Nicosia, Mar 23: Qatar Petroleum International (QPI) has signed a Memorandum of Understanding (MoU) with China's Sinopec concerning the construction in China of an ethylene plant with the capacity to produce between 700,000 and 800,000 tons of ethylene a year.

The location of the plant has not been decided yet.

Nasir Jaidah, QPI's Managing Director, told reporters that Qatar would supply the condensate feedstock for the plant, which is expected to start production in 2013.

He could not give an estimate of how much the project will cost, because the feasibility study has not been completed, but he said that it would run to billions of dollars. He also pointed out that the ethylene plant would be QPI's first investment in China.

As currently, China produces about 10 million tons of ethylene a year, while the country's demand is close to 24 million tons a year, the production of the new plant will be used to satisfy the country's domestic needs.

Last January, the Saudi Basic Industries Corporation and Sinopec signed a heads of agreement for an ethylene derivatives plant that will have the capacity to produce one million tons of derivatives a year.

The project will be completed before the end next year.

Ethylene is the most produced organic compound in the world; global production of ethylene exceeded 75 million metric tons per year in 2005.

To meet the ever increasing demand for ethylene, sharp increases in production facilities have been added globally particularly in the Gulf countries. Ethylene cracker capacities in the Gulf region alone are projected to increase from eight million tons in 2000 to 28 million tons by 2010. (ANI)