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China Sinochem to start USD4.6-B Quanzhou complex in mid-2020

January 24/2020

MOSCOW (MRC) -- China Sinochem Group is expected to start up a new crude processing unit and a petrochemical complex in southeastern China around mid-2020, marking the state firm's first foray into making petrochemicals, reported Reuters with reference to three company sources' statement.

The state-run oil and chemicals group is adding 60,000 barrels per day of crude processing capacity at an existing 240,000-bpd refinery in Quanzhou, Fujian province.

It will also begin operations around June of a petrochemical plant, including a naphtha cracker that can produce one million tonnes per year (tpy) of ethylene, the sources said.

The expansion is part of a new wave of investments in China, led by private chemical giants Hengli Petrochemical and Zhejiang Rongsheng Holdings, that have boosted output of petrochemicals such as paraxylene (PX), the key raw material for synthetic fibre and water bottles. China is the world's largest petrochemical importer.

The Quanzhou refinery additions will come on top of some 900,000 bpd of refining capacity added during 2019 in China, nearly 8% of national total refinery throughput, that swelled China's fuel glut and spurred record product exports.

The 32.5 billion yuan (USD4.64 billion) investment is a pivotal part of Sinochem's growth strategy. The state group is seeking a multi-billion-dollar stock listing for its energy department, and believes petrochemicals can add value to its dominant refining and oil trading business.

Sinochem plans to process light crude oil at the new 60,000-bpd crude distillation unit to make naphtha for the cracker. The existing refinery units process mainly heavier grades, according to the three sources, who declined to be named as they are not authorized to speak to the press.

"The company is looking to start the new refining and ethylene facilities around May/June," said one of the sources.

Wood Group, the service contractor building the facilities, said on its website last month it was conducting safety and quality checks as construction was near completion.

Sinochem did not respond to a request for comment.

Since its start-up in 2014 - the existing 240,000-bpd Quanzhou plant, Sinochem's single fully-owned refinery - has been a leading contributor of revenue and profits to the group's energy business, which for decades has been dependent on the international trading of oil and chemicals.

Sinochem is also expected to start operating towards the fourth quarter an 800,000-tpy PX unit, according to Bian Chenhui, an analyst with Chinese consultancy JLC Technology Network who closely follows China's PX expansions.

As MRC informed before, in January 2020, Sinochem Energy, a unit of Chinas Sinochem Group, agreed to sell a 20% stake to five state-owned firms for 11.56 billion yuan (USD1.65 billion).

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Sinochem Group engages in energy, agriculture, chemicals, real estate, and finance service businesses in China and internationally. It is involved in the exploration and production, refining and trading, warehousing and logistics, and distribution and retailing of oil and gas. The company also produces and distributes fertilizers, such as nitrogen, phosphate, potash, and other fertilizers.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, paraxylene (PX), homopolymer PP, propylene, ethylene, petrochemistry, Hengli Petrochemical, Sinochem, Zhejiang Petrochemical, China, Russia.
Category:General News
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