Sinopec’s biggest investment will be the 81.5 billion yuan it is spending on upstream exploration for crude oil and gas. In 2022, the company said market demand for refined oil will continued to recover, and demand for natural gas and petrochemical products will keep growing.

The Chinese state-owned conglomerate, however, appears to be growing increasingly concerned about the impact of geopolitical changes on oil pricing and on chemical projects.

According to sources speaking to the Reuters news agency, Sinopec has suspended talks on a $500 million petrochemical investment and a gas marketing venture in Russia, as the country’s leaders fear getting caught up in Western sanctions against Moscow  over the invasion of Ukraine.

In autumn 2020, Russian petrochemical group Sibur began construction on a new cracker and commodity plastics complex (Amur Gas Chemical Complex) in Russia’s far east, as part of a joint venture in which Sinopec reportedly holds 40%. Start-up is scheduled start up in late 2024 with production of 2.3 million t/y of polyethylene and 400,000 t/y of polypropylene. 

The gas marketing joint venture was planned to supply the Chinese market. Russia is China’s second-largest oil supplier and third largest gas provider.

Talks about Sibur and Sinopec teaming up on a follow-up project that would have output similar to the first had been continuing, Reuters said, but Sinopec pulled the brake when it learned that Gennady Timchenko, Sibur minority shareholder and board member, had been sanctioned by the EU and the UK.

Sanctions also reportedly have complicated the Amur project as Russia’s Sberbank, now on the sanctions list, was set to provide $700 million of the $9.1 billion in loans for the project. Some reports said China is seeking alternative funding. 

Sibur told Reuters, however, that it continues to cooperate with Sinopec, among other things on realizing the Amur project, while adding that the companies are working together on the issues of project financing.

Author: Dede Williams, Freelance Journalist