Ineos and Sinopec have signed three “significant” petrochemical deals with an aggregate value of $7 billion, Ineos has revealed.
Under the deals, Ineos has agreed to acquire a 50 percent stake in Shanghai SECCO Petrochemical Company Limited, a subsidiary of China Petroleum & Chemical Corporation (Sinopec), which currently has a production capacity of 4.2 million tons of petrochemicals. Ineos has also agreed to establish a new 50:50 joint venture with Sinopec with the intent to build production capacity of up to 1.2 million tons of acrylonitrile butadiene styrene (ABS) to meet rapidly growing demand in China, as well as a 50:50 joint venture to build a new 500ktpa HDPE plant in Tianjin. In addition to the Tianjin plant, the companies will build at least two additional 500ktpa HDPE plants in the future to produce Ineos pipe grade under license, Ineos outlined.
The agreements are expected to generate a combined turnover of around $10 billion from seven million tons of capacity, Ineos highlighted. They are all subject to regulatory approvals and other conditions and each transaction is currently anticipated to complete before the end of the year, Ineos noted, adding that they will be financed through a combination of internal cash resources and external financing.
“These agreements significantly reshape Ineos’ petrochemical production and technology in China,” Jim Ratcliffe, chairman and CEO of Ineos, said in a company statement.
“We are pleased to make these major investments with Sinopec in areas that provide the best growth opportunities for both companies. Both parties recognize the potential for closer collaboration across a number of other areas as we look ahead,” he added in the statement.
Commenting on the ABS joint venture, Steve Harrington, the CEO of Ineos Styrolution, said, “setting up this joint venture with a strong partner in China feels like the natural next step for growth”.
“We entered China with our first local production sites in 2019. The collaboration with Sinopec allows us to continue to grow in China in fast-forward mode,” he added.
Rob Buntinx, president of APAC at Ineos Styrolution, said, “we are particularly excited that our Terluran ABS is the basis for this cooperation”.
“While Ineos Styrolution contributes to the joint venture with technology, customers, and market expertise, Sinopec provides feedstock integration, and an unequalled network in China. We are looking forward to the collaboration with Sinopec. A one-off opportunity to accelerate our growth ambitions in Asia,” he added.
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