BASF-YPC to expand with $2.9 billion ethylene project

BASF-YPC Company Limited (Nanjing, Jiangsu Province) is proceeding with the $1.3 billion refinancing plan in order to facilitate construction outlines for a project to expand its current steamcracker capacity by one-fourth and to build downstream production facilities. The project is expected to cost more than $500 million. BASF-YPC is a joint venture between Germany's BASF and China's Sinopec. The Industrial & Commercial Bank of China and the Agriculture Bank of China will oversee RMB and USD arrangements while three other Chinese banks will be the lenders for the refinancing. After construction is completed, BASF-YPC's annual ethylene-production capacity is expected to increase to 750,000 tons from the current 600,000 tons.

BASF-YPC is BASF's largest project outside Germany. The $2.9 billion joint venture is equally financed by both groups. The integrated petrochemical company consists of upstream plants, including a 600,000-ton-per-year ethylene plant, and downstream plants producing ethylene glycol, low density polyethylene and oxo-alcohols, among other things.

The joint venture was inaugurated in December 2000 and started commercial operation in June 2005. Nanjing, a port along the Changjiang River, is capable of harboring 40,000-ton vessels, providing the company major transportation access.

Apart from BASF-YPC, BASF has another joint venture, the company's second-largest project in China, in the Shanghai Caojing Chemical Industry Park. The project is capable of producing 160,000 tons per year of methylene diphenyl diisocyanate and 130,000 tons of toluene diisocyanate.

BASF, a leading chemical company with products ranging from chemicals and plastics to crude oil and natural gas, began exporting products to China in 1885 and established its first wholly owned company in Beijing in 1996. It is now one of the largest investors in China's chemical industry with more than 5,500 local employees, 29 operational subsidiaries and nine joint ventures. In 2006, BASF's sales volume in China reached $5.3 billion.

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