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Sinopec, BASF Launch Joint Venture in Nanjing
China Petroleum and Chemical Corporation (Sinopec Corp) and Germany's BASF AG Friday, December 8, launched a US$3-billion joint venture to build and operate an integrated petrochemical site in Nanjing, East China's Jiangsu Province.
The 50-50 joint venture, BASF-YPC (Yangzi Petrochemical Corp) Company Ltd, is the second largest Sino-foreign chemical company after a US$4-billion project in Guangdong Province of the China National Offshore Oil Corp and the Royal Dutch/Shell Group, which was established in October.
Sinopec Corp and BASF began preparation for the joint venture in 1994. Their feasibility programme was approved by the central government in June this year.
"The launch of BASF-YPC Co Ltd is our first strategic joint venture with multinationals after the successful listing of Sinopec," Li Yizhong, chairman of Sinopec Corp, said at the launch ceremony.
Sinopec Corp, the country's first State-owned conglomerate to go public in Hong Kong, New York and London simultaneously, raised US$3.7 billion in its initial public offering in mid-October.
"About half of the investment in the joint venture will come from the stock markets," Li said.
Yangzi Petrochemical Corp, a Sinopec subsidiary, has now been floated on China's markets.
The joint venture is an important milestone for the Chinese petrochemical sector's efforts to strengthen co-operation with foreign partners, Li said.
Construction of the petrochemical site in Nanjing will start next month.
The site is expected to begin operation in 2004, with an annual capacity of 1.7 million tons of high-quality products, including synthetic resin, synthetic fibre and fine chemicals.
"BASF-YPC Co Ltd is the fulfillment of some of our ambitions in the Asian market," said Jurgen Hambrecht, BASF's board member responsible for the Asian region.
The German petrochemical giant plans that 20 per cent of its global turnover will come from Asia by 2010, Hambrecht said.
The joint venture is also a cornerstone of BASF's strategy to build an Asian manufacturing base that will provide materials for 70 per cent of its sales in the region by 2010, Hambrecht said.
"We have targeted the Chinese chemical market because it has tremendous potential," Hambrecht said.
The joint venture will play an important role in satisfying the mounting demand for chemicals in China, Hambrecht said.
At present, about half of the demands of the domestic chemical market is satisfied by imports.
Sinopec Corp also plans to establish another large-scale chemical project in Shanghai in co-operation with British oil conglomerate BP Amoco next year.
Li predicted that the domestic demand for ethylene will reach 15 million tons per year by 2005.
BASF has nine companies in China with 2,200 employees. Last year, BASF reported sales of about US$614 million in China.
Source: China Daily
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