INEOS and SINOPEC have signed three back-to-back deals worth a combined value of US$7 billion. These landmark agreements are expected to generate a combined turnover of around US$10 billion from 7 million t of capacity. The three agreements will significantly reshape INEOS’ petrochemicals production and technology in China.
Firstly, INEOS has agreed to acquire a 50% stake in Shanghai SECCO Petrochemical Company Ltd (SECCO), a subsidiary of China Petroleum & Chemical Corp. (SINOPEC).
SECCO currently has a production capacity of 4.2 million t of petrochemicals - including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene. It is a 200 ha. facility, located inside the Shanghai Chemical Industry Park.
Secondly, INEOS has agreed to establish a new 50:50 joint venture (JV) with SINOPEC with the intent to build production capacity of up to 1.2 million t of ABS, to meet rapidly growing demand in China. The 600 000 tpy ABS plant in Ningbo, which is currently under construction by INEOS Styrolution and 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 300 000 tpy ABS plants, which will also be built by the joint venture based on INEOS’ world-leading Terluran® ABS technology. One of these 300 000 t 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 JV to build a new 500 000 tpy HDPE plant in Tianjin. In addition to the Tianjin plant INEOS and SINOPEC shall build at least two additional 500 000 tpy 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.
INEOS already has joint ventures in operation with SINOPEC following the acquisition of the acetyls and aromatics business from BP in January 2021, and both companies know each other well through two decades of commercial interfaces at various levels. They see a natural fit to working more closely in the future. Through this close relationship 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.
Jim Ratcliffe, Chairman and CEO INEOS, said: “These agreements significantly reshape INEOS’ petrochemical production and technology in China. 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.”
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.