MOSCOW (MRC) -- Chinese state energy giant Sinopec Corp is in advanced talks on taking a controlling stake in petrochemical firm Dragon Aromatics, which operates one of the country's biggest chemical plants, said Reuters, citing three sources with knowledge of the matter.
The discussions come after the independent petrochemical firm suffered a second major fire in less than two years at the USD3 billion plant in Fujian and sources said local authorities want Sinopec to participate before allowing the plant to reopen.
The tough line shows how Beijing is putting pressure on provinces to ensure better industrial safety standards and protect the environment after a series of accidents has stirred protests from residents opposed to plants in their backyard. Dragon Aromatics, owned by Taiwan's Xianglu Group, was forced to shut the plant with a capacity to produce 1.6 million tonnes a year of paraxylene (PX), a chemical used to make polyester fiber and plastics, after the fire in April.
Sinopec could take up to 80 percent of the stake, the source added. Sinopec spokesman Lu Dapeng declined to comment.
The PX plant is located on a peninsular called Gulei, part of Zhangzhou city and a site where state firms including Sinopec and China National Offshore Oil Corporation (CNOOC) had previously tried to build petrochemical plants.
To supply the PX plant, Dragon Aromatics also runs a 100,000 barrels per day condensate splitter and a 3.2 million tonnes per year hydrocracker at the site.
Dragon Aromatics has been one of the biggest buyers of Iranian condensate, a very light crude oil, and the plant shutdown has forced the Middle Eastern producer to store more of its oil.
Dragon Aromatics, owned by Xianglu Group, a Taiwanese petrochemical group, is one of the largest independently-run PX producers in China.
Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the sale, storage and transportation of petroleum products, petrochemical products, coal chemical products, synthetic fibre, fertiliser and other chemical products; the import and export, including an import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.
MRC