* Part of $29 bln plan to upgrade refining complexes
* Looking to BASF for fine chemical technology, expertise
* Analyst sees clear trend of diversification into fine
(Adds analyst comment, details)
By Meng Meng and Chen Aizhu
BEIJING, March 9 Sinopec Corp plans to
boost investment in fine chemicals at its Maoming-Zhanjiang
refining base in southern China alongside partners like
Germany's BASF, a senior executive said in an
interview on Thursday.
The investment would be part of the $29 billion the state
major plans to spend upgrading its refining and petrochemical
hubs by 2020, and highlights industry efforts to move up the
value chain in the face of dwindling diesel demand and a
refining capacity glut in the world's second-largest oil user.
Sinopec, China's largest refiner and petrochemicals
producer, is taking the lead in the push for low-volume but
high-value products that are used in the pharmaceuticals,
agrichemical and aviation industries.
"We are going to cooperate with BASF in more downstream fine
chemical products because they have lots of advanced technology
in those areas," said Yu Xizhi, general manager of Sinopec
Maoming, on the sidelines of parliament's annual meeting.
Yu said Sinopec is far behind the German chemicals giant in
terms of diversification of downstream chemical products.
"I visited BASF headquarter, where it has 600,000 tonnes of
ethylene capacity and 300 units of processing equipment. In
Maoming, we have 1.1 million tonnes of ethylene capacity but
only 20 units for further processing."
Sinopec said last week it would invest 200 billion yuan
($29 billion) to upgrade its four refining bases between 2016
and 2020 to produce high-quality fuels as China embraces more
stringent fuel standards and expands petrochemicals investment.
"We are seeing a clear trend that refiners are diversifying
their products to include fine chemicals. This shift helps them
to better deal with oversupply in traditional fuel markets as
the glut persists," said Seng Yick Tee, senior director at
Beijing-based consultancy SIA Energy.
Sinopec is better positioned than domestic rival PetroChina
in chemical markets because it has more facilities and
better geographic locations, Tee said.
Sinopec's refining sites to be upgraded are in the cities of
Shanghai, Nanjing and Zhenhai on the east coast, and
Maoming-Zhanjiang in southern Guangdong province.
Under the Maoming-Zhanjiang base that Yu heads up, the
400,000-bpd Maoming refinery will focus on traditional fuel and
fine chemicals, while the Zhanjiang greenfield project will
produce clean fuels and have a heavier focus on fine chemicals,
"Headquarters sets no limit on funding the fine chemicals
projects, so long as we can convince them it's the right one,"
Chinese refiners have had to look for new areas of business
amid a moderating economy and excess refining capacity the past
few years, with domestic fuel demand growth easing.
The Maoming plant posted a record annual profit of 9.2
billion yuan ($1.3 billion) before income tax in 2016, due to
good refining margins on near-decade low oil prices and a boom
in chemicals prices, Yu said.
($1 = 6.9126 Chinese yuan)
(Reporting by Chen Aizhu and Meng Meng; Writing by Josephine
Mason; Editing by Tom Hogue)