Two US firms, Stone & Webster and ABB Lummus Global, will take part in renovating an ethylene company in Shanghai, a major petrochemical base in China.

Renovation of the Shanghai Petrochemical Co. Ltd. involves a total investment of 4.7 billion yuan (about 566 million US dollars). The money will be raised by the firm itself and aided bybank loans.

The technology renovation project, which is expected to be completed in 2002, will increase the Shanghai firm's ethylene production capacity from 550,000 tons, already China's largest, to700,000 tons annually.

The two US companies signed agreements with the Shanghai enterprise on January 24 and January 26 in Shanghai, respectively, pledging to provide state-of-the-art technologies.

The project will enable the Shanghai company to reduce the cost of producing ethylene by 25 yuan a ton, thus sharpening the its competitiveness edge in the international market.

China's ethylene industry has developed rapidly in recent years, but there is still a short supply of the chemical in the domestic market, with a shortfall of 40 percent.

The Shanghai Petrochemical Co. Ltd. has been constantly expanded since it was launched with a production capacity of 115,000 tons in the 1970s.

The new project will help Chinese petrochemical companies flex their muscles in the upcoming competition with foreign rivals after China joins the World Trade Organization (WTO), a local petrochemical expert has said. (Xinhua)