Exxon will build a multibillion-dollar petrochemical complex in China and invest in an LNG import terminal, both in the Guangdong province, the company said. The news comes amid growing trade tensions between Beijing and Washington that have sparked concern about the future of U.S. oil and LNG exports to one of the world's top energy consumers.
Exxon said the petrochemical complex is still pending a final investment decision, but if it is made, the facility will feature an ethylene cracker with an annual capacity of 1.2 million tons, two performance polyethylene lines, and two differentiated performance polypropylene lines. If the project remains competitive and receives all necessary permits, it should go into operation in 2023.
Exxon will also provide financial support for the Huizhou LNG terminal and will supply LNG for it, the company said, without, however, providing any details regarding the size of shipments or the capacity of the terminal.
Exxon has a significant footprint in global LNG with its total liquefaction capacity at some 65 million tons annually, and that's not counting its PNG LNG in Papua New Guinea and the Gorgon project in Australia. This puts Exxon in a favorable position after Beijing slapped 25-percent tariffs on U.S. LNG imports beginning August 23.
China last year topped the list of biggest LNG importers in the world as it continues its shift away from coal towards gas and LNG. It is a huge market and it makes sense for energy majors to enter it as early as possible.
But China is also the biggest chemicals market in the world. There are only a few foreign participants in this market, but it is opening up to accommodate more as its plastics and chemicals demand soars, driven by consumer electronics and cars, among others. Just a couple of months ago, Reuters recalls, Germany's BASF announced plans to build a US$10-billion chemicals complex-the first such facility that will be wholly owned by a foreign company in China.
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. More
Comments
After all, that's consistent with their pledge to mitigate climate change. On the other had, Exxon is going to need a lot of money when the lawsuits start making them compensate people for all the fires in Colorado, California, and northern Europe and for rising sea level and increased hurricane damage in places like Houston and Puerto Rico.