China ethylene cracker projects to see rapid capacity growth

A raft of new projects due for completion over the next three years means capacity will soar by 44%

CHINA’S ETHYLENE capacity is expected to increase by 44% – 5.85m tonnes/year – to 19.08m tonnes/year over the next three years on the back of its strong economic growth, industry sources say.

Rex Features/Chris Eyles

The 5.85m tonne/year of upcoming new capacity will come from five new ethylene plants and five cracker expansion projects that will be completed by 2013, most of which are being carried out by subsidiaries of state-owned refiners Sinopec and PetroChina.

This year started off with two new crackers,Sinopec and SABIC’s 1m tonne/year joint-venture (JV) cracker at Tianjin and Huajin Tongda Chemicals’ 450,000 tonne/year cracker at Panjin, Liaoning, each of which came on stream on 16 January and in late January respectively.

The start-ups have brought Chinese ethylene capacity to 13.23m tonnes/year, up by 35% from three years ago.

About 28%, or 1.64m tonnes/year of the expected capacity increase will start up this year. Sinopec subsidiary Zhenhai Oil Refining and Chemical will add a 1m tonne/year cracker in Ningbo, Zhejiang, in March. Shenhua Baotou Coal Chemical’s new 300,000 tonne/year ethylene plant, the world’s first coal-to-olefins unit, is expected to come on stream in the second quarter (Q2).

In the middle of the year, two JV crackers will have expanded their ethylene capacity by around 25%. This includes the China National Offshore Oil Corp. (CNOOC) & Shell Petrochemicals Co. cracker at Huizhou, Guangdong, to be increased from 800,000 tonnes/year to 1m tonnes/year, and BASF-YPC’s cracker, in Nanjing, to be increased from 600,000 tonnes/year to 740,000 tonnes/year.

In 2011, ethylene capacity in China will be raised by a further 1.81m tonnes/year, with the expected start-up of two new crackers and another capacity expansion.

PetroChina unit Fushun Petrochemical will boost its cracker capacity by 800,000 tonnes/year in the first half of 2011, while Sichuan Petrochemical will have a new 800,000 tonne/year cracker by the end of that year.

Another PetroChina subsidiary, Lanzhou Petrochemical, will have added 210,000 tonnes/year of new ethylene capacity to 920,000 tonnes/year by 2011. The remaining 2.4m tonnes/year of ethylene capacity will come on stream in 2013.

Sinopec’s Wuhan Petrochemical subsidiary will further augment China’s ethylene capacity by 800,000 tonnes/year, while PetroChina unit Daqing Petrochemical will double its ethylene capacity to 1.2m tonnes/year in the first half of 2013.

By the end of 2013, Sinopec’s JV refinery-petrochemical complex with Kuwait Petroleum Corp. is expected to start commercial production. The 15m tonne/year refinery and 1m tonne/year cracker complex had been postponed because of a relocation from Nansha to Zhanjiang, Guangdong, after the plans raised environmental concerns.

The $9bn (€6.4bn) project is waiting for final approval from the country’s National Development and Reform Commission (NDRC), which is expected in Q1 2010, a company source says.

In the long term, several other potential ethylene plants with capacity totaling 2.3m tonnes/year are in the pipeline.

Sinopec subsidiary Shanghai Petrochemical has planned to raise its cracker capacity by 800,000 tonnes/year to 1.45m tonnes/year by 2014, together with a 4m tonne/year refinery expansion. Construction of the upstream refinery is to start in 2010, ahead of the cracker, a company source says.

CNOOC is expected to launch its second-phase project – a 10m tonne/year refinery and 1m tonne/year ethylene cracker – in 2010, which is delayed due to the financial crisis. Plans originally called for it to start right after the completion of the first-phase 12m tonne/year refinery in June 2009.

“We’re in the final appraisal of the feasibility study. Some of the ground work has been started at the Huizhou site,” a company source said recently. Another major potential project, Shenhua Group and Dow Chemical’s $10bn (€7bn) JV coal-to-chemical complex at Yulin, Shaanxi, to be operational by 2016, is to add another 500,000 tonnes/year into China’s ethylene capacity. Company officials say the feasibility study is nearly finished and should be submitted to the NDRC in early 2010.

“Year 2009 to 2013 will be a peak expansion period of ethylene capacity in China. After that, the expansion speed will slow down under the macro control of central government,” says Professor Liu, of the China Petroleum and Chemical Planning Institute. With the launch of around 9m tonnes/year of new ethylene capacity – nearly double the country’s current capacity – during 2009-2013, China is expected to reduce its reliance on imports for ethylene’s downstream products. “The import reliance is expected to fall to below 40%, or even around 35%,” Professor Liu says. In 2009, around 44% of China’s equivalent downstream ethylene consumption was satisfied by imports, he adds.

1. Shenhua Group/Dow Chemical
Location: Yulin, Shaanxi

Ethylene capacity: 500,000 tonnes/year

Cost: $10bn (€6.7bn)

Start-up: 2016

Upstream capacity: integrated with coal

Derivative units: 3.32m tonne/year methanol, 1.22m tonne/year methanol-to-olefins, 400,000 tonne/year MEG, 210,000 tonne/year ethanolamines/ethylenediamines, 340,000 tonne/year polyether polyols, 150,000 tonne/year acrylic acid, 200,000 tonne/year acrylic ester, 200,000 tonne/year chlorinated methanes, 510,000 tonne/year ethylene dichloride/VCM) 500,000 tonne/year PVC.

2. PetroChina – Daqing Petrochemical
Location: Daqing, Heilongjiang

Ethylene expansion: 600,000 tonnes/year; total 1.2m

Cost: yuan (CNY) 14bn ($2bn)

Start-up: to be completed in 2012 and due to come on stream in 2013

Upstream capacity: existing 6m tonne/year refinery

Derivative units: 250,000 tonne/year LLDPE/HDPE, 300,000 tonne/year LLDPE/HDPE, 300,000 tonne/year PP, 80,000 tonne/year synthetic rubber, 200,000 tonne/year butanol/octanal, 400,000 tonne/year BTX.

3. PetroChina – FushunPetrochemical
Location: Fushun, Liaoning

Ethylene expansion: 800,000 tonnes/year

Cost: yuan (CNY) 15.6bn ($2.3bn)

Start-up: by 2011

Upstream capacity: existing 11m tonne/year refinery to be expanded by 8m tonnes/year

Derivative units: 400,000 tonne/year BTX, 120,000 tonne/year BD, 30,000 tonne/year butylene, 450,000 tonne/year LLDPE, 350,000 tonne/year HDPE, 300,000 tonne/year PP, 200,000 tonne/year SBR.

4. Sinopec/SK Energy
Location: Wuhan, Hubei

South Korea’s SK Energy had signed a preliminary contract with Sinopec to buy a 35% stake in the project

Ethylene capacity: 800,000 tonnes/year

Cost: yuan (CNY) 18bn ($2.6bn)

Start-up: by 2013

Upstream capacity: existing 3m tonne/year refinery, to be expanded by 5.5m tonnes/year

Derivative units: 300,000 tonne/year LLDPE, 300,000 tonne/year HDPE, 400,000 tonne/year PP, 380,000 tonne/year EG, 100,000 tonne/year EO.

5. Shenhua Baotou Coal Chemical
Location: Baotou, Inner Mongolia

Ethylene capacity: 300,000 tonnes/year

Cost: yuan (CNY) 12.4bn ($1.8bn)

Start-up: Q2, 2010

Upstream capacity: integrated with 5m tonne/year coal

Derivative units: 1.8m tonne/year coal-based methanol unit, a 300,000 tonne/year PE unit and a 300,000 tonne/year PP unit. The project uses UK-based Davy’s methanol technology, while UNIPOL technologies, licensed by US-based Dow Chemical and Univation are used in the PP and PE units, respectively.

6. Sinopec Shanghai Petrochemical
Location: Shanghai

Ethylene expansion: 800,000 tonnes/year, total 1.45m tonnes/year

Cost: yuan (CNY) 6bn ($1bn)

Start-up: by 2014

Upstream capacity: existing 14m tonne/year refinery, to be expanded by 4m tonnes/year

Derivative units: 300,000 tonne/year PP, 380,000 tonne/year MEG.

7. PetroChina – Sichuan Petrochemical
Location: Pengzhou, Sichuan

Joint venture between the Sichuan provincial government and PetroChina

Ethylene capacity: 800,000 tonnes/year

Cost: yuan (CNY) 38.5bn ($5.6bn)

Start-up: end 2011

Upstream capacity: integrated with 10m tonne/year refinery

Derivative units: 300,000 tonne/year HDPE, 300,000 tonne/year LLDPE, 360,000 tonne/year MEG, 80,000 tonne/year oxo-alcohols, 190,000 tonne/year acrylic acid, 220,000 tonne/year acrylates, 180,000 tonne/year phenol/acetone, 130,000 tonne/year BPA, 350,000 tonne/year BTX.

8. Sinopec – Zhenhai Oil Refining & Chemical
Location: Ningbo, Zhejiang

Ethylene capacity: 1m tonnes/year

Cost: yuan (CNY) 26.8bn ($3.9bn)

Start up: March 28, 2010

Upstream capacity: existing 23m tonne/year refinery

Derivative units: 450,000 tonne/year PE plant and 300,000 tonne/year PP to start up on March 8; 530,000 tonne/year MEG plant was scheduled to start up on March 22; 150,000 tonne/year BD; 500,000 tonne/year aromatics facility was scheduled to start up on April 8.

9. Kuwait Petroleum Corp./Sinopec
Location: Zhanjiang, Guangdong

Ethylene capacity: 1m tonnes

Cost: $9bn (€6.39bn)

Start-up: end 2013

Upstream capacity: integrated with 12m tonne/year refinery

Derivative units: 300,000 tonne/year HDPE, 300,000 tonne/year LLDPE, 500,000 tonne/year styrene, 150,000 tonne/year acrylic acid, 300,000 tonne/year PP.

10. CNOOC/Shell Petrochemicals, Phase II
Location: Huizhou, Guangdong

Ethylene expansion: 1m tonnes/year

Cost: yuan (CNY) 25bn ($4bn)

Start-up: by 2015

Upstream capacity: existing 12m tonne/year refinery (started up in June 2009), to be expanded by 10m tonnes/year

Derivative units: PP, PE, etc. still in planning.