With a total investment of 180 billion RMB (21.7 billion USD), Guangdong will step up construction or expansion of five petrochemical bases, five oil-refining projects, five ethylene projects and a number of downstream chemical projects along the southern coastal areas, thus forming a coastal petrochemical industrial corridor in the province.

Guangdong, in its long-term strategy, is expected to be one of the largest petrochemical industrial bases in China and eyes the Asian market. It is estimated that Guangdong's overall petrochemical production value will total 730 billion RMB in 2010, with an average annual increase of 20 percent in the next five years. This growth is forecast in the provincial "Petrochemical Industry Development Plan (2006-2010)", which was released in December, 2005.

Plan based on current situation

Guangdong province currently ranks fourth in the nation in the petrochemical industry, with an annual oil refining capacity of 25 million tons, a total crude oil output of 13 million tons and ethylene production of 0.58 million tons. However, the petrochemical production falls far short of meeting the province's demand. A severe fuel shortage from July to September has slowed down the province's economic growth, according to the provincial statistics bureau.

China is the second largest energy consumer after the United States. Rising demand for petrochemical products is a very significant factor in China's development in the coming 11th five-year plan period (2006-2010). At the same time the world's oil-giants are expanding their market in Asia and loosening restrictions in core technologies.

This is an opportunity for Guangdong, which enjoys an advantaged location with markets, deep-water ports and comprehensive communication networks, to develop its petrochemical industry and reach an industry upgrade.

Efforts

A Guangdong petrochemical industry development team was established in December last year to guide and coordinate the construction of petrochemical bases, which are required to be constructed with high standards and are expected to improve the industry in terms of scale and product quality.

A new petrochemical industrial cluster is being developed in the Daya Bay Petrochemical Industrial Park in Huizhou, in eastern Guangdong. At present, some 26 projects in this industrial cluster with a total investment of 81 billion RMB are under discussion or construction.

For example, China National Offshore Oil Corporation (CNOOC) laid the cornerstone for its wholly invested oil refining project in Huizhou city on Dec 15, 2005. Boasting an annual refining capacity of 12 million tons, mainly crude oil from CNOOC's offshore fields, the project is capable of producing 7.3 million tons of gasoline, diesel and kerosene a year, which will meet international auto emissions standards. Annual sales are expected to reach over 34 billion RMB.

CNOOC & Shell Petrochemicals Company Ltd (CSPC) announced Dec. 30 the completion of its South China Sea petrochemical ethylene project. At full production, the project will turn out some 2.3 million tpa (tones per annum) quality and high value-added petrochemical products.

In addition, Guangdong plans to initiate large oil refining, LNG and a series of other infrastructure projects in the next five years and hopes to start a super-capacity oil refinery with Kuwait, which will involve an investment of 5 billion USD, released in Guangdong's development and reform work meeting on December 26th.

Approaches and measures

According to the provincial 11th five-year development plan, Guangdong will improve its industry layout by attracting and receiving petrochemical industrial technology transferred from outside the province and inputting its resources mainly into the coastal petrochemical bases around the Pearl River Delta.

The most important strategy is to set up a costal energy belt linking five petrochemical bases: Guangzhou, Daya Bay (Huizhou), western coastline (Zhanjiang and Maoming), Yamenkou (Zhuhai and Jiangmen) and eastern coastline (Shantou, Chaozhou and Jieyang), which will develop not only the upper stream business including exploration and production, but also middle- and downstream businesses such as oil refining and petrochemicals.

Special effort will be put into developing upstream large-scale projects and tightening cooperation with oil-giants at home and abroad. The government will also enhance technology innovation systems and support the research of core technologies in key areas.

The infrastructure construction will continue to create a better environment for the development of industrial parks and attract more capital from foreign investors and private business. All of the petrol-chemical projects are required to be energy efficient and environmental friendly and should be constructed according to international energy consumption standards. Related service industries will be integrated into these projects as well.

Total petrochemical production, technology, products' quality and sustainable development levels will be initiated in the 11th five-year plan period.

Editor: Yan