New Contract with Sinopec in Qingdao, China

  • China
  • Investment

Air Liquide, present in Qingdao since 1995, has entered into a new long-term agreement with Qingdao Refining & Chemical Co., Ltd, a subsidiary of Sinopec (China Petroleum & Chemical Corporation) in Qingdao, Shandong Province. Under the terms of this agreement, Air Liquide will supply nitrogen necessary for the new Qingdao refinery by pipeline. This new contract demonstrates the desire of the Group to expand its pipeline networks in the industrial basins, and is a further example of the decision by industrial groups in China to outsource their gas requirements.

With a population of 91 million, Shandong Province is one of the largest provinces in China with a GDP growth of about 15% in 2006. It connects the Greater Shanghai and the Greater Beijing areas. Shandong's main industries are chemical, machinery, electronics and steel.

This refinery will produce more than 10 million tonnes/year of crude oil to be started in Q1 2008. Sinopec is one of China's largest producers and suppliers of oil products and major petrochemical products. It is also the second largest crude oil producer in China.

In 2005, Air Liquide acquired a local company with an ASU (Air Separation Unit) in Qingdao Economic and Technical Development Area and will soon commission another ASU for an investment of 20 million euros. This ASU will supply Qingdao Refining&Chemical and also Lidong Chemical as previously announced.

Commenting on this new development, Jean-Pierre Duprieu, Senior Vice-President Asia-Pacific and member of the Executive Committee of Air Liquide, said, "We are very pleased to have signed this agreement with Qingdao Refining & Chemical Co., Ltd. It not only enables us to extend our pipeline network in the area, but it also constitutes a milestone in our cooperation with Sinopec, which has decided to outsource its gas needs. We want to thank Sinopec for their trust. This new investment is the sixth announced in China in the last 12 months, for production of industrial gases. It is part of the plan to accelerate investments in high-growth segments recently announced by the Group.”

Mr. DU Guosheng, Vice-President of Sinopec Group and Chairman of Qingdao Refining & Chemical Co., Ltd, added, "After fruitful discussion, we have decided to entrust Air Liquide with all our nitrogen needs. We are happy to benefit from Air Liquide's presence in Qingdao and its worldwide capabilities.”