NEWS OF THE WEEK BUSINESS
DOW, BASF PURSUE JOINT VENTURES
The acrylics value chain will also be extended to produce superabsorbent polymers for hygiene and industrial applications. The new operations are expected to
Firms' projects aim to raise presence in regions with growing chemical production
T
HE WORLD'S TWO LARGEST
chemical companies are separately embarking on projects that will increase their presence in two fast-growing regions for chemical production. Dow Chemical has been picked by Saudi Arabian Oil Co. (Saudi Aramco) as its partner in a potential joint-venture chemicals and plastics complex at Ras Tanura, in Saudi Arabia's eastern province. Meanwhile, Germany's BASF and China Petroleum & Chemical Corp., or Sinopec, have signed a $500 million agreement to expand their joint petrochemical complex in Nanjing, China. Saudi Aramco and Dow say they are negotiating a joint venture that would encompass "an array of world-scale facilities producing a very broad portfolio of plastics and chemical products." The proposed project would be integrated with the existing Ras Tanura refinery, which is one of the world's largest refinery complexes. The companies did not provide details on production capacity, time frame, or cost. Saudi Aramco and Dow say their joint venture would produce "an extensive and diversified slate of chemicals and introduce new value chains and specialty products" to Saudi Arabia. The country has been working to develop downstream business sectors to further industrialize and diversify its oil-based economy. Dow is moving ahead with other projects in the Middle East, where it expects an abundant supply of low-cost feedstocks to provide a competitive advantage. The company says it is "making good progress in the planning phase" of a project announced in 2004 that calls for the construction of WWW.CEN-0NLINE.ORG
an ethylene cracker and three poryethylene units in Oman. In addition, Dow is building a second ethylene cracker and downstream plants in Kuwait with Petrochemical Industries Co. of Kuwait, which is Dow^s partner in the existing Equate joint venture. Equate II is due to come onstream in 2008. BASF and Sinopec, meanwhile, say the expansion of their Nanjing petrochemicals complex will involve an increase in cracker capacity of 25% and an expansion of downstream capacities. The steam cracker at the complex will be expanded to produce 750,000 metric tons per year of ethylene, which is in short supply in China. The BASF-Sinopec project also includes expansion of an ethylene oxide plant and development of ethylene oxide derivatives such as nonionic surfactants and the solvent butyl glycol ether.
The Chemical Company
iJLA Ceremony of Frarm >rzeichnung oer
BYC Expansior eiterung
come onstream in 2009. BASF and Sinopec also agreed to integrate a second joint operation, Yangzi-BASF Styrenics, into BASF-YPCCo.Ltd.,whichis50% owned by each company. BASF has invested some $7.2 billion in the Asia-Pacific region since 1990 and plans to spend another $1.3 billion by 2009. The company says the Nanjing site will make a substantial contribution to its goal of achieving 10% of its global sales and earnings in the chemical business in China by
FAST FRIENDS BASF Chairman Jiirgen Hambrecht (right) and Chen Tonghai, chairman of Sinopec, celebrate at a signing ceremony in Berlin for the expansion of the Nanjing site.
2010.—GLENN HESS
PHARMACEUTICALS
Software Mogul Forms New Drug Company
D
ietmar Hopp, cofounder of industrial software giant SAP, is turning his attention to the drug industry. Hopp is leading the formation of a new company, as yet unnamed, through a complex merger of two German biopharmaceutical firms, Axaron Bioscience and Lion Bioscience. The company will have funds of approximately $65 million and focus on central nervous system diseases. A little more than 40% of the funding will come from Hopp and his family. BASF, the majority shareholder in Axaron, will put in 14%, and the remainder will come from Lion. The Hopp family also has offered to buy out Lion shareholders. The name of the new company will be decided at Lion's annual meeting this fall. It will be headed by Alfred Bach, who is on the management
board of Axaron, and Peter Willinger, a Lion board member. The company aims to continue to expand through a combination of organic growth and acquisitions. "I see great potential in the area of life sciences and in its professional business development," Hopp says. "The products, the past performance, and the expertise at Axaron convinced me to invest in this company. In addition, I believe we have gained an experienced partner and strong platform in the financial market in the form of Lion." Axaron was founded in 1997 as a joint venture between BASF and California-based Lynx Therapeutics, nowSolexa, and became independent in 2001. Lion was founded in 1997 to focus on integrating data and information in the life sciences field. New managers restructured the company at the end of 2004.-PATRICIA SHORT
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