LATIN AMERICAN NEWS

Wednesday, December 20, 2006
Economy

COLOMBIA´S PESO JUMPS TO FIVE-YEAR HIGH AS GROWTH ACCELERATES - Colombia´s peso rose to a five-year high after a government report today showed the economy grew at its fastest pace in more than a decade.

The currency gained for a sixth day on optimism the expansion will lure foreign direct investment into the South American country. Colombia´s grew 7.7 percent in the third quarter from a year earlier, more than the 6.2 percent median forecast in a Bloomberg survey of 14 economists.

``There´s a large amount of inflows that are boosting the peso,´´ said Juan Pablo Barney, a foreign-exchange trader at Banco de Occidente in Cali. ``The peso is reflecting the optimism regarding Colombia´s economy. We are still facing further gains.´´

Colombia´s peso rose 0.5 percent to 2,232.45 per dollar. Earlier, it reached 2,228.65 pesos per dollar, its strongest since January 2002. The peso is up 15 percent in the past six months, the second-best performance over that time among the 70 currencies that Bloomberg tracks against the dollar.

The central bank forecasts the economy will expand 6.5 percent this year, the fastest expansion since 1978, as President Alvaro Uribe´s crackdown on guerrilla violence buoys consumer confidence.

The yield on Colombia´s benchmark 11 percent peso bond due in July 2020 today rose 0.04 percentage point to 8.84 percent. The price, which moves inversely to the yield, fell 0.33 centavo to 116.595 centavos per peso, according to the central bank.

Thursday, December 21, 2006
Economy

U.S. ECONOMIC GROWTH SLIPS - The US economy grew at a 2 per cent rate in the third quarter, the government reported in a slight downward revision of gross domestic product.

The Commerce Department, in its final revision of growth in the July-September quarter, notched down its earlier estimate of a 2.2pc annualised pace. Wall Street analysts had on average expected no revision from the 2.2pc figure.

In any case, the growth was the slowest since the final quarter in 2005 and a deceleration from the 2.6pc pace in the second quarter.

The revision came from a slight downward adjustment in the estimate of consumer spending growth in the quarter to 2.8pc instead of 2.9pc.

The department said the slowdown in consumer spending was driven by better data on medical care spending, which was revised lower, and by a steeper slump in real estate spending. That offset slight upward revisions to durable goods spending.

Friday, December 22, 2006
Economy

CHINA´S ECONOMY EXPECTED TO GROW BY 9.8 PERCENT IN 2007 - China’s sizzling economy will slow slightly next year but still should grow by a robust 9.8 percent even as Beijing extends controls to cool off an investment boom, the Central Bank said in a report.

The forecast was in line with outside estimates but well above the 8 percent target for 2007 set by a government strategy report released this month. It would be by far the highest growth rate for any of the world’s major economies.

Growth this year should be 10.5 percent, said the Central Bank report, which was carried on the Web site of the official China Securities Journal newspaper. That was in line with earlier official forecasts.

Communist leaders want rapid growth to reduce poverty. But they are trying to stop an investment boom in real estate and other industries where they worry that overspending on unneeded factories and other assets could ignite inflation or a debt crisis.

Beijing has raised interest rates twice this year, tightened controls on credit and imposed curbs on new construction.

Despite the controls, the government says investment in factories and other fixed assets in the first 11 months of this year soared by 26.6 percent over the same period last year.

In comments to state media, the chairman of China’s main planning agency, the National Development and Reform Commission, said this month that the “relentless expansion has yet to be stopped.”

That official, Ma Kai, said in an interview Friday on the Web site of the Communist Party newspaper People’s Daily that economic controls will be extended into next year to prevent runaway investment.

Inflation should be 1.4 percent this year and 2 percent in 2007, the Central Bank report said.

The government reported economic growth of 10.7 percent for the first nine months of the year. But official indicators show the expansion has slowed slightly since then.

The planning report, released this month following a meeting led by President Hu Jintao, said Beijing would focus next year on trying to shift the basis of China’s economic growth from investment and exports to domestic consumption.

Tuesday, December 26, 2006
Economy

BRAZIL ECONOMISTS CUT 2007 RATE FORECAST TO 11.75% - Brazilian economists lowered their forecast for the benchmark lending rate at the end of 2007 for the first time in two months on expectations consumer price increases will slow.

Central bankers will reduce the benchmark overnight rate to 11.75 percent by the end of 2007 from a previous forecast of 12 percent, according to the median estimate of about 100 economists in a central bank survey taken Dec. 22 and published today.

Central bankers have slashed the benchmark lending rate to 13.25 percent from a high of 19.75 percent in September 2005 as they seek to bolster growth in Latin America´s largest economy.

``The outlook for inflation next year is very benign,´´ Solange Srour, chief economist at Mellon Global Investment Brazil, said in a telephone interview from Rio de Janeiro.

Srour expects policy makers to lower the benchmark overnight rate to 11.5 percent by the end of 2007.

The economists cut their inflation forecasts over the next 12 months to 4.08 percent from an earlier estimate of 4.13 percent, the survey showed. They also lowered their 2007 inflation forecast to 4 percent, compared with the previous week estimate of 4.06 percent, according to the survey.

Consumer prices will likely rise 3.11 percent this year, the survey showed. The central bank set a target of 4.5 percent for inflation in 2006, 2007 and 2008.

The strengthening of the Brazilian currency has cut the cost of importing goods and helped to slow consumer price increases, Srour said. The real has gained 65 percent since President Luiz Inacio Lula da Silva took office in January 2003, the best performance among the 16 most-traded currencies tracked by Bloomberg.

Brazil´s economy will likely expand 2.76 percent this year and grow 3.5 percent in 2007, according to the central bank´s survey. The economy grew 2.3 percent in 2005.

Wednesday, December 27, 2006
Economy

COLOMBIA´S 2006 GDP GROWTH MAY FUEL INFLATION, BOOST DEFICIT - Banco Bilbao Vizcaya Argentaria SA said that the faster-than-expected economic expansion in Colombia this year may fuel inflation and help widen the nation´s current account deficit.

Accelerating economic growth has pushed up Colombia´s trade deficit, making the country´s economy more vulnerable to contractions in overseas economies and markets, BBVA chief Colombia economist Miguel Medellin said in an e-mail report. BBVA, whose local unit is Colombia´s third-biggest bank, raised its estimate for growth this year to 7.1 percent from 6.3 percent previously.

The quickening expansion ``has made evident the resurgence of an incipient increase in consumer spending that could push inflation up in the future and make the country more vulnerable to external shocks,´´ the report said.

Medellin said economic growth next year will likely slow to 6.2 percent and Colombia´s central bank may raise its benchmark overnight lending rate to as high as 8.25 percent. A half- percentage point increase 8 percent from 7.50 percent now is the most likely scenario, he said.

Gross domestic product, the broadest measure of a country´s output of goods and services, grew a faster-than-expected 7.7 percent from a year earlier after rising a revised 6.1 percent in the second quarter, the government said last week. Colombia´s economy is now on course to finish the year with the biggest expansion since 1978.

Wednesday, December 20, 2006
Petroleum & Gas

BRAZIL PETROBRAS´ PRODUCTION REACHES OVER 2.3 MILLION BARRELS A DAY - Petrobras began operating this week a new oil rig with an estimated initial daily production of 15.000 barrels of heavy oil, 17 degrees API in the Jubarte field off Espírito Santo state, according to a release from the corporation.

The P-34 platform went online via the horizontal Jubarte-4 well, which kicked Phase 1 of the Jubarte field. Three other wells will contribute to help P-34 reach its nominal 60.000 bpd capacity in the next few months.

Well ESS-110, P-34´s second, is slated to go online in the coming weeks. When the platform reaches its peak production level, the Espírito Santo Business Unit (UN-ES) is expected to reach a volume of 135.000 bpd.

In November, Petrobras´ average oil and gas production in Brazil and abroad topped 2,321,513 barrels of oil equivalent (BOE) per day, a 2.4% production increase compared to the same month a year ago, although stable over October 2006.

Petrobras´ exclusive production in Brazil in November was 1,813,952 bpd, equivalent to October´s volume. Natural gas production in the Brazilian fields was 43,734,000 cubic meters a day.

Oil and natural gas volume, in barrel equivalents (BOE), from the eight countries where Petrobras has production assets, reached 232.485 bpd in November. The company´s exclusive oil production overseas was 128.662 bpd.

Thursday, December 21, 2006
Petroleum & Gas

VENEZUELA MINISTER: HOPE TO SEE OIL INVENTORIES CONTINUE FALL - Venezuelan Oil Minister Rafael Ramirez said Thursday that he hopes to see global oil inventories continue falling to help support prices.

Ramirez said recent production cuts by the Organization of Petroleum Exporting Countries, or OPEC, have contributed to a draw in oil stocks, but he is waiting "for inventories to reach a normal level."

"There has been a strong decline due to the (OPEC) cuts," said Ramirez, speaking to reporters at an event at Miraflores palace.

However, he said there is "still" a surplus of inventories.

Venezuela is a founding member of OPEC and consistently argues in favor of micromanaging oil supply to defend high prices.

Thursday, December 21, 2006
Petroleum & Gas

IRAN, CHINA SIGN $16BN GAS DEAL - Iran and China´s biggest offshore oil producer, CNOOC, have signed a memorandum of understanding worth more than $16 billion to develop a giant natural gas field.

The deal is aimed at developing Iran´s northern Pars gas field and build plants to produce LNG (Liquefied Natural Gas).

“The agreement to develop the northern Pars gas field was signed with Chinese firm CNOOC, this contract involves a $16 billion investment,” the report from the semi-official agency said.

It said the project will be developed in four phases, with each party taking 50 per cent of the produced LNG.

The investment, however, will come from the Chinese side. The upstream investment to explore and produce the gas comes to $5 billion while the downstream investment for the plants is $11 billion.

“The development of the field will take eight years to complete,” the report said, adding that the field is estimated to be holding 80 trillion cubic feet (2.26 trillion cubic metres) and has the capacity to produce 431 million cubic feet of gas per day.

Friday, December 22, 2006
Petroleum & Gas

BIOFUELS EAT INTO CHINA´S FOOD STOCKS - China´s biofuel industry is booming thanks to voracious demand for energy to power the country´s high-flying economy. Applying modernized versions of ancient chemical processes to convert crops and oils into energy sources, Chinese entrepreneurs have created a profitable "green business" with plenty of room to grow.

But worried over surging crop prices, China is now clamping down on the use of corn (maize) and other edible grains for producing biofuel. While it wants to support the growth of alternative energy sources, Beijing says the issue of national food security should take precedence over the country´s green agenda.

"In China the first thing is to provide food for its 1.3 billion people, and after that, we will support biofuel production," the state-run newspaper People´s Daily quoted Wang Xiaobing, an official at the Agriculture Ministry´s Crops Cultivation Department, as saying this week.

China has been encouraging the production of biofuels such as ethanol and methane from renewable resources to reduce the country´s growing dependence on imported oil. Once an exporter, China now imports at least 43% of its oil supply.

Biofuel is also seen as an environmentally friendly substitute to pollution-producing oil. Chinese economic planners have made the development of green energies such as ethanol fuel and biodiesel a key priority in the country´s five-year economic plan. By 2020 they want green energies to account for 15% of all transportation fuels.

Yet surging demand for biofuel is now partly blamed for recent price hikes in the food market and for shortages in grain stocks. Wheat prices are at their highest level in a decade, due to poor harvests in key producing countries such as the United States and Australia, while corn prices have surged by up to 20% in local markets.

Beijing has begun auctioning some of its wheat reserves to halt the rise in crop prices and prevent panic among the public. Despite predictions that this year would see another bumper harvest, government officials feel compelled to restrict the use of corn for producing biofuel.

"We have a principle with biofuel: it should neither impact on the people´s grain consumption, nor should it compete with grain crops for cultivated land," the People´s Daily quoted Yang Jian, director of the Development Planning Department under the Agriculture Ministry, as saying.

Government officials estimate that corn contributes about three-fourths of the raw material used for making ethanol in China. The output of ethanol fuel is projected at 1.3 million tonnes this year, according to the China Daily. Experts say, however, that output from private and public producers this year may reach 5 million tonnes.

With biofuel demand booming, existing producers have been ramping up production and new players have been entering the market. They made only 1 million tonnes of ethanol fuel in 2005 but by 2010 China´s ethanol-fuel production may reach as high as 10 million tonnes, local press reports say.

As biofuel is produced from renewable biological resources, what government officials worry is that overcapacity may lead to a shortage of edible grains and feedstock supplies. This has already happened with cornstalk used in ethanol production. Cornstalk prices in China have jumped 500% to US$30 per tonne since 2005.

The same is now happening with corn. Industrial processing in China consumed 23 million tonnes of corn in 2005, an annual increase of 16.5% from 2001, while corn production increased at the slower rate of 5% during the same period, according to a circular released this week by the National Development and Reform Commission (NDRC), China´s top economic body.

While rivalry between food and fuel producers for grain is not limited to China, the problem is particularly acute in this country because of the low per capita availability of arable land to feed its vast population.

The grain crop is expected to hit a record 490 million tonnes this year, the third straight year of bumper harvests, but Chinese planners are worried that fast-shrinking farmland could affect grain supply in the near future. Arable land is said to have shrunk by 8 million hectares between 1999 and 2005.

"We should never relax our efforts to focus on grain production by ensuring there is enough acreage and improving per-unit output," Yang Jian was quoted as saying.

Experts warn that if ethanol production continues to be corn-based, China will be forced to import the crop by 2008. Relying on crop imports is a sensitive issue as the government policy supports food self-sufficiency for the sake of national security.

"The excessive growth of corn processing has resulted in scarce feed for livestock and affected the development of animal husbandry. Some main producing areas are even considering importing corn," said the NDRC circular. It demanded that local producers step up efforts to make ethanol from non-grain sources, such as potato and sweet sorghum.

Chinese producers, however, continue to make ethanol from corn because the mass planting of non-grain feedstock such as cassava and sorghum has yet to be implemented on a large scale because of the lack of suitable farming technology.

Tuesday, December 26, 2006
Petroleum & Gas

GAS PIPELINE BLAST KILLS 260 IN NIGERIA - A gasoline pipeline ruptured by thieves exploded into a blazing inferno Tuesday as scavengers collected the fuel in a poor neighborhood, killing at least 260 people in the latest oil-industry disaster to strike Africa´s biggest petroleum producer.

Braving a towering pillar of fire and a cloud of acrid black smoke, thousands of people in Lagos´ Abule Egba neighborhood surged around rescue workers carrying away charred bodies, hoping to catch a glimpse of missing relatives.

"My brother, my brother," wept 19-year-old Suboke Adebayo as an unidentified male corpse was loaded into an ambulance. Adebayo, a student, had spent hours trying unsuccessfully to contact her sibling: "I´ve been calling him since this morning, but I can only hear a holding tone."

A woman in a yellow T-shirt sobbed uncontrollably, slapping herself on the face and clawing her own arms in grief over the devastation of bodies and gutted cars spread around the pipeline.

A senior official for the Nigerian Red Cross, Ige Oladimeji, said his workers counted 260 dead by nightfall and took 60 injured people to hospitals. "We are still counting (dead), but there will not be hundreds more," he said.

Residents said a gang of thieves had been illegally tapping the pipeline for months, carting away gasoline in tankers for resale.

Tapping is common in Nigeria, where many of the 130 million people live in woeful poverty amid widespread graft that makes a handful wealthy in this major oil exporter. A single pilfered can of gasoline sold on the black market can earn two weeks of wages for a poor Nigerian.

But tapping also brings frequent accidents. Earlier this year, 150 people died in a similar explosion in Lagos, and a 1998 pipeline fire killed 1,500 in southern Nigeria.

Tuesday´s blast, the worst in years, came after thieves opened the conduit during the night but left without fully sealing it, prompting hundreds of nearby residents to rush to collect spurting gasoline with cans, buckets and even plastic bags, witnesses said.

It was unclear what ignited the fuel just after dawn.

"There were mothers there, little children," said Emmanuel Unokhua, an engineer who lives nearby. "I was begging them to go back."

Unokhua said people had splashed fuel on him seeking to chase him away and also doused a few police officers who tried unsuccessfully to control the crowd.

"They were not arresting anyone because they had no vehicle to put them in," Unokhua said bitterly. "There are plenty of vehicles for the dead bodies now."

Bodies lay scattered around the periphery of the site. For many victims, only tiny reminders — a child´s flip flop blistered by the heat, a half-melted plastic bucket — were the only identifiable items in a fused mass of bones, skulls and charred limbs.

Flames that nearly incinerated cars and melted electrical lines to pylons kept rescue workers away from much of the carnage until the fire began to wane in early afternoon. Crowds of anguished people impeded the passage of fire crews and ambulances.

Owned by Nigeria´s state-owned petroleum company, the pipeline delivers refined fuel for domestic consumption, so the blast was not expected to affect oil pumped for export.

Residents blamed greed, graft and poverty for the disaster.

"This was a preventable tragedy," said Joel Ogundere, a lawyer whose home is next to the blast. "It was poverty, ignorance and greed."

Widespread corruption and mismanagement have left Nigeria´s refineries unable to meet demand and fuel shortages are common. Christians heading home for Christmas and Muslims preparing for a feast day have jammed service stations for days across Lagos, a sprawling city of 13 million people.

Many Nigerians feel they have gained little from decades of oil production in their country, saying natural gas flaring and oil spills have polluted lands while they remain poor and a tiny elite grows rich.

"How can this be, that people are so poor in Nigeria that they will risk their lives for a little thing," said Bode Kuforiji, a university lecturer. "But boats leave for America every day filled with oil."

Wednesday, December 27, 2006
Petroleum & Gas

REPSOL YPF IN TALKS TO MAINTAIN PART OF BOLIVIAN RESERVES ON BOOKS - Repsol YPF SA has asked its reserves auditors King & Spalding to review all its assets in Bolivia following the nationalisation of that country´s oil and gas reserves, with the aim of maintaining at least part of its reserves on the books, Expansion reported, citing unnamed sector sources.

According to the sources, the Spanish-Argentine oil and gas group has sent the auditors all the new contracts signed with the Bolivian government on Oct 28.

Under the terms of these contracts, foreign oil companies will cede a higher proportion of profits from the exploitation of large oil fields to the Bolivian state, in return for greater control over the production and commercialisation of gas.

Despite the changes in the contracts, Expansion noted that Repsol YPF considers it can still book a large part of its reserves registered in Bolivia, amounting to 604 mln barrels of oil equivalent, or 18 pct of the group´s total reserves.

It said the company will monitor the decisions taken by other oil majors on their Bolivian reserves, and does not rule out consulting the SEC on the matter.

On Jan 26, Repsol YPF announced a 25 pct drop in reserves, equivalent to 1.25 bln barrels, at its operations in Latin America, with Bolivia accounting for 52 pct of this drop.

Monday, December 18, 2006
Petrochemical & Plastics

DOW BUYS BAYER´S CELLULOSE BUSINESS - Dow Chemical has acquired Bayer’s Wolff Walsrode cellulose business, which the US company says is a good strategic fit with its own water soluble polymers business.

Wolff Walsrode makes products such as casings for the food industry, as well as construction materials and other applications. It employs about 1,500 people at operations in Germany and Poland, with its principal sites at Walsrode Industrial Park and the Bitterfeld Chemical Park in Germany.

Bayer announced in March that it would divest its subsidiaries H.C. Starck and Wolff Walsrode. The financial terms of the latest divestment have not been disclosed but proceeds will help to finance Bayer’s acquisition of pharmaceutical group Schering earlier this year.

Wolff Walsrode had net sales of €329m in 2005. Romeo Kreinberg, Dow’s executive vice president for the Performance Plastics and Chemicals portfolio, said: “The acquisition will create a $1bn performance business for Dow. We will accelerate growth, ensure long-term supply, and offer a broad portfolio of differentiated solutions by expanding our collective expertise and capabilities.”

Wolff’s production technology focuses on HEMC (hydroxyethyl methyl cellulose) and CMC (carboxymethyl cellulose) chemistry, while Dow’s water soluble polymer technology centres on HPMC (hydroxypropyl methyl cellulose).

Andrew Liveris, Dow’s chairman and chief executive officer, said: “We continue to deliver on our strategy – the acquisition of Wolff Walsrode is another step along our path to maximize long-term shareholder value from investments into advantaged technologies, growing end-use markets and emerging geographies.”

Tuesday, December 19, 2006
Petrochemical & Plastics

CIBA TO INVEST IN NEW CHINESE PLANT - Ciba Specialty Chemicals has reached an agreement with Chinese authorities to invest in a new facility in Qingdao to produce a range of pigments and additives.

The investment will complement both Ciba’s research and development activities in Shanghai and pigment production at its existing plant in Qingdao, according to the company. The plant will also serve as a regional base for Ciba’s coating effects business.

Production at the new site located in the Qingdao International Airport Industry Park is to commence by early 2008.

“We are expanding our capacity in high performance products with a new site in China, where our customers are increasingly moving their own operations,” said Hermann Angerer, Ciba global segment head of coating effects. “This investment will strengthen our position in Asia in line with fast-growing demand in the transportation, plastic and construction industries and will turn Qingdao into a key supply point in our global production network.”

Thursday, December 21, 2006
Petrochemical & Plastics

IRAN: TONDGUYAN PETROCHEMICAL STARTS CONSTRUCTING THIRD PTA - Third PTA unit constructed at Shahid Tondguyan Petrochemical Complex is in accordance with Fifth 4-Year Petrochemical Plan, official sources informed.

Shahid Tondguyan Petrochemical Complex, situated at Pars Special Energy Economic Zone of Assaluyeh, southern Iran, comprises two phases and full implementation of PET (polyethylene terephthalate).

This project will generate national income of US $800 million per annum with export of 800,000 tons.

If exports fluctuate, paraxylene production at Borzuyeh complex will be complimented by the purified terephthalic acid unit.

By March 21, 2007, paraxylene is expected to come on stream and Tondguyan may use all the paraxylene produced at Bu-Ali and Imam Khomeini complexes in future.

Friday, December 22, 2006
Petrochemical & Plastics

VENEZUELAN CHEMICAL COMPANY TO INCREASE METHANOL PRODUCTION - State-run company Petroquimica de Venezuela (Pequiven) on Thursday signed a deal with two Japanese companies to build a new methanol production facility for their joint venture Methanol de Oriente (Meteor).

Meteor said the new structure will be built in its existing facility in the Jose Antonio Anzoategui complex, an industrial estate in the central state of Anzoategui. The company, formed by Pequiven and Mitsubishi Corp. and Mitsubishi Gas Chemical, produces gasoline and petrochemicals.

Meteor, which began operation in 1992, will invest around 470 million U.S. dollars in the project, to increase its annual methanol production from 750,000 tons to 1.6 million tons.

Meteor will begin constructing the new facility in 2007, with an aim of completing work by the second half of 2009 and starting production in 2010.

Pequiven has a 37.5 percent share in Meteor and each of the other partners has a 23.75 percent share. Methanol can be used as additives in gasoline.

Tuesday, December 26, 2006
Petrochemical & Plastics

MIDDLE EAST: SIPCHEM´S ACETYLS COMPLEX GETS BANK LOAN - International Acetyl Company (IAC), International Vinyl Acetate Monomer Company (IVAC) and United Industrial Gases Company (UIGC) — affiliates of Saudi International Petrochemical Company´s (Sipchem) — signed $560 million loan facility with nine regional banks on Saturday for joint Acetyls complex.

HSBC acted as the independent financial adviser for the complex, according to a Sipchem press release. "The amount of loan will be scaled down once the PIF loan is signed in the future," Acetyls Complex President Abdullah Al-Saadoon said. He indicated that Sipchem had already started the process of converting the loans to Islamic (Ijara lease) structure in line with the company´s long-term goals.

The construction of the acetyls complex has started at the company site in Jubail and is progressing as schedule. The complex comprises three facilities — the 460,000-ton per annum (mtpa) acetic acid plant, the 330,000 mtpa vinyl acetate monomer plant and the 345,000 mtpa carbon monoxide plant, in addition to the utilities and offsite port facilities at King Fahd Industrial Seaport in Jubail.

Tuesday, December 26, 2006
Petrochemical & Plastics

CHINA: PETROCHEMICAL INDUSTRY OILS HUIZHOU ECONOMY - Situated in the southeast of China´s most developed province, Guangdong, Huizhou boasts two national-level development zones, the Dayawan Economic and Technological Development Zone and the Zhongkai High and New Technological Development Zone, according to Li Ruqiu, acting mayor of Huizhou.

With the completion of China National Oil Corporation (CNOOC) and Shell Petrochemicals Company (CSPC), a 50-50 joint venture between CNOOC and Royal Dutch Shell, and the launch of CNOOC Nanhai Oil Refinery, the Dayawan development zone has met an unprecedented opportunity to grow to be a world-class petrochemical industrial base. The area has entered a new era of economic and social development, said Li at a press conference on Friday.

CNOOC is China´s third-biggest oil company. Its petrochemicals complex with Shell, which is so far the largest joint venture project in China, became operational in March, involving a total investment of US$4.3 billion. It will supply 2.3 million tons of petrochemical products every year to Guangdong and neighboring provinces in southern China, said the joint venture´s deputy chief executive officer Zhai Hongxing on Friday.

CSPC finally chose Huizhou as its location because the city has a natural port which ensures convenient transportation by ship, as Huizhou is close to the Pearl River Delta Region. Some 57 percent of its target market is in the Delta Region, which means reduced costs. The Huizhou government has also invested about one billion yuan in improving infrastructure and the investment environment , Zai told chinadaily.com.cn.

Nearby, the CNOOC Nanhai Oil Refinery Project is under construction. The project involves a total investment of 19.3 billion yuan (US$2.4 billion) and its annual sales are expected to reach 34 billion yuan after it comes on stream in 2008.

Huizhou set up a petrochemical industrial park in the development zone after agreements on the two projects were reached. The petrochemical industrial park has become home to a number of foreign enterprises in the industry. There are now 28 projects in the Dayawan development zone, both completed and still under construction, involving a total capital investment of 73 billion yuan.

During the first eleven months of this year, the added value from the petrochemical industry in Huizhou increased 2.8 times that of the same period last year to hit 5.8 billion yuan, according to data from the local statistics bureau.

Investment in petrochemicals and the petrochemical-related industry in Huizhou is estimated to be 60 billion yuan to 100 billion yuan with a newly added industrial output value worth 100 billion to 200 billion yuan in the next five to ten years, said Li.

Currently, there are 93 projects under construction in Huizhou with an investment of more than US$10 million each and a total investment of US$2.87 billion. Some 50 projects are in talks which involve a total investment of US$4.38 billion.

Boosted by the petrochemical industry as well as other increasingly developing industries like electronic information and auto spare parts in its new technological development zone, Huizhou´s gross domestic product will grow by 15 percent a year on average during the 11th Five-Year-Plan period. It is expected to reach 180 billion yuan by 2010, doubling that of last year, said Li.

With a population of 3.7 million, Huizhou has a land area of 11,200 square kilometers, a sea area of 4,520 square kilometers and a coastline of more than 220 kilometers.

Wednesday, December 27, 2006
Petrochemical & Plastics

BASELL PURCHASES MUNCHSMUNSTER, GERMANY CRACKER FROM BP-PDVSA JV - Basell announced that it has purchased the cracker at the Munchsmunster, Germany petrochemical site from Ruhr Oel GmbH (ROG), a joint venture between Deutsche BP and PdVSA, the Venezuelan state-owned oil company. The transaction, which includes sales agreements and assets associated with the cracker, has been approved by the European Commission.

"This is a strategically important acquisition for Basell because it secures the supply of ethylene for the new Hostalen Advanced Cascade Process (ACP) high density polyethylene (HDPE) plant we are building at Munchsmunster and also strengthens Basell´s position in propylene and other cracker products," said Volker Trautz, President and CEO of Basell.

Basell´s new HDPE plant in Munchsmunster, which is scheduled to start up in early 2009, will replace the plant that was damaged by an explosion and fire in December 2005. The new plant will have an initial capacity of 120 KT and will accommodate future expansion to 150 KT.

"We believe that the Munchsmunster plant is an important part of the Bavarian chemical industry," said Patrick Dixon, Chairman of the Executive Board, BP Refining & Petrochemicals (BP RP, operator of the ROG JV). "However, BP has sold most of its olefins and polyolefins business to Ineos, and PdVSA does not have any other olefins and polyolefins activities in Europe beyond the Gelsenkirchen-Scholven assets. ROG therefore believes that it is more logical for a company with a strong interest in the chemicals industry in the Bavarian region to own the Munchsmunster cracker."

Basell is the largest producer of polyethylene in Europe, with plants in Germany, France, the UK and Poland, where it is a partner in the Basell Orlen Polyolefins joint venture. Earlier this year, to strengthen the company´s ethylene integration, Basell acquired the remaining 50% interest in Societe du Craqueur de l´Aubette (SCA) from its former partner in the French cracker joint venture, Shell Petrochimie Mediterranee.

"Competitive feedstock is a defining factor in our industry and the cracker in Munchsmunster further fortifies our PE business in Europe," said Trautz.