INEOS signs 3 landmark deals with SINOPEC in China
INEOS and SINOPEC signed three landmark agreements which will establish a very large footprint for INEOS in China.
INEOS already has joint ventures in operation with SINOPEC following the acquisition of the Acetyls and Aromatics business from BP in January 2021.
“These agreements significantly reshape INEOS’ petrochemical production and technology in China,” Jim Ratcliffe, chairman and CEO INEOS said.
These three back-to-back deals are expected to generate a combined turnover of around USD10 billion from 7 million tonnes of capacity.
Firstly, INEOS has agreed to acquire a 50% stake in Shanghai SECCO Petrochemical Company Limited (SECCO), a subsidiary of China Petroleum & Chemical Corporation (SINOPEC). SECCO currently has a production capacity of 4.2 million tonnes of petrochemicals – including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene. It is a 200-hectare facility, located inside the Shanghai Chemical Industry Park.
Secondly, INEOS has agreed to establish a new 50-50 joint venture with SINOPEC with the intent to build production capacity of up to 1.2 million tonnes of ABS, to meet rapidly growing demand in China. The 600 kiloton per annum (ktpa) ABS plant in Ningbo, which is currently under construction by INEOS Styrolutionand is planned to be operational by the end of 2023, will become part of the joint venture. INEOS and SINOPEC also plan to work together on two additional 300 ktpa ABS plants, which will also be built by the joint venture based on INEOS’ world-leading Terluran® ABS technology. One of these 300 kiloton plants will be located in Tianjin. The location of the third unit is yet to be decided.
The third agreement will see INEOS and SINOPEC also establish a 50-50 joint venture to build a new 500 ktpa HDPE plant in Tianjin. In addition to the Tianjin plant, INEOS and SINOPEC shall build at least two additional 500 ktpa HDPE plants in the future to produce INEOS pipe grade under license. The Tianjin plant is expected to be onstream by the end of 2023.
Through these deals, SINOPEC gains access to some of the best downstream technology in the world from INEOS and INEOS achieves a substantial presence in China, the fastest growing market in the world.
“We are pleased to make these major investments with SINOPEC in areas that provide the best growth opportunities for both companies. Both parties recognise the potential for closer collaboration across a number of other areas as we look ahead,” said Ratcliffe.
China is a key growth region for INEOS and the agreements significantly extend its petrochemicals business with a focus on products where it has some of the leading proprietary technologies.
The transactions are all subject to regulatory approvals and other conditions. Each transaction is currently anticipated to complete before the end of the year and will be financed through a combination of internal cash resources and external financing.