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BASF and SINOPEC sign MoU to expand cooperation in China

BASF and SINOPEC sign MoU to expand cooperation in China
Photo courtesy of BASF

BASF and SINOPEC have signed a Memorandum of Understanding (MoU) in Beijing to further strengthen their partnership in upstream and downstream chemical production in China.

The partners intend to build an additional steam cracker and to further expand their existing 50-50 joint venture, BASF-YPC Company, Limited (BASF-YPC). A joint pre-feasbility study will be concluded by the end of 2018. Additionally, the two companies will jointly explore new business opportunities in China’s fast-growing battery materials market.

According to the MoU, BASF-YPC will invest in a 50% stake to build a second steam cracker with a capacity of 1,000,000 metric tons of ethylene per year. SINOPEC Yangtzi Petrochemical (YPC) will invest the other 50%. Both BASF-YPC and YPC will have access to all of the products of the new steam cracker to develop their downstream product portfolios.

Additionally, the basic chemicals provided by the new steam cracker enable BASF and SINOPEC to expand production capacity at BASF-YPC, their existing integrated joint venture “Verbund” site in Nanjing. At a Verbund site, plants are interconnected in order to utilize products, by-products and energy in the most efficient way, to save costs and minimize environmental impact.

“This additional investment into a new steam cracker and the expansion of our BASF-YPC joint venture in Nanjing underline the strong partnership between SINOPEC and BASF and the commitment to our customers in China,” said Martin Brudermueller, chairman of the Executive Board of Directors, BASF SE.

“With the strengthened cooperation between Sinopec and BASF, we will provide high-quality chemicals that can enhance quality of life for the general consumers and add oil to better living. We aim to create further value by extending this partnership,” said Dai Hou-Liang, chairman of the Board and the president of SINOPEC.

The partners are also jointly exploring new business opportunities in battery materials. The rising importance of alternative energy in China, especially in the automotive industry, has led to a surge in demand for innovative battery materials for a range of applications.

BASF-YPC was founded in 2000, with a total investment to date of approximately USD5.2 billion. The integrated petrochemical site produces about three million tons of high-quality chemicals and polymers for the Chinese market annually. The products serve rapidly growing demand in multiple industries including agriculture, construction, electronics, pharmaceutical, hygiene, automotive and chemical manufacturing. BASF-YPC posted sales of approximately CNY21 billion (USD3 billion) in 2017 and employed 1,882 people as of the end of that year.