Sinopec enhances refining capacity with chemical JVs

Asia's biggest refiner, China Petroleum and Chemical Corp (Sinopec), is stepping up efforts to enhance its overseas refining capacity through international refining and chemical joint ventures.

The Amur Gas Chemical Complex, an integrated polyethylene and polypropylene production facility jointly developed by Sinopec and Russian petrochemical company Sibur, began construction on Aug 27,Sinopec said.

The plant, the largest chemical cooperation project between China and Russia, has a designed capacity of 2.3 million metric tons/year polyethylene and 400,000 tons/year polypropylene. It is expected to begin operations in 2025, with most of its products to be sold in the Chinese market.

It is one of the company's six overseas refining and chemical, storage and logistics investment projects as of 2019, including YASREF in Saudi Arabia, a Krasnoyarskiy nitrile rubber (NBR) JV project in Russia, a lubricants plant and supporting jetty project in Singapore, a Fujairah storage project in UAE and a VESTA storage project in the Netherlands.

By the end of 2019, the company's cumulative initial investment reached $4.7 billion and it had overseas refining capacity of 7.5 million tons/year, storage capacity of 1.36 million cubic meters, lubricant grease production capacity of 80,000 tons/year and NBR production capacity of 10,500 tons/year.

Li Li, research director at energy consulting company ICIS, said the project will take advantage of the low cost of local gas to produce common chemical raw materials.

Production at the site will use ethane and liquefied petroleum gas (LPG) feedstock from the Gazprom Amur Gas Processing Plant.

The site is strategically located in the region to serve buyers in China, with capacity 1.35 times higher than its total polymer exports in 2019, said ICIS.

Investing in the Amur project is among the company's recent efforts to deepen cooperation between the two countries, and the project is seen as leveraging Sinopec's best practices and advantages in fields of investment, technology, engineering services, operations and trade, said Sinopec.

As the strategic relationship between China and Russia enters a new stage, the project will become a model for future energy cooperation between China and Russia in downstream petrochemical sector-related areas, it said.

As Asia is becoming a major consumer of petrochemical products, it is expected that Russian petrochemical exports to China will increase alongside rising energy supplies.

Sinopec is tipped to become a partner on this project as it "boasts an extensive distribution network in China for oil and gas products of varying processing levels", said Sibur.

Sinopec holds a 40 percent stake in the Amur gas chemical complex located in Russia's Far East.

"Long-term forecasts for petrochemical demand, proximity to markets and a well thought out feedstock base give us confidence that Amur will be a highly effective and competitive business that will help Sibur gain a strong foothold in both Russia and globally," said Dmitry Konov, Sibur's CEO.