On January 26, 2021, LyondellBasell and China Petroleum & Chemical Corporation (Sinopec) announced the signing of a joint venture agreement to establish an equal 50:50 joint venture (JV), named Ningbo Zhenhai Refining & Chemical LyondellBasell New Materials Co., Ltd., for expanded production of propylene oxide (PO) and styrene monomer (SM) in China.
The two parties first unveiled a cooperation memorandum in December 2019. The formal establishment of the JV was subject to review and approval by relevant government authorities including anti-monopoly investigations.
China accounts for more than 60% of Asia’s chemical market demand and is projected to contribute 40% of global chemical demand growth over the subsequent decade. PO and SM are core product lines for LyondellBasell.
LyondellBasell operates five wholly-owned manufacturing facilities across China, located in Guangzhou, Suzhou, Dalian, Dongguan and Changshu respectively.
Torkel Rhenman, Executive Vice President of LyondellBasell, commented: "Against the backdrop of sustained economic growth in China, domestic market demand for propylene oxide and styrene monomer will keep rising. We are thrilled to extend our partnership with Sinopec through this new JV, enabling us to better serve Chinese customers. The combination of Sinopec’s outstanding operational capabilities and LyondellBasell’s proprietary technologies guarantees a win-win outcome for both sides."
Yu Baocai, Senior Vice President of Sinopec, stated: "Building on the successful experience of our first joint venture project, we are pleased to join hands with our key partner LyondellBasell to embrace new achievements. The launch of the new JV aligns with China’s national policy of further opening up, and marks a critical step for Sinopec to deepen and expand its international operations. We hold high expectations that the new JV will drive economic growth in the Ningbo region. During the 14th Five-Year Plan period, Sinopec will continue advancing green industrial upgrading and innovative transformation, contributing to sustained economic expansion in Zhejiang Province, the East China region, and the overall development of China’s chemical industry."
The proposed JV will construct a brand-new PO/SM integrated production complex in Ningbo Zhenhai, licensed with LyondellBasell’s proprietary PO/SM technology. The facility is designed with an annual capacity of 275,000 metric tons of propylene oxide and 600,000 metric tons of styrene monomer, targeted for mechanical completion and startup by the end of 2021.
After commissioning, the JV’s products will be sold equally by both parent partners, substantially boosting their market footprint in China’s PO and SM sectors.
Sinopec first partnered with LyondellBasell back in 2007 to set up Ningbo Zhenhai Refining & Chemical Lyondell Chemical Co., Ltd., with equity ratios of 73.35% held by Sinopec and 26.65% by LyondellBasell. The jointly invested PO/SM project served as a key supporting facility for Zhenhai Refining & Chemical’s 1 million tons per annum ethylene project.
Commissioned in 2010, the project required a total investment of RMB 4.44 billion, adopting LyondellBasell’s PO/SM technology. Its annual output reached 285,000 metric tons of PO and 620,000 metric tons of SM.
LyondellBasell, Repsol and Shell are the primary global owners of mature PO/SM process technologies. Chinese enterprises including Changzhou Ruihua Chemical Engineering & Technology Co., Ltd. and Wanhua Chemical have also invested heavily in the independent development and commercial application of this technology route.
The completion and operation of these two landmark units eliminated China’s exclusive dependence on the chlorohydrin process for PO manufacturing.
Repsol from Spain has not yet delivered any commercialized PO/SM projects in China, but has signed technology licensing agreements with multiple project owners including Tianjin Bohua Group and Sinochem Quanzhou; several related projects are currently under construction.
Ruihua Chemical has licensed its self-developed PO/SM technology to numerous manufacturers, including CITIC Guoan Ruihua New Materials Co., Ltd., Phase II of Zhejiang Petrochemical Co., Ltd., and Jingbo Hydrocarbon Biochemical Technology Co., Ltd. The PO/SM project invested by Dongming CITIC Guoan Ruihua New Materials Co., Ltd., with an annual PO capacity of 80,000 metric tons and co-production of 200,000 metric tons of SM, has nearly finished construction. This facility is the first full-scale industrial unit adopting Ruihua Chemical’s proprietary PO/SM technology and is listed as a key industrial project in Shandong Province.
Wanhua Chemical’s complete technology package for high-efficiency green PO production via ethylbenzene co-oxidation passed the appraisal organized by the China Petroleum and Chemical Industry Federation in January 2019. The company planned to invest RMB 3.25 billion to build an integrated industrial plant in Yantai, Shandong Province, capable of producing 300,000 metric tons of PO and co-producing 650,000 metric tons of SM annually, scheduled for completion and commissioning in the second half of 2021.
