MOSCOW (MRC) -- Sinopec Corp plans to boost investment in fine chemicals at its Maoming-Zhanjiang refining base in southern China alongside partners like Germany's BASF, a senior executive said in an interview on Thursday, reported Reuters.
The investment would be part of the USD29 billion the state major plans to spend upgrading its refining and petrochemical hubs by 2020, and highlights industry efforts to move up the value chain in the face of dwindling diesel demand and a refining capacity glut in the world's second-largest oil user.
Sinopec, China's largest refiner and petrochemicals producer, is taking the lead in the push for low-volume but high-value products that are used in the pharmaceuticals, agrichemical and aviation industries.
"We are going to cooperate with BASF in more downstream fine chemical products because they have lots of advanced technology in those areas," said Yu Xizhi, general manager of Sinopec Maoming, on the sidelines of parliament's annual meeting.
Yu said Sinopec is far behind the German chemicals giant in terms of diversification of downstream chemical products.
"I visited BASF headquarter, where it has 600,000 t of ethylene capacity and 300 units of processing equipment. In Maoming, we have 1.1 MMt of ethylene capacity but only 20 units for further processing."
Sinopec said last week it would invest USD29 billion to upgrade its four refining bases between 2016 and 2020 to produce high-quality fuels as China embraces more stringent fuel standards and expands petrochemicals investment.
"We are seeing a clear trend that refiners are diversifying their products to include fine chemicals. This shift helps them to better deal with oversupply in traditional fuel markets as the glut persists," said Seng Yick Tee, senior director at Beijing-based consultancy SIA Energy.
Sinopec is better positioned than domestic rival PetroChina in chemical markets because it has more facilities and better geographic locations, Tee said.
Sinopec's refining sites to be upgraded are in the cities of Shanghai, Nanjing and Zhenhai on the east coast, and Maoming-Zhanjiang in southern Guangdong province.
Under the Maoming-Zhanjiang base that Yu heads up, the 400,000-bpd Maoming refinery will focus on traditional fuel and fine chemicals, while the Zhanjiang greenfield project will produce clean fuels and have a heavier focus on fine chemicals, Yu said.
"Headquarters sets no limit on funding the fine chemicals projects, so long as we can convince them it's the right one," he said.
Chinese refiners have had to look for new areas of business amid a moderating economy and excess refining capacity the past few years, with domestic fuel demand growth easing.
As MRC informed earlier, in June 2016, Rosneft and Sinopec Group signed a Framework Agreement on joint pre-feasibility study of the project related to the construction and operation of a gas processing and petrochemical complex in East Siberia. The project will meet the growing demand for polyethylene and polypropylene in Russia and in China. It is assumed that the annual capacity of the new complex near the administrative center of Boguchany District will be 5 BCM of gas yielding up to 3 mln tons of polymers and petrochemical products primarily for sale on the Russian and Chinese markets. The resource base of the project comprises Rosneft oil and gas fields of Yurubcheno-Takhomsky cluster in East Siberia.
China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC