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The authorities of Zhoushan, an island city in eastern China, said they were in talks with Exxon on the construction of an ethylene plant worth US$7 billion, Reuters reported on Wednesday, citing a statement by the city authorities. Today, however, the city withdrew its statement, saying that yesterday’s information was not factually correct. Reuters has since withdrawn its earlier story.
According to the statement, the plant was supposed to have an annual capacity of 1.5 to 1.8 million tons of ethylene and will be the second ethylene plant project of Exxon in China announced in the last two months. In September, Exxon said it had struck a deal with a city in the southern Guangdong province for the construction of a 1.2-million-ton ethylene plant. That one should be ready to start operations in 2023.
China is the largest consumer of petrochemicals globally, and Exxon is not the only international oil major seeking to build a presence in this lucrative market, especially in light of projections that in the future, plastics and other oil derivatives will replace fuels as the primary driver of crude oil demand. Today, a new report surfaced that Saudi Aramco had signed an agreement to invest in a 400,000 bpd refinery and associated petrochemical plants in the same city of Zhoushan.
Exxon is on track to take an active part in China’s LNG market, which is also growing rapidly. Last month, the supermajor inked a deal with the city of Huizhou to build an LNG terminal and to supply the feedstock.
There are only a select few foreign companies moving to take advantage of China’s growing LNG market as efforts by Beijing to curb pollution saw a lot of utilities switch from coal to natural gas, including LNG.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.