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Business

Dow, BASF Pursue Joint Ventures

Firms' projects aim to increase presence in regions where chemical production is growing fast

by Glenn Hess
July 11, 2006

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Credit: BASF PHOTO
Hambrecht (right) and Chen Tonghai, chairman of Sinopec, celebrate at a signing ceremony in Berlin for the expansion of the Nanjing site.
Credit: BASF PHOTO
Hambrecht (right) and Chen Tonghai, chairman of Sinopec, celebrate at a signing ceremony in Berlin for the expansion of the Nanjing site.

The world's two largest chemical companies are separately embarking on projects that will increase their presence in two fast-growing regions for chemical production.

Dow Chemical has been picked by Saudi Arabian Oil Co. (Saudi Aramco) as its partner in a potential joint venture to build and operate a chemicals and plastics complex at Ras Tanura, in Saudi Arabia's eastern province.

Meanwhile, Germany's BASF and China Petroleum & Chemical Corp., or Sinopec, have signed a $500 million agreement to expand their joint petrochemical complex in Nanjing, China.

Saudi Aramco and Dow say they are negotiating a joint venture that would encompass "an array of world-scale facilities producing a very broad portfolio of plastics and chemical products."

The proposed petrochemical project would be integrated with the existing Ras Tanura refinery, which is one of the world's largest refinery complexes. The companies did not provide details on production capacity, time frame, or cost.

Saudi Aramco and Dow say their joint venture would produce "an extensive and diversified slate of chemicals, and introduce new value chains and specialty products" to Saudi Arabia. The country has been working to develop downstream business sectors to further industrialize and diversify its oil-based economy.

BASF and its Chinese partner Sinopec say the expansion of their Nanjing petrochemicals complex will involve an increase in cracker capacity of 25% and an expansion of downstream capacities.

"The success of this joint venture is symbolic of the strong partnership between BASF and Sinopec and between Germany and China," BASF Chairman J??rgen Hambrecht says. "This latest strategic investment again demonstrates our long-term commitment to China's growing chemical market."

The steam cracker at the complex will be expanded to produce 750,000 metric tons of ethylene per year, up from 600,000 metric tons. The project also includes expansion of the ethylene oxide plant and development of ethylene oxide derivatives such as nonionic surfactants for detergents and the solvent butyl glycol ether.

The acrylics value chain will also be extended to produce superabsorbent polymers for hygiene and industrial applications. The new capacities are expected to come onstream in 2009.

Both companies also agreed to integrate a second joint operation, Yangzi-BASF Styrenics, into BASF-YPC Co. Ltd., the main joint venture between BASF and Sinopec.

The investment reflects BASF's desire to strengthen its position in Asia-Pacific. The company says the Nanjing site will make a substantial contribution to its goal of achieving 10% of its global sales and earnings in the chemical business in China by 2010.

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