CHEMICAL UPDATE
FEBRUARY 2009
MCILVAINE COMPANY
TABLE OF CONTENTS
China's Petrochemical Stimulus Plan to Focus on Refining and Chemicals
CF Industries Begins Offers for Rival Terra
Diversified to Acquire 100% of Spectro Chem
Huntsman Suspends Work on Planned Dutch Plant
Dow Chemical Makes First Dividend Cut in 97 Years
Westlake Chemical 2008 Earnings Down
Rohm and Haas Discusses Sustainability at IVP Session in Brussels
PROJECTS/ EXPANSIONS/ACQUISITIONS
Abu Dhabi's IPIC to Acquire Nova Chemicals
HPCL-Mittal Energy Plans $500 Million Polypropylene Plant in Punjab
Abu Dhabi to Develop 6 Million-Ton Petrochemical Complex
Spain's Tecnicas Reunidas Awarded $1.39 Billion Contract for Borouge 2 Expansion
India's Archean in JV with Bahrain's EBH Holdings for $100 Million Aluminum Fluoride Plant
Uhde Wins Contracts for Three Chinese Aromatic Projects
Arkema to Invest $400 Million to Expand Changshu Base
Sinopec Begins Construction of Vinyl Acetate Project in Sichuan Province
China's upcoming stimulus package for the petrochemical sector will likely focus on oil refining and chemical industries, while oil and gas exploration will not be touched upon.
The package will more likely dedicate to the overall development of the sector in the next three years with emphasis on industrial restructuring and optimization of product mix, said sources with China Petroleum and Chemical Industry Association (CPCIA).
In terms of chemical industry, the stimulus package would stress adjustment and upgrading of industrial structure, support development of high-end chemical products, and encourage manufacturers to make high-tech and high-value-added products which could replace import ones, said the sources.
The package might also include plans for establishing a reserve system for petrochemical products, such as fertilizer reserve during agricultural off-peak seasons and commercial reserves of refined oil, said sources with CPCIA.
China's petrochemical sector saw profit drop by 10 percent last year, totaling 499 billion yuan (73.06 billion U.S. dollars), said the CPCIA report.
China's refining capacity reached 342 million tons last year, and will increase 40 million tons in 2009, according to the Economic and Development Research Institute under China Petroleum and Chemical Corporation (Sinopec), China's largest oil refiner.
Fertilizer maker CF Industries Holdings Inc formally launched its hostile bid to buy rival Terra Industries Inc recently, and said it was still interested in holding talks with Terra to seal a deal.
CF said it had commenced with an exchange offer of 0.4235 of its share for each Terra share by filing with the U.S. Securities and Exchange Commission.
At current share prices, that offer is worth about $2.37 billion. The offer expires on May 15.
Terra has rejected the offer as too low, and advised its shareholders in a statement issued on Monday to take no action. It will make a formal recommendation to shareholders within 10 businesses days.
In a letter to Terra's shareholders, CF said it was confident a tie-up of the two companies would benefit shareholders and yield $100 million in operating synergies, but that it did not plan to raise its offer.
"Given the significant premium we have offered, and the very positive market reaction, we have not seen any reason to consider changing the terms of our proposal," CF said in the letter.
Still, CF said it would keep "an open mind" on the offer and was prepared to review any information the company or shareholders provided to it.
CF also acknowledged in the letter that under state law it could not close the deal unless it was approved by Terra's board of directors, but that it hoped Terra's shareholders would back its bid.
Diversified Industries Ltd. is pleased to announce the signing of a Letter of Intent to acquire Spectro Chem Inc., an Alberta-based oilfield chemical solutions and service company. Spectro Chem's products include iron sulphide inhibitors, scale inhibitors, emulsion breakers, dispersants, corrosion inhibitors and scavengers.
Spectro Chem was incorporated in the province of Alberta in response to client demand to provide oilfield water quality control, an innovative chemical treating alternative and new insight to providing oil and gas production companies’ solutions for a wide variety of treatment/application issues. The two founders are seasoned professionals in the oil and gas industry with a specific focus in the areas of oilfield chemicals, applied oilfield chemistry and in providing solutions for oil and gas production problems.
Spectro Chem is being acquired for 500,000 common shares of Diversified to be issued at the closing of the transaction.
Diversified President / CEO, Darren Lamothe, commented: "The owners of Spectro Chem have significant expertise and industry contacts in the oil and gas industry in Western Canada and we are excited to bring Abe Saad and Frank Velden into the Company as shareholders. Spectro Chem has developed several unique chemistries that the Company feels will be very synergistic with our existing specialty chemical products and customers. The combination of Spectro Chem's products along with Diversified/CFR's existing lines of oilfield related chemicals will expand our product line considerably and will significantly enhance our sales and revenue."
The acquisition is subject to due diligence, the acceptance of the TSX Venture Exchange and the approval of Diversified's Board of Directors. It is anticipated that it will close no later than March 30, 2009.
It is the first of several new opportunities that the Company has underway to expand its offering of specialty chemical products to the Energy industry. All manufacturing and sales activities for Spectro Chem products will be handled through CFR Chemicals.
Diversified currently owns 50% with the option to own 100% of CFR Chemicals Inc.
The Associated Press reports that Huntsman has suspended work on design and feasibility studies for its planned investment in a new methylene diphenyl diisocyanate (MDI) plant at its site in the Netherlands, as the downturn in the global economy limits demand MDI-based polyurethanes. MDI is a key raw material for the polyurethane industry, which make the building blocks for thousands of everyday items such as tires, adhesives and upholstery.
Huntsman said the work, which includes preliminary engineering for the planned 400,000 metric tons capacity unit in Rozenburg, the Netherlands, will be halted at a stage to allow quick and efficient re-engagement at a future date. Until then, all third party work on the project will be suspended.
Huntsman began increasing its global production capacity for MDI in 2005 by working to expand its facilities. At the time the company planned to expand the Rozenburg plant by 220 million pounds per year to 880 million pounds per year. The company will continue its internal evaluation of the potential construction of another MDI unit in China, with a number of different options under consideration.
Dow Chemical announced its first quarterly dividend cut in 97 years, citing the economic downturn and a pair of deals that turned sour late last year. The Associated Press reports that the company cut its dividend from 42 cents to 15 cents. Though it is the company's first reduction since 1912, it will still be the 390th consecutive cash dividend issued.
Dow postponed its $15.4 billion buyout of specialty chemical maker Rohm & Haas just weeks after a planned joint venture with a Kuwaiti company collapsed. Dow had expected to pocket $7 billion from the Kuwaiti deal, money that could have helped fund the Rohm & Haas acquisition. Dow had agreed to pay $78 per share for Rohm & Haas, a price some on Wall Street consider too high given the current economic climate, especially after the Kuwait venture collapsed. Dow is now paying a $3 million "ticking fee" for every day it does not close the Rohm & Hass deal. Philadelphia-based Rohm & Haas has sued Dow and the case is scheduled to go to court in Delaware next month.
Westlake Chemical Corporation (NYSE:WLK), Texas, reported a rough fourth-quarter 2008, as the company suffered a net loss of $109.6 million in the quarter, compared to income of $18.8 million in the fourth quarter of 2007. The company's net sales were down almost 30% year over year, coming in at $597.1 million in 4Q08. The lower sales figures were caused by both a severe drop in the prices of Westlake's chemical products and reduced demand as customers ran down their inventories. Overall, Westlake reported a net loss of $29.5 million for the 2008 fiscal year. "Our losses for the year were all attributable to the inventory losses sustained in the fourth quarter," said Chief Financial Officer M. Steven Binder in a conference call regarding the earnings.
CEO Albert Chao discussed the impact of the falling price of polyethylene, one of Westlake's main products. "Industry polyethylene prices declined $0.41 per pound in the fourth quarter of last year, an unprecedented drop in prices for one quarter," said Chao. "Customers' buying patterns slowed down dramatically as they waited for some pricing stability to take hold. Due to the weakened demand, we idled one of our ethylene units in Lake Charles in December, lowered operating rates at some of our derivative units and accelerated a scheduled maintenance turnaround, which was originally planned for the second quarter of 2009. The ethylene unit is expected to resume operations in the first quarter of this year." Chao added that the price of PVC resin had dropped $0.20 per pound in the fourth quarter, another unprecedented fall in price.
The company suggested that the worst of the hard times has been reached and that conditions in the olefins and vinyls industries will steadily improve. "We're seeing some signs of improvement in January after a dismal fourth quarter," said Chao. "The industry announced a PVC-resin price increase of $0.05 per pound on February 1st, and we're hopeful that customers will begin restocking inventories. Some elements of the new government stimulus package are aimed directly at infrastructure, housing and energy efficiency, so we remain guardedly optimistic about the outlook for the latter part of 2009 and beyond." Chao also noted that the price of polyethylene was gradually creeping up and that the market could soon improve. "A significant portion of our polyethylene is sold into food packaging and other consumer non-durable markets, and the underlying volume in those segments tends to be more resilient," he said. "We believe the possibility exists for restocking to begin going forward."
Chao said that Westlake expected capital spending to be between $100 million and $150 million in 2009, specifically highlighting the company's chlor-alkali expansion project in Geismer, Louisiana. Construction of the project, which has an estimated total investment value of $300 million, is scheduled to start later this year and is expected to be complete by mid-2011. CDI Engineering of Baton Rouge, Louisiana is acting as engineer on the project.
“Sustainability has become an important topic in the board rooms and R&D strategy sessions of some the region’s leading paint and coatings companies,” said Dr. Cheryl Martin, Rohm and Haas Company Vice President and General Manager for the company’s Paint and Coatings Materials business in Europe, the Middle East and Africa. “We’re already seeing European paint and coatings industry stepping up to the mark – with more companies bringing environmentally advanced products to market every day,” she said in remarks to the IVP General Assembly (Industrie des Peintures, Vernis, Encres d’Imprimerie et Couleurs d’Art) in Brussels recently.
Dr Martin addressed three primary drivers behind this change, and discussed why sustainability is not only good for the environment but also good for business:
· She noted that what once were discrete trends, like global warming, energy conservation, solvent reduction, dependence on oil and increasing compliance regulations have converged and become clear. Life supporting resources are declining even as consumption of these resources is increasing.
· Consumers are more aware of the issues, she says, and increasingly take these issues into consideration when they make a choice. “Consumers today are looking for products that use less energy, or pollute less,” says Martin. “They still expect great performance from the products they buy – that’s a given – but they also look for something more.”
· And, finally, there is increasing clarity about market need and consumer demand that is enabling companies to focus on bringing new technologies and products to market that meet growing consumer needs and allow companies to make a reasonable profit in the process.
“The ability to offer products that are better for the environment is now a central driver for successful business in the future. Innovation alone is not enough to support sustainability,” said Dr Martin. “I believe that the power of chemistry developed in partnership with other innovative chemical companies will find the answer to a more sustainable future, one step at a time,” she commented. “I am pleased to be part of an industry that is finding ways to work in partnership with others, and willing to drive the change that is needed. This, along with reliable and supportive policy frameworks, will continue to be critical to the success of this industry moving forward.”
International Petroleum Investment Co. (IPIC; Abu Dhabi) has agreed to acquire Nova Chemicals for $6/share in cash. The deal values Nova at $2.3 billion, and will allow Nova to strengthen its balance sheet so it can keep operating and expanding, Nova says.
The agreed price is a 348% premium over the February 20 closing price, and a 204% premium over the combined and currency-adjusted 30-day volume-weighted average price of the shares through February 20. IPIC is a state-owned Abu Dhabi fund responsible for investments in the hydrocarbons and related sectors outside of Abu Dhabi.
Nova's shares have been hit by the global downturn and concerns of Nova's liquidity position as it sought to refinance pending debt maturities. Nova separately announced yesterday that it has secured $150 million in new financing, exceeding a financing condition agreed to by the company as part of the earlier announced financial covenant relief. The new financing is a revolving credit facility with Export Development Canada (EDC), and a syndicate of three Canadian banks.
IPIC has no plans to change the current operations of Nova, and the current President and COO, Chris Pappas is expected to remain with the company as CEO upon the previously announced retirement of Lipton on May 1, 2009.
“This acquisition will provide enhanced balance sheet strength for Nova Chemicals and facilitate Nova Chemicals’ growth internationally. We can provide stability and allow Nova Chemicals to meet its operational and financial requirements while continuing to expand and invest in its business,” says H.E. Khadem Al Qubaisi, managing director and Board member of IPIC.
IPIC has agreed to a $250 million credit backstop facility to provide Nova Chemicals with sufficient liquidity. “The deal is intended to enable us to meet all of our obligations,” Lipton adds.
The acquisition will be implemented by way of a court-approved plan of arrangement under the Canadian Business Corporations Act, the companies say. Nova expects the deal to be completed within 60 to 75 days, or possibly sooner, Lipton says.
IPIC is the majority shareholder in Borealis with a 65% stake.
HPCL-Mittal Energy Limited, in Punjab, India, a 49:49 joint venture between Hindustan Petroleum Corporation Ltd., Mumbai, and Mittal Energy Private Ltd., Singapore, is planning to set up a $500 million polypropylene plant in Ludhiana, Punjab, following the progress of the group's $4 billion Guru Gobind Singh Refineries (GGSRL) plant in Bhatinda in the state. The newly proposed Ludhiana plant will process 400,000 tons per year of polypropylene. The refinery and the polypropylene plant are both scheduled to be operational in February 2011. About 50% of the polypropylene plant's produce will be used for domestic consumption in Punjab.
There is a tremendous market potential for the polypropylene plant because of high domestic demand for polypropylene in the economic zone where the refinery is located. The region is likely to attract an investment of $240 million and generate more than 4,000 direct and indirect employment opportunities. The Punjab State Industrial Development Corporation is cooperating on all fronts with HMEL to facilitate easier development of the petrochemical hub in Ludhiana.
The GGSRL project has attained financial closure with nearly $2.3 billion raised as debt and the remaining through loans from 25 banks. This includes a loan of $1.7 billion from Life Insurance Corporation of India. About $830 million has already been spent on the project and orders worth $2.2 billion to procure plant equipment have also been placed. Despite being approved in 1998, the project had a taken a backseat because of the lack of a suitable equity partner for HPCL in the venture and issues between the company and the state government.
Output from the refinery would include a range of high-value petroleum products, such as aviation fuel, diesel, food-grade hexane, liquefied petroleum gas (LPG), naphtha, pet coke and petrol. HPCL would be responsible for marketing liquid products while HMEL will sell solid products, such as sulfur, coke and polypropylene. The grassroot refinery would comply with Euro IV emission norms. The products would be transported from the refinery through road, pipeline and rail network.
The GGSRL refinery in Bhatinda, spread over an area of 2,000 acres, would have an oil-refining capacity of 9 million tons per year. In addition, it will also have a captive power plant to generate 165 megawatts of power, a 1,012-kilometer oil pipeline to supply crude to the refinery from Mundra in Gujarat to Bhatinda with Single Point Mooring (SPM), and a crude oil terminal at Mundra. In order to ensure better market penetration, HMEL has sought the Punjab state government's help in acquiring retail outlets in major cities to trade the refined oil produced by the GGSRL refinery.
Abu Dhabi is set to develop the world's largest petrochemical complex in its new Mina Khalifa Industrial Zone in the Taweelah area. The government is on a drive to diversify the country's predominantly oil-based economy by setting up complementary industries and associated services. To accelerate the implementation of the decision, the International Petroleum Investment Company (IPIC), Abu Dhabi, UAE, and the Abu Dhabi Investment Council, agreed to establish the Abu Dhabi National Chemicals Company—Chemaweyaat, Abu Dhabi—with an initial investment of about $136 million. Chemaweyaat will develop the Chemaweyaat Industrial City in the Mina Khalifa Industrial Zone.
The first phase of the complex is scheduled to begin production in 2013 or 2014. It will be set up with an initial investment of $15 million to $20 million. The first unit will be designed to produce several chemical products, such as acetone, benzene, bisphenol, butadiene, cumene, monoethylene glycol, paraxylene, phenol, polyethylene, and polypropylene, among others. Upon completion, the complex is expected to have a combined production and export capacity of more than 6 million tons per year. The Chemaweyaat Venture 1 Company, called Tacaamol, is finalizing the pre-front-end engineering design stage. The complex is expected to be the world's biggest fully integrated grassroot petrochemical complex. Its naphtha cracker, benzene-toluene-xylene unit, ethylene oxide unit, melamine unit and reformer will be the world's largest.
Chemaweyaat is looking to attract both international and local joint-venture partners. The desired partners are required to be market leaders in their concerned sectors and must have both operating and marketing know-how to participate in the establishment of Tacaamol. IPIC plans to use the expertise of German industrial firm MAN Ferrostaal AG, Essen, to help set up the chemicals complex. IPIC recently acquired a 70 percent stake in the German company. Also under way are discussions to plan for several more complexes and companies.
In January 2009, Australia's largest engineering company, WorleyParsons Limited was selected by the consortium members of Chemaweyaat to carry out the preliminary engineering for the project.
The establishment of the Chemaweyaat Industrial City will encourage the development of industries and businesses in other sectors, such as downstream processing and conversion industries, service industries and real estate development. Chemaweyaat intends to implement the master plan for the industrial city in collaboration with the Abu Dhabi Ports Company.
Borouge, UAE, a leading manufacturer of petrochemicals and plastics, signed a revised utilities and offsite contract valued at $1.39 billion with global engineering, construction and procurement (EPC) firm Tecnicas Reunidas, Spain, for the Borouge 2 expansion project. The original contract awarded in 2007 was an open book estimate deal valued at $1.234 billion. This has now been revised to a fixed lump sum turnkey order for the expansion of Borouge's facilities at the Ruwais petrochemical complex in Abu Dhabi.
The Borouge 2 expansion project aims at tripling the production capacity of the facility from the present 600,000 tons per year to 2.5 million tons per year of polyolefins and will also enable the firm to add polypropylene to its product mix. The EPC contract awarded to Tecnicas Reunidas includes utilities and offsite work for the development of an ethylene cracker unit with a production capacity of 1.4 million tons per year, two plants to produce Borstar polypropylene with a combined production capacity of 800,000 tons per year, the world's largest olefins conversion unit with a production capacity of 750,000 tons per year, and a 540,000-ton-per-year plant to produce Borstar polyethylene. The actual construction and development of the new units will be undertaken by Maire Tecnimont SpA, Italy, which was awarded a deal worth $1.855 billion in 2007, the largest supplier contract awarded by Borouge up to that time. Tecnicas Reunidas will supply auxiliary systems and interconnections for the upcoming facilities.
The Borouge 2 expansion project is slated for completion by mid-2010. More than one-third of the production will be sold in the Middle East and the remainder will be exported to India and China. The firm is also studying the feasibility of the Borouge 3 expansion program, which will further increase the facility's production capacity to 4.5 million tons per year of polyolefins by 2014.
The global market for polyethylene and polypropylene is estimated to be growing at an annual rate of 8 percent to 10 percent. Borouge is also reportedly planning to invest $5.5 billion in maintenance and expansion of its facilities, including the total investment of $4.3 billion on the Borouge 2 expansion project.
Borouge is a 40:60 joint venture firm established in 1998 by Borealis AS, Austria, a global provider of plastics solutions, and Abu Dhabi National Oil Company, one of the world's largest oil and gas companies. The firm's production complex at Ruwais in Abu Dhabi is located next to the Ruwais oil refinery, the largest in the United Arab Emirates, with a refining capacity of 415,000 barrels per day.
In addition to its expansion plans in the Middle East, Borouge is establishing its presence in the logistics hubs of South and Southeast Asia. The firm is currently developing a regional logistics hub in Shanghai with a capacity of 600,000 tons per year, a hub in Guangzhou with a capacity of 300,000 tons per year, and a plastics compounding facility in Shanghai with a capacity of 50,000 tons per year. The firm is also reportedly considering setting up a downstream facility in India.
India's Archean Group recently entered into a 76:24 joint venture with EBH Holdings, Bahrain to establish Pearl Industrial Chemicals Company, a $100 million unit that will manufacture aluminum fluoride. The plant will be set up at the South Alba Industrial Estate with a production capacity of 60,000 tons per year of aluminum fluoride. The unit is expected to commence commercial operation in two years.
The plant will set up in two phases. In Phase I, the unit will be developed to produce 30,000 tons per year. Of this, 18,000 tons per year will be purchased by Aluminium Bahrain B.S.C (Alba), Bahrain, which claims to be one of the world's largest new generation aluminum smelters. Sulfur, one of the critical raw materials for the plant, will be procured locally from The Bahrain Petroleum Company B.S.C., which has assured the firms of an uninterrupted supply of sulfur. Other raw materials will be imported.
Bahrain's Ministry of Industry and Commerce has allocated nearly 100,000 square meters of land, including amenities such as gas, power and water, and has also accorded necessary clearances for the project. About 150 technical and nontechnical personnel, including 100 Bahraini nationals, will be employed for the project.
The Archean Group will bring to the project its technology expertise gained from its multinational operations in the fields of construction materials, industrial chemicals, mining, salt and shipping. The firm will also be responsible for project management and business operations, including training of personnel in the use of modern plant technology.
Aluminum fluoride serves as a key raw material in the aluminum smelting process, which involves dissolution of alumina feed in molten cryolite followed by electrolysis of the resultant mixture to produce pure aluminum metal. Aluminum fluoride is used in electrolysis to lower the melting point of the solution and to increase the conductivity of the electrolyte, resulting in an energy-efficient process.
Member countries of the Gulf Coordination Council (GCC) have an estimated requirement of 140,000 tons per year of aluminum fluoride. Alba, Sohar Aluminium Company, Oman, and other smelters in the region currently import the chemical. The GCC is home to some of the world's largest aluminum smelting projects, and new projects are under way in Qatar and Saudi Arabia. The new manufacturing unit is being set up in a bid to increase the local availability of the chemical and to eliminate the dependence of domestic aluminum smelters on raw material imports.
Pearl Industrial will also produce co-products, such as gypsum, that will be fed to cement manufacturing units in GCC countries. There are plans to set up satellite units in the vicinity of the proposed aluminum fluoride plant to manufacture gypsum board and other products for the construction industry.
One of the world's top-ten chemical engineering companies, Uhde GmbH, Germany, has won contracts to build three aromatic plants in China.
Uhde signed a contract with Xuyang Coking Company, Hebei province, to build a new aromatic facility in Tangshan, east of Beijing. The new facility is expected to produce valuable aromatic fractions such as top-quality benzene, toluene and xylene. Products will be sold mainly in the Chinese market. The facility is expected to come online in 2010 and will have an eventual capacity of 60,000 tons of high-purity aromatics.
Uhde has also won two more contracts from Chinese coke producers. One involves constructing an aromatics plant for a coke plant in Qujing, Yunnan province, in Southwest China; the other is to build an aromatics plant in Wuhan, Hubei.
All three plants will be built based upon Uhde's Morphylane process. In the past year and a half, Uhde also has won three other aromatics plants contracts in Kazakhstan, South Korea and Qatar. Once built, the six plants will have a combined production capacity of more than 2 million tons of aromatics.
French company Arkema SA, one of the world's leading producers of chemical products, is set to invest another $400 million to expand the company's production base in Changshu, Jiangsu province, in eastern China.
With the additional $400 million, Arkema is expected to complete construction of a 15,000-ton-per-year pentafluoroethane (HFC-125) facility by the end of 2009. This facility will be jointly held by Arkema and Japanese company Daikin Industries Limited, with 60 percent going to the Arkema and the rest to Daikin.
Part of the HFC-125 products will be used to replace Forane 22 (F22), which will be banned in Europe in 2010. As a major producer of F22, Arkema has doubled F22 production capacity at the Changshu base to 30,000 tons per year and is expected to raise this to 34,000 tons per year.
The addition of the new HFC-125 facility will add another 20,000 tons to the Changshu facility's current consumption of fluorite, which is currently between 44,000 and 45,000 tons per year. As a major production area of hydrofluoric acid, Changshu is capable of producing 28,000 tons of hydrofluoric acid annually.
Arkema has also been investing around 100 million Euros in building an integrated poly-vinylidene fluoride facility with a production capacity that is expected to reach 40,000 to 50,000 tons per year by the second half of 2010. Efforts are also being made to build a vinylidene fluoride facility with a production capacity between 4,000 and 5,000 tons per year.
In 2005, Arkema also added a 3,000-ton-per-year organic peroxide facility to the Changsu plant. The production capacity of this facility is expected to rise to 3,000 tons per year by the end of 2009. Arkema also has doubled production capacity of nylon-11, nylon-12 and aromatic copolyamide microfiber to 4,000 tons per year.
The Arkema Group was created in October 2004 from the reorganization of Total's chemicals branch. The company has three major business segments: Vinyl Products, Industrial Chemicals and Performance Products.
China Petroleum & Chemical Corporation, Beijing, has begun to lay the foundation for the Sichuan Vinylon Factory, a 300,000-ton-per-year vinyl acetate project, in the Changshou Chemical Industry Park in the Chongqing Municipality. The project will use natural gas to manufacture acetylene and synthesize vinyl acetate from acetylene and acetic acid. Based on vinyl acetate, polyvinyl alcohol will be produced. Methanol will be synthesized using the exhaust from acetylene production. The project is also a major part of Sinopec's efforts to transfer natural gas to the east.
The project will include a 100,000-ton-per-year acetylene unit, a 300,000-ton-per-year vinyl acetate unit, a 100,000-ton-per-year polyvinyl alcohol unit and a 730,000-ton-per-year methanol unit. An auxiliary 800 billion-cubic-meter natural-gas-desulfurization facility will also be built.
It has been reported that construction could be complete by October 2010. A trial run is slated for December 2010. Upon start-up, the project is estimated to generate $588 million in revenues, and the plant could be considered one of the world's largest natural gas chemical manufacturers.
McIlvaine Company
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