| BEIJING, June 26
BEIJING, June 26 Sinopec Corp has
proposed a $3.1 billion ethylene plant in east China that would
be the top Asian refiner's first to use natural gas and
liquefied petroleum gas (LPG) as a petrochemical feedstock.
Sinopec's plans call for a 1 million tonnes per year
ethylene complex in Qingdao, Shandong province, at a cost of
18.79 billion yuan ($3.1 billion), according to a circular
posted on the Ministry of Environmental Protection's (MEP)
website on Tuesday.
Sinopec may be looking at the plan as a way to counter the
threat of cheap U.S. ethylene imports. Shale gas crackers in the
United States can produce ethylene at less than half the cost of
the typically naphtha-fed crackers in Asia.
China does not have the surplus natural gas to feed the
plant, so Sinopec will be looking at a combination of imports
and its own LPG supply from a nearby refinery.
"It will be roughly half natural gas that is going to be
imported and half LPG which will be produced by our refinery," a
Sinopec official with direct knowledge of the plan said on
Wednesday. The official declined to be named as he's not
authorized to speak to press.
It would be Sinopec's first such gas-based petrochemical
complex, the official said.
The official did not specify the source of imports. Industry
experts, however, are pointing to the potential exports of
natural gas liquids post-2015 from the United States, where the
country's shale gas boom has spurred abundant production of
ethane, LPG and condensate.
Sinopec would utilize LPG produced from its subsidiary
240,000 barrels per day refinery in Qingdao, said the official.
The refiner may also be looking ahead to the day that China
is successful in developing its own shale gas potential.
China is believed to hold the world's largest resource of
shale gas and hopes to replicate the production boom seen in the
United States. But it faces huge technological and environmental
challenges due to more complex geology and scarcity of water.
Ethane is extracted from natural gas to crack into ethylene.
LPG can be sourced from both gas output and refinery processing.
The Qingdao complex would take three years to build, said
the MEP circular, without giving a timeframe for the start of
China earlier this month gave the final greenlight to two
similar investments, which industry experts said may also look
to natural gas or LPG as feedstocks.
China imports nearly half its requirements of ethylene, a
key building block for plastics, synthetic rubber and textiles.
(Editing by Tom Hogue)