Sinopec puts hold on $3.1 bln Qingdao ethylene project -source

BEIJING, April 28 Mon Apr 28, 2014 6:33am EDT

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BEIJING, April 28 (Reuters) - Sinopec Corp has held up a $3.1 billion ethylene plant in east China's Qingdao, after a fatal pipeline blast last year threw into question whether the city is environmentally viable for the petrochemical complex, a company source said on Monday.

The explosion last November in the bustling coastal city of Qingdao killed 62 and exposed the danger of sprawling urban development that often conflicts with industrial planning by engulfing oil and gas infrastructure.

"It (the project) has been put on hold for now," said the Sinopec source.

"Sinopec is waiting for the government's final word on it," the source said.

The delay on the project also comes amid concern about demand growth in China's petrochemical sector and new competition from U.S. shale gas crackers.

Sinopec spokesman Lu Dapeng, when asked about the status of the Qingdao project, said: "There is no official verdict yet on that."

But Lu added that there is no timeline for when construction will start on the plant, which received environmental clearance last June.

Huangdao, part of Qingdao municipality, already hosts a 200,000-barrel-per-day Sinopec refinery and a 700,000-tonnes-per-year paraxylene plant built by Korean and Omani companies.

Huangdao is also the site of one of China's first strategic petroleum reserves.

Sinopec's Qingdao ethylene plant was to be its first designed to use natural gas and LPG as a feedstock. (Reporting by Chen Aizhu; Editing by Tom Hogue)

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