s 600,000-tpy ABS plant currently under construction in Ningbo upon the site’s scheduled commissioning by yearend 2023, according to the operator.

Under a final agreement, INEOS and Sinopec propose establishing a third JV that would oversee construction and operation of a grassroots 500,000-tpy high-density polyethylene plant (HDPE) in Tianjin by yearend 2023, as well as at least two additional HDPE plants in China sometime in the future.

Subject to regulatory approvals and other conditions, INEOS—which plans to finance the deals through a combination of internal cash resources and external financing—said it expects to finalize all three of the proposed transactions by yearend 2022.

The three proposed deals with Sinopec would generate a combined turnover of about $10 billion, INEOS said.

Details from Sinopec regarding the planned INEOS petrochemical collaborations have yet to surface, with many of the state-owned operator’s official news and investor websites inaccessible as midday on July 28.