By intern reporter Wang Zhen and staff reporter Luo Jieqi

(Caijing Magazine) A multibillion-dollar Sino-Kuwaiti petrochemical complex will be relocated to protect an "environmentally challenging" section of the Nansha Economic Zone in the city of Guangzhou, the project's investors have confirmed.
 
A memorandum of understanding for moving the Petrochemical Integration Project was signed May 11 by the project's three stakeholders: Kuwait National Petroleum Corp., China Petroleum & Chemical Corp. (Sinopec) and the Guangdong Province government.

The move came four years after the central government picked Guangdong for the US$ 8 billion complex, which is slated to produce up to 12 million tons of crude oil and 1 million tons of ethylene annually. Opposition from legislators, political advisers and environmentalists eventually prompted the government to change its course.

Nansha's Advantage

Guangdong is China's top income engine, accounting for 12 percent of the nation's GDP. But a key weakness is its dependence on imported oil. So in 2005, the Chinese government took steps to improve the province's position by signing a memorandum of understanding with OPEC member Kuwait for a steady, long-term fuel supply through a petrochemical project hosted by Guangdong.

Attracted by the project's huge potential for industrial value, tax revenue and complementary industries, several port cities in the province vied for the project. Each interested city -- Guangzhou, Huizhou, Zhanjiang, Maoming, Zhuhai and Shantou – had had some experience with the petrochemical sector.

An NDRC directive six months later changed the project's scope. The commission backed integration of oil refining and petrochemical production, prompting investors to add an ethylene production line to the refinery's plan. And Sinopec Guangzhou Company (SGC) decided to close two ethylene lines in Guangzhou's Huangpu District.

NDRC allowed preliminary work on the integrated project to proceed in Nansha, but withheld any official endorsement of the project.

A site covering 8 square kilometers was earmarked for the project. About 30 families were moved from the plot, and a 100-member team that included Kuwaiti and Chinese specialists arrived in April 2007 to launch a feasibility study.
 
Public Concerns

Nansha is also ecologically rich. One section is described as "Guandong's last virgin territory," with rivers, ponds and wetlands. In fact, wetlands account for 89 percent of the area.

Several thousand acres of reeds and mangroves flourish in a huge wetlands park close to the project site. The park is a year-round home to more than 10,000 birds of 24 kinds, and a winter shelter for tens of thousands of migrating birds. 

According to the Guangdong Environmental Protection Planning Guidelines 2006-'20, Nansha is "an ecologically fragile and environmentally sensitive zone." The guidelines call for "preventing the establishment of heavy polluting projects, such as oil refining, petrochemical, iron and steel" plants in the area.

In January 2008, the project was cited as a priority in a Guangdong Economic and Social Development Plan. But opposition from various circles emerged when the plan went before the provincial branch of the National People's Congress (NPC).

Fourteen NPC delegates called for delaying the project. And in the months that followed, more concerns were raised over the project's environmental feasibility. Some called for moving it out of Nansha.

Urban planners and environmentalists in neighboring cities including Zhuhai, Zhongshan, Dongguan, Foshan, Jiangmen, Shenzhen, Hong Kong and Macao also kept a close watch.

Some experts warned that gaseous emissions could be carried by winds and leaking sewage could ride the tides to surrounding cities and towns in the delta, aggravating existing water and air pollution in the densely populated region.

The Pearl River Delta -- along with the Yangtze River Delta, Bohai Bay, the Texas Gulf Coast and Mexico City – has been called one of the world's worst brown cloud areas.

A report last November by the Bauhinia Foundation Research Center, a think tank composed of former Hong Kong officials, called the Nansha petrochemical project a "potential security threat to the Pearl River Delta metropolitan area," and said project decision making should involve not only Guangzhou but the whole region.

Edward Yau Tang-wah, environment secretary for the Hong Kong SAR government, said the city's environmental authorities had expressed concern about the project's regional ecological impact and had monitored its progress within the framework of the Hong Kong-Guangdong Cooperation Joint Conference.

The Guangzhou municipal government has conducted two rounds of environmental impact evaluations over the past three years, prompting city officials to pledge to maintain drinking water quality. Meanwhile, SGC promised to limit emissions and discharges by overhauling production lines.

But public doubts persisted. Pan Dalin, deputy director of the Guangdong NPC Environment and Resources Protection Committee, said the project not only runs contrary to a number of provincial regulations and planning guidelines, but also falls short of environmental standards. 

New Location

The project is likely to leave Nansha but not Guangdong. Zhanjiang and Maoming have been named as possible candidates.

Chen Yaoguang, secretary of the Communist Party in Zhanjiang, told the media in February that his city is looking to fill a 15-million ton gap between its plan and existing annual refined oil capacity of 5 million tons. Zhanjiang sent in April a feasibility report to Guangdong officials offering to take the project, according to a Sinopec source.

Sinopec's pillar petrochemical factories in Guangdong are in Guangzhou, for the Guangdong market, and Maoming, which focuses on business in western Guangdong and other southwestern provinces. Factoring in setup, production capacity and market volume, the Sinopec source said "Zhanjiang could be a choice."

Officials of Maoming's local chapter of the NDRC said they have no news about the relocation. Li Ningning, deputy chief for the NDRC's Department of Basic Industries, told Caijing that a new site has yet to be chosen.

Full article in Chinese: http://magazine.caijing.com.cn/2009-06-08/110179292.html