INEOS and SINOPEC have recently announced a new Joint Venture agreement that will see INEOS acquire a 50% share in the existing Tianjin Nangang Ethylene Project from SINOPEC. The project is currently building a 1.2 million tonne ethane cracker, expected to come on-stream at the end of 2023, and downstream derivative plants in Tianjin, China.
A full suite of derivative units is being built at the complex, including the 300ktpa ABS (Acrylonitrile Butadiene Styrene) plant and the 500ktpa HDPE (High-Density Polyethylene) plant announced by INEOS and SINOPEC in July.
The 300ktpa ABS plant will be based on INEOS’ world-leading Terluran® ABS technology. It is the second of three ABS plants that INEOS has agreed will be built and operated in China in partnership with SINOPEC, the first being the 600ktpa plant currently under construction by INEOS in Ningbo. The 500ktpe HDPE plant, which is also expected to be onstream by the end of 2023, is the first of three planned units to produce INEOS pipe grade with SINOPEC under license in China.
The joint venture agreement was signed at a virtual meeting between Dr. Ma Yongsheng, Chairman of SINOPEC and Sir Jim Ratcliffe, Chairman of INEOS. Through this partnership SINOPEC benefits from INEOS’s technological knowledge and operational expertise, and INEOS achieves a substantial presence in China, the fastest growing market in the world.
Sir Jim Ratcliffe, Chairman and CEO INEOS said: “This latest joint venture with SINOPEC significantly expands INEOS’ petrochemical production and business footprint in China. It is a further example of the close relationship and growing collaboration between Sinopec and INEOS.”
Dr. Ma Yongsheng, said “SINOPEC and INEOS have enjoyed many years of partnership and this agreement is further testament to the cooperation between our companies, which is taken to a new level. The decision is driven by our dual goals of reducing carbon emissions and managing the energy transition within our businesses, from refining all the way through petrochemicals. SINOPEC will give INEOS a significant local presence and INEOS will contribute its technological and operational expertise, which will create a win-win for the cooperative development of both companies.”
This is the fourth venture signed in 2022 with Sinopec. Two are petrochemical complexes and two are product joint ventures. Each is a similar scale.
The three projects previously announced with SINOPEC are:
• INEOS agreed to acquire a 50% stake in Shanghai SECCO Petrochemical Company Limited (“SECCO”), a subsidiary of China Petroleum & Chemical Corporation (SINOPEC). SECCO currently has a production capacity of 4.2 million tonnes of petrochemicals - including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene. It is a 200-hectare facility, located inside the Shanghai Chemical Industry Park.
• INEOS also agreed to establish a new 50:50 joint venture with SINOPEC with the intent to build production capacity of up to 1.2 million tonnes of ABS, to meet rapidly growing demand in China. The 600ktpa ABS plant in Ningbo, which is currently under construction by INEOS Styrolution and is planned to be operational by the end of 2023, will become part of the joint venture. INEOS and SINOPEC plan to work together on two additional 300ktpa ABS plants, which will also be built by the joint venture based on INEOS’ world-leading Terluran® ABS technology. It is one of these 300ktpa plants that will be located in Tianjin. The location of the third unit is yet to be decided.
• The third agreement will see INEOS and SINOPEC build the new 500ktpa HDPE plant as part of the Tianjin Nangang Ethylene Project. In addition to the Tianjin plant INEOS and SINOPEC will build at least two additional 500ktpa HDPE plants in the future to produce INEOS pipe grade under license.
China is a key growth region for INEOS and the agreements significantly extend its petrochemicals business with a focus on products where it has some of the leading proprietary technologies.
The transactions are all subject to regulatory approvals and other conditions and will be financed through a combination of internal cash resources and external financing.
