BP Chemicals to ago ahead with China chemical project

BP Chemicals to ago ahead with China chemical project

SINGAPORE (Reuter): BP Chemicals, a unit of giant British Petroleum, is pressing ahead with multi-billion dollar investments in China, dispelling energy industry fears of changes to investment policies after Deng Xiaoping's death.

"I don't see any change after Deng. It is not as if this was a shock," BP Chemicals, chief executive officer Bryan Sanderson told reporters yesterday at the sidelines of the second Asia Pacific Chemical Conference.

Sanderson said BP was hoping to start up the first portion of its U.S$2.5 billion 50/50 joint-venture with Shanghai Petrochemicals Co Ltd in 1999.

"The intention is that the acrylonitrile plant will be the first to be commissioned in 1999. Other plants will be introduced on a phased basis during the period to 2003."

Energy analysts have said they did not see any changes to China's energy investment policies following the death of the reform-minded Deng.

However, they added they were concerned that decisions on projects could be delayed while the power vacuum is filled.

At the heart of the project in Jinshan is a 650,000-ton-per- year ethylene plant that will feed a number of downstream units, including a major polyethylene plant.

State-owned China Petrochemical Corp, or SINOPEC, is the majority shareholder of Shanghai Petrochemicals.

Sanderson said BP had "undergone a major step change within the last few months" in its China commitment and involvement.

"The proposed joint venture will be one of only a limited number of such complexes which will be approved by the Chinese authorities in the development of the petrochemical industry," he said.

Chinese state planners are looking to promote six ethylene projects with annual capacity of 600,000 tons or more, the official China Daily said recently.

The other company to have received the nod to build is BASF AG in Janjing in Jiangsu province.

China's State Planning Commission is due to decide in the first half of this year on another project mooted by Royal Dutch/Shell Group, said a China National Offshore Oil Corp spokesman, a partner in the project.

Dow Chemical Co hopes for approval in the first half of this year to build in Tianjin. Exxon Corp and Amoco Corp are bidding to build a plant in Fujian province.

BP is currently building a 150,000-ton-per-year acetic acid plant in Chongqing, southwest China, and is looking to translate the experience gained there to the Shanghai project.

The U.S. $200 million plant in which BP has a 51 percent stake while Yangtze River Acetyls and Sichuan Vinylon will share a 44 percent stake, is expected to start up in mid-1998.

A third company, Chongqing Investment and Construction, will take up the remaining five percent share.

The UK-giant is also beefing up investments in Southeast Asia. Yesterday it announced plans to build a U.S.$200 million, 500,000-ton-per-year acetic acid plant in Kuantan, on the east coast of Peninsular Malaysia.

The plant a 70/30 joint venture between BP and state-owned Petroliam National Bhd (Petronas) is due to start up in 1999.

In Indonesia, BP has joined a consortium of four Japanese firms and one Indonesian firm to work on a feasibility study for the building of a 700,000-tons-per-year ethylene plant, which is expected to go on stream in 2000.