BASF and Sinopec announced they plan to invest proximately US$1.4 billion in the second phase of the integrated petrochemical site (IPS) project of their joint venture, BASF-YPC Co Ltd (BYC).

The second phase of BYC, launched yesterday, will mainly focus on developing technologies to produce downstream chemical intermediates and specialties for the Chinese market.

"The products made here will ultimately contribute to the modernization and sustainable development of the Jiangsu region and the whole country," said Martin Brudermueller, a member of the BASF executive board. "With this expansion, we are putting a greater focus on specialty goods, which are mostly closely related to people's daily life, especially in reducing overall energy use and creating a cleaner environment."

In the second phase of the construction, the capacity of the steam cracker will be expanded from 600,000 tons a year to 740,000 tons a year of ethylene, and 10 new chemical plants including a 2-propylheptanol plant, a non-ionic surfactants plant, and an amines complex will be built in addition to the expansion of three existing plants.

Dai Houliang, vice-president of Sinopec, said the joint venture and new construction show a great partnership between Sinopec and BASF, both of which are among the world's biggest 500 companies.

"We together with BASF will support the development of the joint venture to make BYC one of the most competitive production sites in China's petrochemical industry," Dai said.

The second phase of the project is expected to be operational from 2011. The new plants will produce a variety of materials that go into products for daily life, such as those for personal hygiene, including shower gels and detergents, as well as for construction, including pipes, floorings and windows.

Brudermueller said although BASF lost a lot of business in China during the economic crisis that started last year, they have already seen fast recovery since year, of which the new construction is a strong signal.

"This mostly comes from the increasing needs of China's market, especially east China," said Brudermueller.

BASF-YPC Co Ltd, located in Nanjing, is a 50-50 joint venture founded in 2000 with a total investment of US$2.9 billion in the first phase. The company started commercial production at a steam cracker as well as nine downstream plants in China in June 2005.

Dai said Sinopec was also planning other projects, including a large-scale refining and petrochemical project in Caofeidian, Hebei province, which equates to a processing factory with yearly production of 10 million tons of gas and a factory that produces 1 million tons of ethylene a year.

"We have already submitted an application to the National Development and Reform Commission," Dai said.

Dai also said Sinopec was planning to construct refining and petrochemical bases in Bohai Bay, and the Yangtze and Pearl River deltas to supply fuel for fast developing cities such as Tianjin, Beijing, Shanghai and Guangzhou.

"Sinopec also is considering whether to establish a joint venture with Kuwait Petroleum Corporation, with a total investment of 53 billion yuan," Dai said.