INEOS And SINOPEC Sign Three Significant Petrochemical Deals With An Aggregate Value Of $7B

• These transactions establish a very large footprint for INEOS in China.
• The agreements will have a combined capacity of 7 million tonnes per annum, generating a turnover of around $10B. The three deals are:
  • SECCO joint venture. INEOS will acquire 50% of Shanghai SECCO Petrochemical Company Limited (“SECCO”). SECCO has a capacity of 4.2 million tonnes of petrochemicals including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene.
  • ABS joint venture. INEOS and SINOPEC will also establish a second 50:50 joint venture for ABS (Acrylonitrile Butadiene Styrene), based on INEOS’ world leading proprietary ABS Technology. This will include the 600ktpa Ningbo facility currently under construction, plus a further 600ktpa of new capacity.
  • HDPE joint venture. INEOS and SINOPEC will also establish a third 50:50 joint venture to build a new 500ktpa HDPE (High-Density Polyethylene) plant in Tianjin. In addition to the Tianjin plant INEOS and SINOPEC shall build at least two additional 500ktpa HDPE plants in the future to produce INEOS pipe grade under license. The INEOS technology is again world leading.
• Sir Jim Ratcliffe, Chairman and CEO INEOS said: “These agreements significantly reshape INEOS’ petrochemical production and technology in China. We are pleased to make these major investments with SINOPEC in areas that provide the best growth opportunities for both companies. Both parties recognise the potential for closer collaboration across a number of other areas as we look ahead.”

INEOS and SINOPEC have today signed three back-to-back deals worth a combined value of $7B.

These landmark agreements are expected to generate a combined turnover of around $10B from 7 million tonnes of capacity. The three agreements will significantly reshape INEOS’ petrochemicals production and technology in China.

Firstly, INEOS has agreed to acquire a 50% stake in Shanghai SECCO Petrochemical Company Limited (“SECCO”), a subsidiary of China Petroleum & Chemical Corporation (SINOPEC). SECCO currently has a production capacity of 4.2 million tonnes of petrochemicals - including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene. It is a 200-hectare facility, located inside the Shanghai Chemical Industry Park.

Secondly, INEOS has agreed to establish a new 50:50 joint venture with SINOPEC with the intent to build production capacity of up to 1.2 million tonnes of ABS, to meet rapidly growing demand in China. The 600ktpa ABS plant in Ningbo, which is currently under construction by INEOS Styrolution^[1] and is planned to be operational by the end of 2023, will become part of the joint venture. INEOS and SINOPEC also plan to work together on two additional 300ktpa ABS plants, which will also be built by the joint venture based on INEOS’ world-leading Terluran ABS technology. One of these 300kt plants will be located in Tianjin, the location of the third unit is yet to be decided.

The third agreement will see INEOS and SINOPEC also establish a 50:50 joint venture to build a new 500ktpa HDPE plant in Tianjin. In addition to the Tianjin plant INEOS and SINOPEC shall build at least two additional 500ktpa HDPE plants in the future to produce INEOS pipe grade under license. The Tianjin plant is expected to be onstream by the end of 2023.

INEOS already has joint ventures in operation with SINOPEC following the acquisition of the Acetyls and Aromatics business from BP in January 2021, and both companies know each other well through two decades of commercial interfaces at various levels. They see a natural fit to working more closely in the future. Through this close relationship SINOPEC gains access to some of the best downstream technology in the world from INEOS and INEOS achieves a substantial presence in China, the fastest growing market in the world.

Jim Ratcliffe, Chairman and CEO INEOS said “These agreements significantly reshape INEOS’ petrochemical production and technology in China. We are pleased to make these major investments with SINOPEC in areas that provide the best growth opportunities for both companies. Both parties recognise the potential for closer collaboration across a number of other areas as we look ahead.”

China is a key growth region for INEOS and the agreements significantly extend its petrochemicals business with a focus on products where it has some of the leading proprietary technologies.

The transactions are all subject to regulatory approvals and other conditions. Each transaction is currently anticipated to complete before the end of the year and will be financed through a combination of internal cash resources and external financing.

^[1] https://www.ineos-styrolution.com/news/INEOS-Styrolution-hosts-groundbreaking-ceremony-for-its-new-600kt-ABS-plant-in-Ningbo-China

INEOS and Sinopec have signed three major petrochemical deals worth a combined US$ 7B.

These transactions will significantly expand INEOS' presence in China.

A series of joint venture cooperation agreements will achieve a combined annual production capacity of 7 million tons and generate sales of approximately US$10B per year. The three joint venture projects between INEOS and Sinopec include:

Shanghai SECCO joint venture project. INEOS will acquire a 50% stake in Shanghai Secco Petrochemical Co., Ltd. ("Shanghai Secco"). Shanghai SECCO has an annual production capacity of 4.2 million tons of petrochemical products, including ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene.

ABS joint venture project. INEOS and Sinopec will jointly establish a second joint venture company based on a 50%:50% equity ratio, which will use INEOS' leading proprietary ABS technology. The project includes the 600,000 tons/year ABS Ningbo project currently under construction, and will add 600,000 tons/year of production capacity in the future.

HDPE joint venture project. INEOS and Sinopec will jointly establish a third joint venture company based on a 50%:50% equity ratio to build a new 500,000-ton/year high-density polyethylene (HDPE) project in Tianjin. In addition, INEOS and Sinopec will build at least two 500,000-ton/year high-density polyethylene (HDPE) projects in the future to license the production of INEOS pipe grades. The relevant INEOS technology used in this project is also world-leading.

Sir Jim Ratcliffe , Chairman and CEO of INEOS Group , said: "This cooperation will reshape the production and technology layout of INEOS's petrochemical industry in China. We are very honored to work with Sinopec to explore these areas of cooperation and achieve win-win development. In the future, We will deepen cooperation in more fields and jointly promote the development of the industry."

INEOS and Sinopec today signed a series of joint venture agreements worth approximately US$7B. The three landmark agreements are expected to achieve a combined annual production capacity of 7 million tons and generate approximately $10B in annual sales. This cooperation will reshape the production and technology layout of INEOS in the petrochemical industry in China.

First, INEOS will acquire a 50% stake in Shanghai Secco Petrochemical Co., Ltd. (“Shanghai Secco”), a subsidiary of China Petrochemical Corporation (SINOPEC).

Shanghai Secco is located in Shanghai Chemical Industrial Park. The factory covers an area of ​​200 hectares. At present, the annual production capacity of petrochemical products is 4.2 million tons. The production includes ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butylene. alkene, benzene and toluene.

Second, INEOS and Sinopec will jointly establish a new joint venture with a 50%:50% equity ratio, aiming to achieve 1.2 million tons/year ABS production capacity to meet the rapidly growing demand in China. The ABS project with an annual production capacity of 600,000 tons is located in Ningbo and is currently being constructed by INEOS Styrolution. It is planned to be mechanically completed by the end of 2023, and the project will become part of the joint venture. INEOS and Sinopec also plan to cooperate and use INEOS' world-leading Terluran ABS technology to build two other ABS projects with a production capacity of 300,000 tons per year. One of the ABS projects with a capacity of 300,000 tons/year will be located in Tianjin, and the location of the third project has not yet been determined.

According to the third agreement, INEOS and Sinopec will jointly establish a joint venture company based on a 50%:50% equity ratio to build a new 500,000-ton/year high-density polyethylene (HDPE) project in Tianjin. In addition, INEOS and Sinopec will build at least two 500,000-ton/year high-density polyethylene (HDPE) projects in the future to license the production of INEOS pipe grades. The Tianjin project is expected to be completed by the end of 2023. The Tianjin project is expected to be FEED and mechanically completed by the end of 2023.

Since INEOS acquired the acetyl and aromatics business of British Petroleum (bp) in January 2021, INEOS has established a basis for friendly cooperation with Sinopec. Based on the multi-faceted business cooperation between the two parties for more than 20 years, INEOS and Sinopec have been familiar with each other for a long time, and the cooperation between the two parties will be closer and tacit understanding in the future. Through closer joint venture cooperation, Sinopec will obtain a number of world-leading downstream technology licenses from INEOS. At the same time, INEOS will also obtain a larger business scale in the world's fastest growing Chinese market.

Sir Jim Ratcliffe , Chairman and CEO of INEOS Group , said: "This cooperation will reshape the production and technology layout of INEOS's petrochemical industry in China. We are very honored to work with Sinopec to explore these areas of cooperation and achieve win-win development. In the future, We will deepen cooperation in more fields and jointly promote the development of the industry."

China is an important growth market for INEOS, and this series of joint venture agreements will further expand INEOS' petrochemical business in China and focus on producing related products using INEOS' leading proprietary technology.

All transactions are subject to regulatory approvals and conditions. All transactions are currently expected to close by the end of this year. The project will provide financial support through a combination of its own funds and external financing.