Chinese refinery and petrochemicals giant Sinopec (Beijing; www.sinopec.com) is planning to build the company's first gas-based cracker. According to a report from the international news agency "Reuters", Sinopec wants to build the facility in Qingdao, in the country's northeastern province of Shandong, which places it halfway between Beijing and Shanghai. The proposed cost for the site is anticipated to be roughly USD 3.1 bn. The news agency says it will take three years to complete the plant. However, no specific timeline has been mentioned.

The planned capacity of the scheduled facility is estimated to be around 1m t/y of ethylene. Half of the feedstock would be from imported natural gas and the rest would be liquefied petroleum gas (LPG) from a nearby refinery, also based in Qingdao, and belonging to the company with the use of a deep sea port. Where the natural gas liquids would be imported from was not confirmed; however, industry experts are suggesting it is coming potentially from the US post-2015. Reuters cites the official website of the Ministry of Environmental Protection, which recently posted an announcement of the plans.

It is being speculated that China is moving in the direction of gas-based production of ethylene to counter inexpensive ethylene imports from the US. Ethylene produced from shale gas crackers costs less than half of that produced utilising naphtha. As in other nations with suspected abundance of shale gas, China, too, is making efforts to explore and develop its potential.

Most of the crackers in China and the rest of Asia are based on naphtha as in Europe. In northwestern China a significant number of olefin production plants based on coal are in the process of being built or are in the preliminary stages of planning. Developments in the country's gas market will, however, have an affect on the competitive landscape of the coal equation.