(Yicai Global) Sept. 6 -- Liaoning Bora Enterprise Group has penned a framework agreement with world famous Dutch chemical company LyondellBasell Industries for a light hydrocarbon industrial project that will receive USD1.2 billion investment over 10 years.

The two signed their joint venture partnership memorandum of understanding and government support agreement in Panjin, a major oil production region in China's northeastern Liaoning province where the plant is located, LyondellBasell said in an announcement yesterday.

Bora and Lyondellbasell will form a 50-50 JV to operate a 1.1 million ton ethylene cracker which will produce olefins and polyolefins for use in various construction and consumer products such as pipes, plastic containers, petroleum fuel tanks and agricultural film. LyondellBasell will take charge of marketing the products per the announcement. Bora began construction of the facility this year. 

"The formation of this JV with a well-respected Chinese company allows us to increase our flexibility to produce these products closer to the customer. We see tremendous opportunity to create additional value and potentially grow further in this very important market," said Lyondellbasell Chief Executive Bob Patel.  

China constitutes over 60 percent of the Asian chemicals market and will see 40 percent of growth in global chemicals in the next ten years, according to London-based analytics firm IHS Markit.

The project will apply the Rotterdam-based chemical giant's technologies and greatly expand its presence in the burgeoning Chinese market  for olefins and polyolefins, which are core LyondellBasell products. LyondellBasell, among the globe's largest plastics, chemical and refining companies with operations in 24 countries and customers in over 100, already operates three Chinese polypropylene compounding facilities in Guangzhou, Suzhou and Dalian.

Bora, which formed in 2005, is the largest private chemical firm in Northeast China and plies the integrated petroleum refining, fine chemicals and petrochemical trade. It has total assets worth over CNY6 billion (USD842 million). It ranked 299th among the "Top 500 Chinese Enterprises" this year.

Olefins are hydrocarbons with a minimum of two carbon atoms and a double bond. They are polymerized to produce polyolefins, the most common of which are polypropylene and polyethylene.

Editor: Ben Armour