Posted in | Petrochemicals

Lyondell to Construct Propylene Oxide Plant in China

Lyondell Chemical Company announced today that it and Sinopec Zhenhai Refining & Chemical Co., Ltd. (ZRCC) have received final government approval for a project to construct a world-scale propylene oxide / styrene monomer (POSM) manufacturing facility in Ningbo, China, across the Hangzhou Bay from Shanghai. The project is a partnership between Lyondell and ZRCC, and the companies expect that this plant will be one of the lowest-cost POSM plants in the world, capitalizing on Lyondell's industry-leading POSM technology, both companies' operating experience and raw materials provided by ZRCC's future olefins plant in Ningbo.

Lyondell will contribute its POSM technology and its overall operating and technical experience in exchange for a share of the propylene oxide (PO) profitability from the plant. The parties will jointly market all of the PO manufactured by the new facility. The companies expect to complete construction in 2009.

Along with Lyondell's POSM plants near Houston and Rotterdam, the Ningbo facility will top the list of the world's largest POSM assets. The new plant will have an annual design capacity of 274,000 metric tons (604 million pounds) of PO and 602,000 metric tons (1.3 billion pounds) of styrene. Lyondell estimates that worldwide demand for PO was approximately 6.5 million metric tons (14.3 billion pounds) in 2006.

"With demand for propylene oxide in China growing rapidly, this world- scale plant with its leading technology and ideal location on the eastern coast of China provides a perfect platform for Lyondell and ZRCC to serve the region," said Dan Smith, Lyondell's president and CEO. "ZRCC currently operates the largest and most efficient refinery in China, and we are pleased to be a part of a site that will soon become one of the largest integrated petrochemical complexes in the region." In November 2006, ZRCC broke ground on a new 1 million ton-per-year olefins complex on the site.

Smith added, "With this project, we are expanding our position in an important market and continuing to grow efficiently in a manner consistent with our financial strategy and commitment to debt reduction."

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