ExxonMobil and SABIC have both announced plans to build wholly owned petrochemical complexes in coastal southern China. The news comes two months after BASF, another chemical giant, disclosed its own intentions to build a large, integrated chemical complex in southern China.
Scheduled for start-up in 2023, the ExxonMobil project would take shape in Daya Bay, a district of the city of Huizhou in Guangdong province. It would feature an ethylene cracker with a capacity of 1.2 million metric tons per year and downstream polymer facilities. ExxonMobil, which last year said it was considering the project, already operates a petrochemical complex in Fujian province in a joint venture with Saudi Aramco and Sinopec.
More vague are SABIC’s plans to build a petrochemical project somewhere in Fujian in China’s southeast. The idea is to diversify SABIC’s business, a statement noted without providing other details. SABIC already operates, as part of a joint venture with Sinopec, a petrochemical complex in the northern China city of Tianjin.
In July, BASF disclosed plans to invest $10 billion in a chemical complex in Guangdong featuring a 1 million-metric-ton ethylene cracker. One of China’s most affluent provinces, Guangdong is located just north of Hong Kong.
In addition to their close timing, a common thread among the three projects is that they would be wholly owned by foreign firms. In the past, China has protected its petrochemical industry by requiring that a government company such as Sinopec or China National Offshore Oil Corp. own a 50% stake.
“It’s a change in political sentiment, or maybe the bureaucrats no longer see the point of investing in upstream petrochemicals, a business that is less profitable than specialties,” says Kai Pflug, president of the Shanghai-based advisory firm Management Consulting—Chemicals.
The timing of the announcements might be related to the ongoing trade war with the U.S., Pflug says. “Letting these projects move forward is a chance to show that China is nice.” Most international firms, he notes, are seeking to increase their presence in China, which accounts for 40% of the global market for many products.