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Investment Guidance for Petrochemical Industry

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					Guide to Invest in Petrochemical Industry Of Chengdu

August, 2008

Content
1.0 CURRENT SITUATION OF THE INDUSTRY ................................................. 3 1.1 INDUSTRIAL FOUNDATION ............................ ERROR! BOOKMARK NOT DEFINED.3 1.2 INDUSTRIAL CHAIN....................................... ERROR! BOOKMARK NOT DEFINED.5 1.2.1 About the Industrial Chain .................................. Error! Bookmark not defined.5 1.2.2 Major Industrial Categories ................................ Error! Bookmark not defined.5 1.2.3 Introduction of Representative Enterprises ......... Error! Bookmark not defined.6 1.2.4 International Well-known Enterises ............................................................... 7 1.3 MARKET OVERVIEW ............................................................................................... 8 1.3.1 Overall Development Status of the Petrochemical Industry .......................... 8 1.3.2 Market Analysis of the Petrochemical Industry of Chengdu ......................... 9 2.0 INVESTMENT ENVIRONMENT ..................................................................... 11 2.1 HUMAN RESOURCES ............................................................................................. 11 2.2 INFRASTRUCTURE ................................................................................................ 13 2.3 LOGISTICS ............................................................................................................ 14 2.3.1 Railway ............................................................................................................................. 14 2.3.2 Road ................................................................................................................................... 16 2.4 ENVIRONMENT PROTECTION REQUIREMENTS ....................................................... 17 3.0 INDUSTRIAL DEVELOPMENT PROGRAM ................................................ 19 3.1 INDUSTRIAL POLICY ............................................................................................. 19 3.1.1 Improve Overall Planning and Integrated Coordination .............................. 19 3.1.2 Develop and Canvass for Policies in support of the development of the Industry........................................................................................................................................ 20 3.1.3 Enhance Land Realignment to Ensure Industrial Land Using.......................... 20 3.1.4 Strengthen Technology Innovation and Human Resources Exploration ....... 20 3.1.5 Actively Acquire Significant Materials Required by the Petrochemical Industry........................................................................................................................................ 21 3.1.6 Strengthen Investment and Financing, and Collect Industrial Development Capitals through Multiple Channels ................................................................................... 21 3.1.7 Strengthen Merge and Regrouping of Enterprises, Focus on fostering Large-scale Enterprises and Groups ................................................................................... 22 3.1.8 Carefully Implementing Energy Saving and Emission Reduction, Develop
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Circular Economy .................................................................................................................... 22 3.2 INDUSTRIAL PROGRAM ......................................................................................... 23 3.2.1 Overarching Goal........................................................................................................... 23 3.2.2 Development Program of Key Industrial Chain ................................................... 24 3.3 ONE SPECIALTY PER ZONE ...................................................................... 27 3.3.1 Overview .......................................................................................................................... 27 3.3.2 Layout of the Petrochemical Industry...................................................................... 29 4.0 IMPACTS OF THE 5.12 WENCHUAN EARTHQUAKE ON THE INDUSTRIAL DEVELOPMENT OF CHENGDU ............................................... 34 4.1 IMPACTS OF THE WENCHUAN EARTHQUAKE ON THE CITY OF

CHENGDU ............................................................................................................. 34
4.2 IMPACTS OF WENCHUAN EARTHQUAKE ON THE

PETROCHEMICAL INDUSTRY OF CHENGDU .......................................... 35

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1.0 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 property 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;

182.25

Industrial Sales Revenue of Chengdu Industrial Sales Revenue of the Petrochemical Industry

2803.85

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.

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

300 250 200 150 100 50 0 Industrial ValueAdded Industry of the Whole City Petrochemical Industry

8.712 18.225 1.753 1.179
Profits Tax

Industrial Growth

20 15 10 5 0

Major Economic Growth Indexes of the Petrochemical Industry of Chengdu (Unit: 0.1 billion Yuan) Industrial ValueAdded Sales Revenue Total Profits Tax Total Profits 2003 2004 2005 2006 2007

Output of Major Petrochemical Products in 2007 Synthetic Ammonia Nitrogen Fertilizer Sodium Sulfate Anhydrous 732,600 t Chemical 494,000 t Agricultural 470,800 t PVC Resin Urea (Physical Quantity) 912,100 t High 60,000 t Monoammonium Phosphate

Purity Triallylamine

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Pesticide (Original Chemical) 174,600 t

Potassium Carbonate

Potassium Hydroxide

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 m Processin g

Coking and Nuclear Fuel Processing Industry

Chemical Material & Chemical Products Industry

Chemical Fiber Productio n Industry

Pharmacy Production Industry

Rubber Product Industry

Plastic Product Industry

1.2.2 Major Industrial Categories

Chemical Fertilizer

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

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Farm Chemical

Basic Chemical

Paint, Printing Ink and Pigment Specialty Chemical

Synthetic Material

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 realized in 2007 was 496 million Yuan, and the profits tax 32 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 realized in 2007 was 3.228 billion Yuan, and the profits tax 303 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, with the property totaling 899 million Yuan; the sales revenue realized in 2007 was 1.373 billion Yuan, and the profits tax 133 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. 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
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China

National

Petroleum

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 Rank Company Unit: 1,000 ton/year Ownership
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Number of Productivity of the Entire

Factories 1 2 3 4 5 6 7 8 9 10 Dow Chemical Company Exxon Mobile Corporation Saudi Basic Industries Corporation Shell Group SINOPEC INEOS Group Lyondell Chemical Company Chevron Phillips Chemical Company TotalSA (TOT) BASF Group 14 l5 7 10 9 8 6 4 9 7

Combined Device 13,155 11,460 8,985 8,945 6,295 6,546 4,880 3,956 5,523 4,955

Capacity of the Company 10,370 8,327 7,182 6,821 6,145 5,09l 4,880 3,701 3,327 3,109

1.3 Market Overview 1.3.1 Overall Development Status of the Petrochemical 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
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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 rapidly. 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
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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

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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 1 2 3 4 5 6 7 8 Materials Polypropylene Products Benzene P-xylene C5 C9 Butyl-octyl Alcohol Ethylene Oxide Light and Heavy Fuel Oil Amount(1,000 tons) 1,020 370 600 110 50 330 50 180

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2.0 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.
Southwest Located in the Xindu District of Chengdu, this university

Petroleum University focuses on the petroleum, natural gas subjects and the related ones, with 22,408 full-time students currently studying in it. Sichuan University 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 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 Taiwan. Located in Chengdu City, it is a national key university focusing on engineering, with the subjects of engineering, science, administration, economy, culture and law, etc. developing coordinately, and has fostered nearly 200,000 graduates. Located in Huayang, Chengdu, it opens petroleum drilling, petroleum mud, internal combustion engine, natural gas purification, and natural gas extraction and transmission, etc., among other subjects. Currently there are more than 2,000 students studying in the school.

Southwest Jiaotong University

Sichuan Petroleum School

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Reference Salary Level for Foreign Investment Enterprises (Manufacturing Industry) in Chengdu Position  Senior Executive Level(Factory Manager)  Department Manager Level (Financial RMB Yuan/Month 2300-5000 1800-4000

Controller, Logistics Manager, etc.)  Engineer (with two years’ experience)  Engineer (without two years’ experience)  Technician/Director experience)  Skilled Operator (with two years’ experience)  Moderately Skilled Operator (with one year’s experience)  Green-hand Operator (new graduates from vocational schools) 580-1000 700-1500 600-1300 (with two years’ 1500-3000 1250-2500 860-1500

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.

Unit Sichuan

Resources and Energy Key Elements to Be Guaranteed Development Land Water Electricity Timeframe 2008-2012 4 km2 4,000 t/hour 260,000kW

Natrual Gas 1.8 billion
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Petrochemical Base 2012-2017 Pengzhou Plastic Science & 2008-2017 Technology Industrial Park 5.3 km2 2.4 km2 5,000 t/hour 320,000kW

m3/year 1.9 billion m3/year

3,000 50,000 t/day 130,000kW m3/day

400 2008-2012 Expansion of Zone B of Xinjin 700 Industrial Park 2012-2017 3 km2 4,000 t/hour 200,000kW million m3/year 2 km2 2,500 t/hour 150,000kW million m3/year

Water 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. Electricity 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). Natural Gas The total supply of natural gas in Chengdu is 2.52 billion m3; the price natural gas for industrial production is 1.66 RMB Yuan/m3.

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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

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

2.3.2 Road There are altogether
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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 From/To Destinatio n Chengdu-Xi’anChengdu- Yangsha Shangqiu-NanjingShanghai n Port Suzhou-Shanghai Chengdu-ChongqingChengduShenzhen Yantian Port Guiyang-Nanning2,400 Guangzhou-Shenzhe n 2 days 40 feet 13,000 2,508 2 days 40 feet 12,500 Route (km) (hour) Size One way Time Container Price (Yuan)

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Chengdu-Xi’anChengduTianjin Tianjin Shi Jia ZhuangPort Zhenzhou-Tianjin Chengdu- Lianyun Lianyun Gang Gang Port Chengdu-Xi’anShangqiu-Lianyun Gang 2,491 2 days 40 feet 13,000 2,230 2 days 40 feet 12,500

2.4 Environment Protection Requirements
Environment Quality Standards Effluent Standards for Pollutants

Ambient Air: implementing the secondary Wastewater Discharge: implementing the standard of the “Ambient Air Quality Level Three standard of the “Integrated Standard” GB 3095-1996; wastewater discharge standard” GB

The hydrogen chloride (HCl), ammonia 8978-1996. (NH3), sulfuric acid mist, chlorine (Cl2) will Waste Gas Discharge: implementing the implement the Hygienic Standards for the secondary standard, emission limits of air Design of Industrial Enterprises (TJ36-79) pollutants for new pollution sources of the to comply with the maximum allowable “Integrated Emission Standard of Air density of the harmful matters in the air for Pollutants” GB 16297-1996. residence areas. Ammonia (NH3): implementing the

“Emission Standard for Odor Pollutants” GB 14554-93. Surface water will implement the Flue Gas of Natural Gas Boiler:

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Category

III

waters

standard

of

the implementing

the

secondary

regional

“Environmental

Quality

Standards

for standard of the “Emission Standard of Air Pollutants for Boilers” GB 13271-2001. Noise: implementing the

Surface Water” GB 3838-2002. Sound Environment:

implementing the Boundary

Category III standard of the “Standard of Category III standard of the “Standard of Environmental Noise of Urban Area” GB Noise 3096-93. at Boundary of Industrial

Enterprises” GB 12348-90.

3.0 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
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development posture. 3.1.2 Develop and Canvass for Policies in support of the development of the Industry 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.

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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 capabilities. 3.1.5 Actively Acquire Significant Materials Required by the Petrochemical Industry 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 products.

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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
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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
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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) Industrial Value-Added 11.7 (billion Yuan) Sales Revenue (billion 24 Yuan) Profits Tax (billion 2.2 Yuan) 2.7 3.5 15 30 30 38 130 250 13 15 50 80 2008 2009 2010 2012 2017

3.2.2 Development Program of Key Industrial Chain
Oil-refining 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.

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Alkene Industrial Chain

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 be further processed into high density polyethylene (HDPE), linear low density polyethylene (LLDPE) and ethylene 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 transalkylation and isomerization, etc., to get benzene, p-xylene and o-xylene products. Benzene/p-xylene/o-xylene The benzene chain: with benzene as the raw material, hydrogenate to generate cyclohexane, which is in turn Industrial Chain 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 (UPR). Aromatic Hydrocarbon Industrial Chain Styrene Industrial Chain Ethylene and benzene together may produce styrene, which
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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 (MBS). The propylene can be oxidized into acrylic acid, which can Acrylic Acid and Ester Industrial Chain produce methyl methacrylate, ethyl acrylate, n-butyl acrylate 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. Phenol-Acetone Industrial The phenol and acetone may be used to produce special Chain phenolic resin; the phenol and acetone may synthesize into bisphnol A, which is further used to produce polycarbonate (PC) engineering plastic; the bisphnol A and epichlorohydrin together may produce thermosetting synthetic materials such as epoxy resin, etc. Plastic-Rubber Processing The polyethylene, polypropylene, polystyrene and PVC are Industrial Chain the materials primarily used for developing programs of plastic accessories, containers, plastic construction materials, BOPP films, nonwovens, transparent polypropylene sheets, 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. Natural Gas Chemical Industrial Chain 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 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
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produce the glyphosate pesticide. Silicon Material Industrial Chain Focus on developing the new-type silicon material industry, produce trichlorosilane with chlorine byproducts as raw material, and further process the trichlorosilane into polysilicon; comprehensively utilize the materials to develop the fumed silica; vigorously develop the silicofluoric organic material, forming a circular economic silicon material industrial base. Based on the Potassium-Rich Brine resource advantage of the city of Qionglai, develop the potassium industrial chain, with priority in the development of high value-added potassium 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.

Potassium Chemical Industrial Chain

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
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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 No. Industrial Concentration Development Zone 1 Chengdu High-tech Zone Electronic (inclusive Information 1. Sugar making software) and 2. Gourmet Powder Manufacturing (not inclusive of packaging) 3. Printing &. Dyeing 4. Leather Tanning Industries Priority Supported with Taboo Industries

bio-medical industry 2 Chengdu Economy Technology Development Zone 3 Chengdu Petrochemical Base 4 Jijiang District Enterprise headquarters Modern manufacturing

& focusing on the automobile whole-car (inclusive of

engineering machinery) and supporting accessories Petrochemical Industry

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focusing designing

on and

innovation 5. Artificial Oil electronic Production 6. Coking 7. Nuclear Fuel Processing headquarters 8. Metal Smelting (not inclusive of calendaring process)

information services 5 Qingyang District Enterprise headquarters

focusing on the aviation die industry 6 Jinniu District Enterprise

focusing on the electronic information services 7 Wuhou District Enterprise headquarters

focusing on light industrial designing development 8 Chenghua District Enterprise focusing on headquarters electrical research and and and software

mechanical development 9 10 Wenjiang District Qingbai District 11 Xindu District

Electronic machinery industry

Jiang Metallurgy and construction material industry Precision manufacturing (Xinfan industry) Town: machinery industry furniture

12

Dujiangyan City

Electricity & Machinery and Software Industry
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13 14

Pengzhou City Qianglai City

Plastic Manufacturing Industry Natural Industry Gas Chemical

15

Chongzhou City

Light Industry Focused on Shoes Making

16

Jintang County

New-type Materials (Huaikou

Construction Manufacturing Town: Textile &

Shoes Making Industry) 17 Shuangliu County Photovoltaic/photo-electricity and machinery and electricity Industry 18 Pi County Precision electricity machinery and

manufacturing

industry (Ande Town: Sichuan Cuisine main and subsidiary material processing industry) 19 Dayi County Light industry machinery

manufacturing industry 20 Pujiang County Food & drink manufacturing industry 21 Xinjin County Chemical industries based on new energy and new materials

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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 the Petrochemical Industry of Chengdu

One Base Sichuan Petrochemical Base (Pengzhou)

Two Parks Pengzhou Plastic S&T Industrial Park Expansion of ZoneB of the Xinjin Industrial Park

Two Sites Qionglai Salt & Natural Gas Chemical Industrial Concentration Site Qingbai Jiang Natural Gas Chemical Industrial Concentration Site

31

32

33

34

4.0 Impacts of the 5.12 Wenchuan Earthquake on the Industrial Development of Chengdu 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 Chengdu. Experts’ Comments:
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“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
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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 10 th, 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 unchanged.

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