Sinopec petchem unit to boost capacity, tackles pollution

Tue Nov 13, 2012 3:07pm IST

Stocks

   

* To boost refining capacity by 56 pct by mid-2014

* Fuel output to nearly double

* May submit environment assessment of new ethylene unit by year-end

By Judy Hua and Chen Aizhu

BEIJING, Nov 13 (Reuters) - Asia's largest refiner, China's Sinopec, will boost refining capacity at its Yangzi Petrochemical unit by more than half to 250,000 barrels per day (bpd) in mid-2014, and may submit its ethylene expansion plan to environment officials by the end of the year, the head of the subsidiary said.

The company is expected to finish building a 160,000-bpd crude processing unit by the end of 2013 and put it on stream in mid-2014, Ma Qiulin, chairman and president of Sinopec Yangzi Petrochemical Co Ltd, told Reuters on the sidelines of the Communist Party Congress.

But total refining capacity will only rise to about 250,000 bpd, from 160,000 bpd now, because an old 70,000-bpd crude unit will be shut down, Ma said.

Yangzi, located in the eastern province of Jiangsu on the bank of the Yangtze river, is also building a new 2-million tonne-per-year (tpy) catalytic cracking (FCC) unit, and plans to eliminate an old 800,000-tpy FCC unit, he said.

"We will be using cutting-edge technology in the new round of expansion and will eliminate outdated units to raise our competitiveness," Ma said.

The company will be able to produce between 6.5 million and 6.6 million tonnes of oil products, including gasoline, kerosene and diesel, after the expansion, nearly double the 3.5 million tonnes now, he said.

About three-fourths of the crude processed in Yangzi is imported and it wants to retain this level after the expansion.

Yangzi is expected to process 160,000 bpd of crude in 2013, up 23 percent from 130,000 bpd this year, he added.

PETCHEM EXPANSION

One of Sinopec's largest makers of polyester and plastics, Yangzi faces tougher environmental challenges in its expansion, as the industry runs into tighter scrutiny, especially after recent protests turned violent.

The firm wants to double ethylene capacity by adding a new 800,000 tonne-per-year complex and hopes to submit its environmental report by the end of this year.

"The challenge is (the government) requirement of keeping the same level of pollution while we boost capacity," Ma said.

China has promised to give regulators more teeth as it tries to head off growing public anger over big industrial polluters, many of which are state-owned.

Last month, the eastern city of Ningbo cancelled plans to expand a petrochemical complex after a week of sometimes violent protests sparked by concerns over their environmental impact.

Protesters objected to the building of a paraxylene facility at the plant, owned by a Sinopec subsidiary, on the grounds that paraxylene, used to make polyester, was a carcinogen.

Ma, who has worked at Yangzi for three decades, said the public had a "misunderstanding" of paraxylene, which has lower toxicity than gasoline.

"I'm not very concerned. I don't think it's a problem for China, which has 30 years of experience ... in building petrochemical plants," said Ma.

Yangzi invested more than 900 million yuan ($144 million) on 26 pieces of equipment to cut pollution between 2006 and 2010 and will invest at least 1.1 billion yuan from 2011 to 2015.

Besides its traditional oil refining and petrochemical businesses, Yangzi has started new ones, such as the development of biochemical products and coal and natural gas-based chemical products.

"Crude oil costs remain high," Ma said. "We are shifting our strategy to have cheaper and more reliable resources."

Yangzi's chemical business could be profitable this year and Ma expects the chemical market to be stable next year. ($1=6.229 Chinese yuan) (Editing by Clarence Fernandez)

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