BP’s US$2.7bn petrochemical joint venture deal near Shanghai was signed last month. The three-way project with Sinopec and Shanghai Petroleum Co will be built at Caojing and could process up to 900,000 tonnes of ethylene a year.
A US$1.8bn financing package for the deal was signed, which, according to the Financial Times, for the first time involved Chinese banks prepared to extend a large US dollar-denominated loan to a foreign company. Only two foreign banks, HSBC and the Industrial Bank of Japan, were involved in the loan facility.
Until now, most foreign companies in China have borrowed the foreign currency component of loans from overseas banks. However, Chinese banks are now actively moving into this market, partly as a result of growing levels of foreign currency deposits held by Chinese. At end-December 2001, foreign currency deposits held by financial institutions in China rose 5.2 per cent yearon- year to US$139.9bn.
Amec, the UK construction group, has won a contract initially worth US$60m to design and construct the petrochemicals plant. The company said the value of the deal could rise to several hundred million dollars.