Petrochemical industry in Chengdu

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Petrochemical industry in Chengdu Powered By Docstoc
					Guide to invest in the Petrochemical industry in Chengdu

  1.1 industrial foundation…………………………………………1
  1.2 industrial chain…………………………………………………2
     1.2.1 About the Industrial Chain……………………………………2
     1.2.2 Major Industrial Categories…………………………………3
     1.2.3 Introduction of Representative Enterprises…………………4
     1.2.4 International Well-known Enterises…………………………5
  1.3 market overview………………………………………………6
     1.3.1 Overall Development Status of the Petrochemical Industry…6
     1.3.2 Market Analysis of the Petrochemical Industry of Chengdu…6
  2.1 human resources………………………………………………9
  2.2 infrastructure…………………………………………………10
  2.3 logistics…………………………………………………………11
     2.3.1 Railway………………………………………………………11
     2.3.2 Road…………………………………………………………12
  2.4 environment protection requirements……………………14
  3.1 industrial policy………………………………………………14
     3.1.1 Improve Overall Planning and Integrated Coordination……14
     3.1.2 Develop and Canvass for Policies in support of the development of the
     3.1.3 Enhance Land Realignment to Ensure Industrial Land Using15
     3.1.4 Strengthen Technology Innovation and Human Resources
     3.1.5 Actively Acquire Significant Materials Required by the Petrochemical
     3.1.6 Strengthen Investment and Financing, and Collect Industrial Development Capitals
     through Multiple Channels………………16
     3.1.7 Strengthen Merge and Regrouping of Enterprises, Focus on fostering Large-scale
     Enterprises and Groups……………………17
     3.1.8 Carefully Implementing Energy Saving and Emission Reduction, Develop Circular
 3.2 industrial program……………………………………………18
     3.2.1 Overarching Goal……………………………………………18
     3.2.2 Development Program of Key Industrial Chain……………19
 3.3 one specialty per zone…………………………………………22
     3.3.1 Overview……………………………………………………22
     3.3.2 Layout of the Petrochemical Industry………………………24
OF CHENGDU…………………27
 4.1 impacts of the wenchuan earthquake on the city of
 4.2 impacts of wenchuan earthquake on the petrochemical industry of
1. Current Situation of the Industry
      1.1 Industrial Foundation
       In 2007, there were 244 petrochemical enterprises above the designated size in
the petrochemical industry in Chengdu, with the overall pr operty totaling 19.251
billion Yuan, and a workforce of over 30,000 people. The sales revenue achieved in
the year 2007 reached 18.225 billion Yuan, accounting for 6.5% of the total industrial
sales revenue of the city;

                                                 Industrial Sales Revenue
                                                 of Chengdu
                                                 Industrial Sales Revenue
                                                 of the Petrochemical


       In 2007, the industry achieved an industrial value-added of 8.712 billion Yuan,
accounting for 7.4% of that of the city, with the profits tax 175.3 billion Yuan,
accounting for 5.7% of the city’s total profits tax. The products of Chengdu’s
petrochemical industry involve 19 major industrial categories, with more than 1,000
types and over 2,000 specifications.

The Proportion of the Petrochemical Industry in the Industrial Economic Data of Chengdu in
                                           2007 (Unit: billion Yuan)

     150                                                   Industry of the
                                                           Whole City
     100                                                   Petrochemical
      50                                                   Industry
       0 Industrial18.225   1.753 1.179
                          Profits Tax
         Value Added

                                              Industrial Growth
     Major Economic Growth Indexes of the Petrochemical Industry
               of Chengdu (Unit: 0.1 billion Yuan)

20                                                            Industrial
                                                              Sales Revenue
10                                                            Total Profits
                                                              Total Profits
 0      2003     2004      2005     2006     2007
                                Output of Major Petrochemical Products in 2007
                                                         Sodium                 Urea
                      Synthetic        Nitrogen                                             Monoammonium
                                                         Sulfate              (Physical
                      Ammonia          Fertilizer                                             Phosphate
                                                       Anhydrous              Quantity)
                     732,600 t       494,000 t        470,800 t             912,100 t       60,000 t
                                     Agricultural                           High Purity
                                     Potassium        PVC Resin             Potassium       Triallylamine
                                     Carbonate                              Hydroxide
                     174,600 t       39,000 t         79,600 t              6,100 t         34,700 t
      1.2 Industrial Chain
     1.2.1 About the Industrial Chain

                          The Petrochemical Industry

Petroleu     Coking and   Chemical   Chemic      Pharmacy        Rubber           Plastic
   m          Nuclear     Material       al      Production      Product         Product
Process         Fuel         &         Fiber      Industry       Industry        Industry
  ing        Processing   Chemical   Producti
              Industry    Products      on
                          Industry   Industry

     1.2.2 Major Industrial Categories
                   There are 23 enterprises currently in this industrial category,
                   with the property totaling 5.906 billion Yuan; the sales revenue
                   realized in 2007 was 468.2 billion Yuan, and the profits tax 408
                   million Yuan. The major products include synthetic ammonia,
                   nitrogen fertilizer, phosphate fertilizer, urea, synthetic fertilizer,
                   agricultural potassium nitrate, and agricultural potassium
                   sulfate, etc.
                   There are 13 enterprises currently in this industrial category,
                   with the property totaling 0.644 billion Yuan; the sales revenue
Farm               realized in 2007 was 496 million Yuan, and the profits tax 32
Chemical           million Yuan. The major products include glyphosate,
                   mancozeb, xiaochongthion, quinalphos, azadirachtin and
                   brassinolide, etc.
                   There are 56 enterprises currently in this industrial category,
                   with the property totaling 4.227 billion Yuan; the sales revenue
Basic              realized in 2007 was 3.228 billion Yuan, and the profits tax 303
Chemical           million Yuan. The major products include high purity potassium
                   hydroxide,     sodium sulfate anhydrous, hydrogen peroxide,
                   melamine, methanol, formaldehyde, etc.
                   There are 36 enterprises currently in this industrial category,
Paint,             with the property totaling 899 million Yuan; the sales revenue
Printing Ink       realized in 2007 was 1.373 billion Yuan, and the profits tax 133
and Pigment        million Yuan. The major products include paint, emulsion paint,
                   printing ink and meghafast green, etc.
                   There are 57 enterprises currently in this industrial category,
                   with the property totaling 2.504 billion Yuan; the sales revenue
                   realized in 2007 was 2.677 billion Yuan, and the profits tax 202
                   million Yuan. The major products include catalyst, chemical
                   reagent, adhesive, lysine, amino acid, high purity helium,
             nitrogen tetrafluoride, etc.
             There are 19 enterprises currently in this industrial category,
             with the property totaling 1.254 billion Yuan; the sales revenue
             realized in 2007 was 1.245 billion Yuan, and the profits tax 244
             million Yuan. The major products include poly (phenylene
             sulfone) resin, polyvinyl chloride resin and polyurethane, etc.
     1.2.3 Introduction of Representative Enterprises
     I.                                          China National Petroleum Corporation (CNPC)
     The CNPC has invested 21 billion Yuan to found the joint venture company Sichuan
Petrochemical Co., Ltd. with Sichuan Province, to build the 800,000 ton/year ethylene
production program and the 10 million ton/year oil refining program.
      II.      China Petrochemical Corporation (SINOPEC)
      The SINOPEC Sichuan Co., Ltd. is established by the SINOPEC in Chengdu, with an
investment of 500 million RMB Yuan, engaged in the survey and exploration of the oil and
gas resources in Chengdu and the neighboring areas.
      III. Shandong Hi-tech Chemical Group
      The Shandong Hi-tech Chemical Group is an equity participation company of the
SEDAR Petroleum & Natural Gas Development (Sichuan) Co., Ltd., with an investment of
162 million Yuan. The Shandong Hi-tech Chemical Group mainly deals with the trading of
oil products such as fuel oil and light oil for chemical industry, etc., and has built the
30,000 ton/year polypropylene production device and other auxiliary facilities. In 2006, it
realized the sales revenue of 1.747 billion Yuan.
      In addition, there are a number of backbone enterprises, including the Sichuan
Chemical Works Group, Ltd., Sichuan Gaoyu Group Co., Ltd., Chengdu Huarong
Chemical Co., Ltd., Chengdu Zhengguang Investment Group Co., Ltd., and Chengdu
Rongguang Carbon Co., Ltd., etc.
      1.2.4 International Well-known Enterprises
                      World Top 10 Ethylene Production Enterprises in 2006
                                                                                              Unit: 1,000 ton/year
                                                               Productivity of the Ownership
                                                   Number of
               Rank          Company                            Entire Combined Capacity of the
                                                                     Device        Company
                1     Dow Chemical Company            14            13,155           10,370
                2     Exxon Mobile Corporation        l5            11,460           8,327
                      Saudi Basic Industries
                3                                     7             8,985            7,182
                4     Shell Group                     10            8,945            6,821
                5     SINOPEC                         9             6,295            6,145
                6     INEOS Group                     8             6,546             5,09l
                7     Lyondell Chemical Company       6             4,880            4,880
                      Chevron Phillips Chemi-
                8                                     4             3,956            3,701
                      cal Company
                9     TotalSA (TOT)                   9             5,523            3,327
                 10 BASF Group                  7            4,955          3,109

      1.3 Market Overview
      1.3.1 Overall Development Status of the Petrochemic-
al Industry
      Since 2006, under the situation that the prices of crude oil and natural gas vibrate at a
high level all over the world, the world petrochemical industry has entered a period of
readjustment at a high price. The productivity growth of major petrochemical products of the
world rise again slightly, the demands for petrochemical products remain vigorous, and the
prices of most petrochemical raw materials and products pick up continuously. Meanwhile,
the development center of gravity of the global petrochemical industry continues moving
eastwards, with the development of the North America and West Europe maintains basically
stable, and the petrochemical industry of Asia-Pacific and Middle East continues growing
      In recent years, the petrochemical industry of China continues developing fast and
healthily under the support of the relatively fast growth of the world, esp. the Chinese
economy, and has become a major motive force of the development of the global
petrochemical industry.
      1.3.2 Market Analysis of the Petrochemical Industry of Chengdu
      Chengdu abounds in natural gas deposits, among other resources; being the largest water
and electricity industry base, Chengdu has plenty of industrial water and electricity supplies.
With developed airway, railway and road systems, Chengdu is a significant transportation
pivot in West China, casting great radiation influence on the Southwest China region. As the
basic material of the oil refining and chemical industry, the crude oil is transported into
Chengdu stably and safely in pipelines through the Republic of Kazakhstan and Xinjiang
Autonomous Region.
      In 2007, the Sichuan Province stepped into the ranks of the strong provinces of economy
whose GDPs were over 1,000 billion RMB Yuan. And the city of Chengdu accounts for one third of
the total economic value of the whole province, with a solid economic foundation. The market
system of Chengdu is relatively complete, and the civil economy is developed, with the value-added
realized by the civil economy accounting for 50.9% of the GDP of the whole city, which has
brought capital as well as energy to the development of the petrochemical industry. In 2007, the state
formally approved Chengdu to establish a national experimentation zone of the comprehensive
reform for the coordinative development of urban and rural areas.
      Additionally, Chengdu has a large capacity to offer broad space of development for the
petrochemical industry. The city of Chengdu is a processing base for electronics, machinery,
automobile, medicine, leather shoes, furniture, light industry and construction materials, etc.,
and according to preliminary estimates, by the year 2015, the market demands for
polyethylene would be 680,000 tons, polypropylene 370,000 tons, polyvinyl chloride 870,000
tons, polystyrene 150,000 tons, synthetic rubber 210,000 tons, ethylene glycol 450,000 tons,
terephthalic acid (PTA) 1.2 million tons. The completion and operation of the Sichuan
Petrochemical programs will provide Chengdu with large amounts of finished-product oil,
synthetic resin, synthetic rubber and benzene, p-xylene, etc. among other organic chemical
industrial materials; by reconstruction and expansion, it can also provide a certain ethylene
and propylene materials, in support of the development of the downstream petrochemical
processing of Chengdu.
       Presently, the 10 million-ton oil refining program as well as the 800,000-ton ethylene
program invested by CNPC have been approved by the relevant departments of the state, and
are estimated to be completed and put into operation by the end of 2010, providing the
material guarantee for investing in and developing petrochemical industry in Chengdu. The
materials that can be provided by the 10 million-ton oil refining program and the 800,000-ton
ethylene program of the CNPC are shown in the following table:
                 序号                     Materials                   Amount(1,000 tons)

                   1             Polypropylene Products                       1,020
                   2                    Benzene                                370
                   3                     P-xylene                              600
                   4                        C5                                 110
                   5                        C9                                  50
                   6                Butyl-octyl Alcohol                        330
                   7                 Ethylene Oxide                             50
                   8             Light and Heavy Fuel Oil                      180

2. Investment Environment
    2.1 Human Resources
     Chengdu possesses a collection of country famous universities, as well as research and
engineering institutes, with strong scientific and technological capabilities and enormous
talents, which makes it influential in Southwest China, if not the whole country.

                                      Located in the Xindu District of Chengdu, this university
                                      focuses on the petroleum, natural gas subjects and the
                                      related ones, with 22,408 full-time students currently
                                      studying in it.

                                      Located in Chengdu City, this university is a high-level
                                      researching comprehensive university, positioned in West
                                      China by the state, with chemistry, chemical industry and
                                      other relevant subjects; currently there are over 40,000
                Sichuan University
                                      full-time students in the university, over 21,000
                                      postgraduate or doctoral candidates, and 1,042 foreign
                                      students and students from Hong Kong, Macau and
                                             Located in Chengdu City, it is a national key university
                                             focusing on engineering, with the subjects of engineering,
                  Southwest Jiaotong
                                             science, administration, economy, culture and law, etc.
                                             developing coordinately, and has fostered nearly 200,000

                                             Located in Huayang, Chengdu, it opens petroleum drilling,
                                             petroleum mud, internal combustion engine, natural gas
                  Sichuan     Petroleum
                                             purification, and natural gas extraction and transmission,
                                             etc., among other subjects. Currently there are more than
                                             2,000 students studying in the school.

     Reference Salary Level for Foreign Investment Enterprises (Manufacturing Industry) in
                                               Position                             RMB Yuan/Month
                   ● Senior Executive Level(Factory Manager)                             2300-5000
                   ● Department Manager Level (Financial Controller, Log-
                      istics Manager, etc.)
                   ● Engineer (with two years’ experience)                               1500-3000
                   ● Engineer (without two years’ experience)                            1250-2500
                   ● Technician/Director (with two years’ experience)                    860-1500
                   ● Skilled Operator (with two years’ experience)                       700-1500
                   ● Moderately Skilled Operator (with one year’s experience)            600-1300
                   ● Green-hand Operator (new graduates from vocational
      2.2 Infrastructure
        The petrochemical industry relies heavily on raw materials, and has extremely high
requirements on water, electricity and gas, etc. among other resources. Therefore,
emphasizing key elements guarantee is requisite for promoting the healthy and fast
development of the petrochemical industry.

                         Resources and Energy Key Elements to Be Guaranteed
                                             Development                                       Natrual
                            Unit                             Land     Water     Electricity
                                              Timeframe                                          Gas
                                                                      4,000                   1.8 billion
                                              2008-2012     4 km2               260,000kW
                   Sichuan Petrochemical                              t/hour                   m3/year
                   Base                                               5,000                   1.9 billion
                                              2012-2017     2.4 km2             320,000kW
                                                                      t/hour                   m3/year
                   Pengzhou        Plastic
                                                                      50,000                    3,000
                   Science & Technology       2008-2017     5.3 km2             130,000kW
                                                                       t/day                    m3/day
                   Industrial Park
                                                                      2,500                   400 million
                   Expansion of Zone B        2008-2012     2 km2               150,000kW
                                                                      t/hour                   m3/year
                   of Xinjin Industrial
                                                                      4,000                   700 million
                   Park                       2012-2017     3 km2               200,000kW
                                                                      t/hour                   m3/year

              There is a total water deposit of more than 26 billion m3, and the tap water productivity is 2.2
              million m3/day, with the water quality meeting GB57-84, and the price of the industrial tap water
              is 2.7 RMB Yuan/m3 (including the effluent fee). The diameter of the road main water pipe is 300
              mm, with the hydraulic pressure over 0.275 MPa.
              The annual power supply of Chengdu is about 13.2 billion kWh. The price is consistent with the
              current electricity price for major industry (1-10 kV) (0.57 Yuan/kWh in average).
              The total supply of natural gas in Chengdu is 2.52 billion m3; the price natural gas for industrial
Natural Gas
              production is 1.66 RMB Yuan/m3.

     2.3 Logistics
     2.3.1 Railway
       (1)Chengdu is the largest railway pivot in Southwest China, where converge the four
major railway trunk lines including Chengyu, Baocheng, Chengkun and Dacheng lines, with
four major railway cargo sites currently in operation, including the Chengdu East Station,
Chengdu South Station, Chengdu West Station, and Qingbai Jiang Dawan Station.

    (2) In April, 2007, the Chengdu North Marshalling Yard on which the Ministry of
Railways invested 1.7 billion Yuan was formally put into operation.
     (3) The Ministry of Railways plans to invest 1.17 billion Yuan in the Qingbai Jiang
District to build the largest railway international containers terminal in Asia, with a designed
annual throughput of 2.2-2.5 million standard containers, estimated to be put into operation in
the first half of 2009.

                                   Railway Container Transportation Prices
                                                                                                             Unit: Yuan
   Destination              1 ton                 10 tons               20 tons                40 tons
 Shenzhen North
                           236.65                2960.57                5997.09               11112.38
 Railway Station
Yangpu, Shanghai              --                 2208.84                4499.55               8326.43
Northern Suburb of
                            174.3                2198.34                4477.74               8287.82
  Tianjin North
                           159.74                1982.64                4098.85                   --
 Railway Station
   Tianjin Port               --                    --                  4195.97               7519.42
  Tianjin South
                           160.04                1986.74                4107.55                   --
 Railway Station
  Lianyun Gang                --                    --                  3993.91               7178.12

     2.3.2 Road
     There are altogether eight national trunk highways and national highways that go
through Chengdu or begin here, including two national trunk highways (the highway from
Erlian Haote, Inner Mongolia to Hekou, Yuannan; the highway from Shanghai to Chengdu),
and six national highways (Route 108 from Beijing to Kunming, Route 213 from Lanzhou to
Mohan, Route 317 from Chengdu to Naqu, Route 318 from Shanghai to Zhangmu, Route 319
from Xiamen to Chengdu, and Route 321 from Guangzhou to Chengdu). The city of Chengdu
is the strong point for the road networks of Sichuan Province.

                         Basic Information of the Container Transportation
                                   Roads from Chengdu to Ports
                           Port of                              Mileage    Time Container Price (Yuan)
              From/To                          Route
                          Destination                            (km)     (hour)  Size     One way
              Chengdu-     Yangshan
                                        Shangqiu-Nanjing-        2,508    2 days    40 feet    12,500
              Shanghai       Port
                          Yantian Port Guiyang-Nanning-          2,400    2 days    40 feet    13,000
                          Tianjin Port    Shi Jia Zhuang-        2,230    2 days    40 feet    12,500
              Chengdu-                   Chengdu-Xi’an-
              Lianyun                   Shangqiu-Lianyun         2,491    2 days    40 feet    13,000
                           Gang Port
               Gang                            Gang
    2.4 Environment Protection Requirements
              Environment Quality Standards                     Effluent Standards for Pollutants
                                                                Wastewater Discharge: implementing
                                                                the Level Three standard of the
              Ambient Air: implementing the secondary
                                                                “Integrated wastewater discharge
              standard of the “Ambient Air Quality
                                                                standard” GB 8978-1996.
              Standard” GB 3095-1996;
                                                                Waste Gas Discharge: implementing
              The hydrogen chloride (HCl), ammonia
                                                                the secondary standard, emission limits
              (NH3), sulfuric acid mist, chlorine (Cl2) will
                                                                of air pollutants for new pollution
              implement the Hygienic Standards for the
                                                                sources of the “Integrated Emission
              Design of Industrial Enterprises (TJ36-79) to
                                                                Standard of Air Pollutants” GB
              comply with the maximum allowable density
              of the harmful matters in the air for residence
                                                                Ammonia (NH3): implementing the
                                                                “Emission     Standard     for    Odor
                                                                Pollutants” GB 14554-93.
                                                                Flue Gas of Natural Gas Boiler:
                  Surface water will implement the
                                                                implementing the secondary regional
              Category III waters standard of the
                                                                standard of the “Emission Standard of
              “Environmental Quality Standards for Surface
                                                                Air Pollutants for Boilers” GB
              Water” GB 3838-2002.
              Sound Environment: implementing the               Boundary Noise: implementing the
              Category III standard of the “Standard of         Category III standard of the “Standard
              Environmental Noise of Urban Area” GB             of Noise at Boundary of Industrial
                   3096-93.                                   Enterprises” GB 12348-90.

3. Industrial Development Program
      3.1 Industrial Policy
      3.1.1 Improve Overall Planning and Integrated Coordination
      Fully develop the function of overall planning and integrated coordination of the
Chengdu Municipality. Led by the Chengdu Municipality, and with the coordination of the
relevant departments and local governments, the industrial development program will be
tailored properly, to focus on building the Sichuan Petrochemical Base, Pengzhou Plastic
Science & Technology Industrial Park, and the Extension Zone of the B Zone of the Xinjin
Industrial Park, making an industrial cluster development posture.
      3.1.2 Develop and Canvass for Policies in support of the development of the
      Actively canvass for the policy support of the state as well as the Sichuan Province,
carefully explore and develop policies and measures to support the development of the
petrochemical industry, encourage and guide foreign investment enterprises, state-owned and
civil-run ones to conduct industrial agglomeration and consolidation, and to move into the
chemical industry concentrating development zone. Meanwhile, establish entry norms in
energy saving, resources preserving and environment protection, and enforce them strictly.
      3.1.3 Enhance Land Realignment to Ensure Industrial Land Using

     According to the requirements of the petrochemical industrial development, create new approaches of land
utilization, plan industrial land using as a whole, clear up idle land, activate potential land, check up the actual
land using of the program, make proper deviation for the important programs that are consistent to the
development guidance of the city’s petrochemical industry, to ensure large and key programs to settle in
Chengdu. Actively advance the park- and base-oriented construction, to create favorable conditions for
enterprises moving into the industrial park.

      3.1.4 Strengthen Technology Innovation and Human Resources Exploration
      Fully develop the comparative advantage of the city in technology, strengthen the
combination between industry, college and institute, promote independent innovation, and
emphasize the development of high-tech and high value-added sophisticated chemical
industrial products, promoting the optimizing and upgrade of the industrial structure. Speed
the development of favorable policies for introducing petrochemical talents to Chengdu,
actively introduce excellent petrochemical talents home and abroad, and at the same time,
vigorously foster talents, employ them properly, and allow them fully develop their
      3.1.5 Actively Acquire Significant Materials Required by the Petrochemical
      Take full advantage of the joint venture partnership between Chengdu Municipality and
the CNPC, and issue long-term, stable material supply compacts with it, to reserve materials
in Chengdu for developing downstream industries. Actively participate in the reconstruction
and expansion of the oil-refining and chemical programs, striving to have local areas keep a
certain ethylene and propylene deposits for developing more fine chemical industrial
      3.1.6 Strengthen Investment and Financing, and Collect Industrial Development
Capitals through Multiple Channels

     Expand channels for investment and financing, and collect industrial development capitals through multiple
channels, to absorb more civil capitals to invest in the oil and gas chemical industrial programs. Actively
construct the bank-enterprise cooperation platform, and recommend credible and promising enterprises and
programs to the financial institutions, to win the credit support and quality financial services of the financial
institutions. Improve the construction of the financial guarantee system, render greater support to the market
listing of priority fostered enterprises, guide the enterprises to raise funds through the capital market, and support
them to collect capitals through market listing to develop bigger and stronger.

      3.1.7 Strengthen Merge and Regrouping of Enterprises, Focus on fostering
Large-scale Enterprises and Groups
      Support the enterprises to realize the concentration of effective resources to
advantageous enterprises, through asset restructuring, share-holding and share-controlling,
etc., to form a virtuous development circle.
      3.1.8 Carefully Implementing Energy Saving and Emission Reduction, Develop
Circular Economy
     Further improve the index, monitoring and examination system for energy saving and
emission reduction, and implement the rating and examining responsibility system for energy
saving and emission reduction. Adopt various measures, including fund awards, to encourage
the enterprises to enhance human and capital investment in security and environment
protection, etc. Speed the improvement of desolate production capacity elimination system,
launch decisive and effective measures on high energy consumption, high pollution
enterprises as well as those who are not consistent with the safe environment protection
requirements, to eliminate them completely. Actively advance clear production techniques of
the chemical industry, encourage the comprehensive utilization of chemical industrial wastes,
and vigorously develop the circular economy, realizing sustainable development.
     3.2 Industrial Program
     3.2.1 Overarching Goal
     Based on the 10 million-ton oil-refining and 800,000 ton-ethylene production already
approved by the state, and if the environment capacity allows, develop to a production scale
of 12 million-ton oil-refining, one million-ton ethylene, one million-ton aromatic hydrocarbon,
one million-ton PTA, and 500,000-ton polyester by the year 2017; forging the comprehensive
industrial park area focusing on the integration of refining and chemical industry in the
Sichuan Petrochemical Base (Pengzhou) with priority, construct the expansion of Zone B of
the Xinjin Industrial Park, gradually foster the Qionglai Salt & Natural Gas Chemical
Industrial Concentration; by 2017, have the investment scale of petrochemical industry of
Chengdu achieve 86 billion Yuan, and the sales revenue of the whole petrochemical industry
in Chengdu 250 billion Yuan, and by the year 2020, 100 billion Yuan and 300 billion Yuan
respectively, accounting for approximately 15% of the GDP in the Chengdu area.
      From 2008 to 2017, the annual development objectives of the petrochemical industry of
Chengdu are shown in the following table:
                     Annual Development Objectives of the Petrochemical
                                   Industry of Chengdu
               Annual Objectives  (Year)     2008       2009      2010      2012       2017
                 Industrial Value-Added
                                              11.7       13        15        50         80
                     (billion Yuan)
                     Sales Revenue
                                               24        30        38        130        250
                     (billion Yuan)
                       Profits Tax
                                              2.2        2.7       3.5       15         30
                     (billion Yuan)

    3.2.2 Development Program of Key Industrial Chain
                               Make use of the 10 million tons of crude oil transmitted into
                               Sichuan through pipelines from Xinjiang Autonomous Region,
                               processed through atmospheric and vacuum distillation,
                               hydro-cracking, residual hydro-desulfurization, (gas) diesel
                               hydro-fining, catalytic cracking, gas separation, and
                               reforming, etc., to produce quality gasoline, diesel, aviation
                               kerosene, and quality materials for developing ethylene and
                               aromatic hydrocarbon programs.
                               Ethylene raw materials such as naphtha will be processed
                               through the cracking unit and the butadiene extraction unit to
                               produce ethylene, propylene, and butadiene; the ethylene will
               Alkene          be further processed into high density polyethylene (HDPE),
               Industrial      linear low density polyethylene (LLDPE) and ethylene
               Chain           oxide/ethylene glycol (EO/EG); the propylene is further
                               processed into polypropylene (PP) and butyl alcohol and octyl
                               alcohol; and the butadiene is further processed into cis-1,
                               4-polybutadiene rubber.
                               Depentanized naphtha will be put into the aromatic
                               hydrocarbon united plant, and processed through aromatic
                               extraction, absorption and separation, disproportionation and
               n Industrial
                               transalkylation and isomerization, etc., to get benzene,
                               p-xylene and o-xylene products.
                               The benzene chain: with benzene as the raw material,
                               hydrogenate to generate cyclohexane, which is in turn nitrified
                               into adipic acid, which can be used to produce polyamide
                               (nylon 66) with hexanediamine; the cyclohexane can be used
                               to produce caprolactam (nylon 6) with ammonia. And they can
                               be made into nylon 66 chips and nylon 6 ones respectively
                               (synthetic fiber and engineering plastic).
                               The p-xylene chain: the p-xylene can be oxidized to produce
                               terephthalic acid (PTA), and PTA can synthesize with ethylene
                               glycol into polyester (PET); the PTA can polymerize with
                1,3-propanediol to produce poly (trimethylene terephthalate)
                (PTT); the PTA can polymerize with 1,4-butanediol to
                produce thermoplastic polyester engineering plastic,
                Polybutylene Terephthalate (PBT); the PBT can polymerize
                with aliphatic polyester or polyether block to produce
                thermoplastic polyester elastomers.
                The o-xylene chain: the o-xylene can be oxidized to produce
                phthalic anhydride, which reacts with octyl alcohol to produce
                dioctyl phthalate (DOP) and reacts with butyl alcohol to
                produce dibutyl phthalate (DBP) plasticizer; the o-xylene can
                also polymerize with maleic anhydride, styrene, propanediol,
                diethylene glycol, etc. to produce unsaturated polyester resin
                Ethylene and benzene together may produce styrene, which
                can be polymerized to produce the polystyrene resin (PS); the
                styrene polymerizes with butadiene to produce rubber
                elastomer SBS; styrene and propylene/ester can produce
                styrene-acrylic emulsion; styrene and methyl methacrylate
                (MMA)/butadiene can produce engineering plastic and the
                addictive methyl methacrylate-butadiene-styrene copolymer
                The propylene can be oxidized into acrylic acid, which can
Acrylic Acid
                produce methyl methacrylate, ethyl acrylate, n-butyl acrylate
and     Ester
                and 2-ethylhexyl acrylate with methanol, ethanol, n-butanol
                and octanol. The acrylic acid may be used to produce super
                absorbent polymer and fine chemical products.
                The phenol and acetone may be used to produce special
Phenol-Acet     phenolic resin; the phenol and acetone may synthesize into
one             bisphnol A, which is further used to produce polycarbonate
Industrial      (PC) engineering plastic; the bisphnol A and epichlorohydrin
Chain           together may produce thermosetting synthetic materials such
                as epoxy resin, etc.
                The polyethylene, polypropylene, polystyrene and PVC are
                the materials primarily used for developing programs of
                plastic accessories, containers, plastic construction materials,
                BOPP films, nonwovens, transparent polypropylene sheets,
er Processing
                communications cable specialty, and constructional water
                supply specialty, etc. The rubber processing industry focused
                on polybutadiene rubber, mainly develops tyre, new-type
                rubber synthetic materials, new daily products, high-grade
                soles and cases, etc.
                The rich natural gas resources in Chengdu and the neighboring
                areas may be utilized to produce high quality fertilizers such
                as the high density, compound, high-effect and specialty
                fertilizers, etc. The urea is further processed into synthetic
                rsins such as triallylamine, amino resin and urea-formaldehyde
Natural Gas
                resin, etc.; the natural gas is the material for developing dimethyl
                carbonate, paraformaldehyde and 1,4-Butanediol, etc. ; the
                natural gas is also the material for producing hydrocyanic acid,
                which is further used to produce a series of fine chemical
                products such as N-phenyl amino acetonitrile, sodium
                ferrocyanide and iminodiacetonitrile, etc., among which the
                iminodiacetonitrile can be used to produce the glyphosate
                Focus on developing the new-type silicon material industry,
Silicon         produce trichlorosilane with chlorine byproducts as raw material,
Material        and further process the trichlorosilane into polysilicon;
Industrial      comprehensively utilize the materials to develop the fumed silica;
Chain           vigorously develop the silicofluoric organic material, forming a
                circular economic silicon material industrial base.
Potassium       Based on the Potassium-Rich Brine resource advantage of the
Chemical        city of Qionglai, develop the potassium industrial chain, with
               Industrial         priority in the development of high value-added potassium
               Chain              chemical products such as the potassium chloride, high purity
                                  potassium hydroxide, potassium carbonate, agricultural
                                  potassium nitrate and potassium sulfate, and potassium
                                  phosphates, etc., form a distinctive potassium chemical
                                  production base.
    3.3 One Specialty per Zone
     3.3.1 Overview
     In accordance with the objectives of the “Tentative Suggestions on Speeding the
Construction of the Industrial Concentration Zones by the Chengdu Municipality”, insist on
the principles of scientific development, scientific construction and scientific management,
further optimize the program of industrial concentration development zones of the city, speed
the construction of infrastructure and supporting facilities, innovate on the management
system and operation mechanism, to form industrial concentration development zones with
distinctive industrial characteristics, complete supporting functions, high load-bearing
capacity, and the sustainable development capability.
     By 2010, the industrial value-added of the industries above designated size in the
industrial concentration development zones of the city shall exceed 130 billion Yuan, with the
industrial concentration degree over 70%. At least 10 industrial concentration development
zones with an annual sales revenue over 10 billion Yuan shall be completed, and at least 5 of
them shall have an annual sales revenue over 30 billion Yuan. The value-added of the
industries supported with priority in the industrial concentration development zones shall
account for 70% of the entire value-added.

Industrial Orientation of the “One Specialty per Zone” program of the Industrial Concentration
                                        Development Zone of Chengdu
                                                Industries Supported with
               No.     Concentration                                               Taboo Industries
                      Development Zone
                     Chengdu High-tech       Electronic Information (inclusive     1.Sugar making
                     Zone                    software) and bio-medical industry    2.Gourmet Powder
                                             Modern manufacturing focusing on         Manufacturing
                     Chengdu Economy                                                  (not inclusive
                                             the automobile whole-car (inclusive
                2    &       Technology
                                             of engineering machinery) and            of packaging)
                     Development Zone                                              3.Printing &.
                                             supporting accessories
                     Chengdu                                                          Dyeing
                3                            Petrochemical Industry                4.Leather Tanning
                     Petrochemical Base
                                             Enterprise headquarters focusing on   5.Artificial Oil
                4    Jijiang District        innovation designing and electronic     Production
                                             information services                  6.Coking
                                             Enterprise headquarters focusing on   7.Nuclear Fuel
                5    Qingyang District                                                Processing
                                             the aviation die industry
                                             Enterprise headquarters focusing on   8.Metal Smelting
                6    Jinniu District                                                  (not inclusive of
                                             the electronic information services
                                             Enterprise headquarters focusing on      calendaring
                7    Wuhou District          light industrial designing and           process)
                                             software development
                                             Enterprise headquarters focusing on
                8    Chenghua District       electrical and mechanical research
                                             and development
                9    Wenjiang District       Electronic machinery industry
                      Qingbai           Jiang   Metallurgy      and    construction
                      District                  material industry
                                                Precision machinery manufacturing
                 11   Xindu District            industry (Xinfan Town: furniture
                                                Electricity & Machinery and
                 12   Dujiangyan City
                                                Software Industry
                 13   Pengzhou City             Plastic Manufacturing Industry
                 14   Qianglai City             Natural Gas Chemical Industry
                                                Light Industry Focused on Shoes
                 15   Chongzhou City
                                                New-type Construction Materials
                 16   Jintang County            Manufacturing (Huaikou Town:
                                                Textile & Shoes Making Industry)
                                                Photovoltaic/photo-electricity and
                 17   Shuangliu County
                                                machinery and electricity Industry
                                                Precision machinery and electricity
                                                manufacturing industry (Ande
                 18   Pi County                 Town: Sichuan Cuisine main and
                                                subsidiary material processing
                                                Light      industry      machinery
                 19   Dayi County
                                                manufacturing industry
                                                Food & drink manufacturing
                 20   Pujiang County
                                                Chemical industries based on new
                 21   Xinjin County
                                                energy and new materials

     3.3.2 Layout of the Petrochemical Industry
     The petrochemical industry of Chengdu takes on a layout of “one base, two
parks and two sites”.

                           Spatial Layout of
                                  Industry of

      One Base                     Two Parks                    Two Sites
       Sichuan              Pengzhou Plastic                 Qionglai Salt &
    Petrochemical                S&T Industrial                Natural Gas
   Base (Pengzhou)                     Park                Chemical Industrial
                                 Expansion of              Concentration Site
                                  ZoneB of the                Qingbai Jiang
                                 Xinjin Industrial             Natural Gas
                                       Park                Chemical Industrial
                                                           Concentration Site
4. Impacts of the 5.12 Wenchuan Earthquake on the Industrial Development of
     4.1 Impacts of the Wenchuan Earthquake on the city of Chengdu
     In 2007, the GDP of the three disaster stricken counties/cities of Chengdu accounted only
for 9% of that of the whole city. And the impacts on the urban area and significant industrial
development zones of the city were relatively small. Except the main disaster areas,
enterprises in other areas of Chengdu bore relatively slight losses.
     By June 2nd, 94.82% of the industrial enterprises above designated size of Chengdu City
had restored normal production.
     The Chengdu Plain lies in the west of the Sichuan Basin, and on the west rim of the
Yangtze Block in geo-tectonics. The Yangtze Block is a stable block, and none of the three
fault zones of Sichuan Province is in the Yangtze Block, nor are they in the Sichuan Basin or
Chengdu Plain. Therefore, there is no possibility of any major earthquakes to occur in
     Experts’ Comments:
     “Since the Wenchuan Earthquake has allowed the energy accumulated by the earth’s
crust to release, so in 200 years’ time, there would not be any earthquakes ≥ Ms 8.0 to occur
in Chengdu, and the city will remain safe for at least 200 years.”
                                               --- Prof. Liu Baojun, China’s Famous Geologist,
                                            Academician of the Chinese Academy of Sciences
     “The low gliding rate of the Longmen Shan fault zone will also cause the prolonging of
the strong earthquake recurrence cycle, so it is estimated that the recurrence interval of
earthquakes ≥8Ms in the Longmen Shan fault zone is at least 3,000 to 5,000 years.”
                                                                        ---Mr. Zhang Peizhen,
      Director of the Institute of Geology, China Earthquake Administration, and Chief of the
Research Group on Earthquake Construct of the North-South Belt, National Wenchuan
Earthquake Specialists Committee
     4.2 Impacts of Wenchuan Earthquake on the Petrochemical Industry of Chengdu
     Both the CNPC and the SINOPEC have expressed publicly, that according to initial
checking, no evidence shows that the Wenchuan Earthquake brings major accidents to their
local enterprises. The earthquake didn’t produce serious impacts on the oil pipelines of the
CNPC in Sichuan area. July 10th, the Air Liquide Corporation of France signed a formal
investment compact with the Chengdu High-tech Zone, investing USD 70 million to produce
industrial gases.
     Up to now, the strategic position of Chengdu as the development center in West China
did not change; the living and industrial environment of Chengdu is still favorable; and the
industrial foundation, market and the government administration of Chengdu remain

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