ExxonMobil, the American multinational oil and gas major recently announced the signing of an initial deal with China for the development of a petrochemical complex and investment in liquefied natural gas terminal in the country. The deal is among the latest major foreign investment in the world’s top chemicals market.
According to reliable sources, the agreement that has been signed with the southern Guangdong provincial government of China, has a cumulative worth of billions of dollars and includes a 1.2 million-ton-per-year ethylene plant, 2 polypropylene lines and 2 polyethylene production lines in the coastal city of Huizhou. The coastal city will also be the location for the building of an LNG terminal. Exxon will not only be participating in the project but will also be supplying LNG to the same. The timeline for the project completion and its capacity has not yet been disclosed.
According to reports, China is allowing local independents and global players greater access to its substantial chemicals market to increase supply pertaining to the rapidly expanding demand in plastics, coatings and adhesives that are fundamental to the automotive and consumer electronic sectors. As the country is intensifying its efforts to urge factories and households to switch to gas-fired boilers as an effort to battle the smog crisis China is currently facing, Exxon will be one of the only international oil companies to invest in LNG infrastructure.
The news of the agreement comes on the heels of BASF, the German chemical giant having invested $10 billion in Guangdong to build the first exclusively foreign-owned chemicals complex in China. The project is also remarkable due to its inclusion of a steam cracker that has the capacity to produce 1 million tons of ethylene each year.
The deal between American ExxonMobil and the Chinese government is remarkable as it comes at a time when the two top global economies are embroiled in a gradually expanding trade war that has witnessed the two countries levying retaliatory punitive tariffs that extend to include goods worth $50 billion.