With demand for increasingly sophisticated industrial locations in China soaring among big petrochemical companies, which are keen to get closer to China's many consumers but insist on sustainability, expansion of the Nangang Industrial Zone in Tianjin is coming at just the right time.
Nangang, which is part of the Tianjin Economic-Technological Development Area (TEDA), was opened in 2009 and covers an area of about 200 km2 including a port on the coast of the Bohai Sea. TEDA, voted China's top development area for 14 years in a row, aims to turn it into the country's leading center for oil and energy-related industry.
"Nangang is the newest blueprint building upon the nearly 30 years operational knowhow and service knowhow to enterprises in TEDA," said TEDA's director He Shushan. "I believe Nangang is going to be another great success in terms of scientific industrial planning and a benchmark safe, harmonious, green and ecologically-pleasant park. It's going to be a satisfactory investment environment for all those investors who are committed to the next leap."
Investment in Nangang, located less than an hour east of Beijing by high-speed train, will top 800 billion yuan in the first three to five years and has created an integrated industrial chain from unrefined oil through the refining process and onward to sub-industries such as marine chemicals and derivative industries such as synthetic resin and new materials, Shushan said.
In 2011, companies already located in Nangang (and Tianjin) produced a combined industrial output of 500 billion yuan, of which 20 companies contributed more than 10 billion yuan of industrial output each. Some 35 million tons of unrefined oil were collected from Nangang, while reservations of both refined and unrefined oil came to 20 million tons. Nangang has a refining capacity of 22 million tons. Ethylene capacity hit 1.2 million tons.
And more companies are coming. In August, Shell Lubricants announced it would build a new, state-of-the-art lubricants blending plant in Nangang with a capacity of 300 million liters per year initially and the potential to expand to 500 million liters.
Shell estimates the Asia Pacific region will account for more than half of global demand for lubricants. Almost half of that demand will come from China, which will replace the US as the world's biggest lubricants market in 2015, driven by the expected tripling over the next decade of the number of vehicles on Chinese roads to half a billion and by infrastructure development in general.
"Success in the lubricants business is about being close to the customer and offering the right products and services in the right places," said Mark Gainsborough, executive vice president of Shell Global Commercial. "Shell’s new investments in the supply chain, innovation and brand are what this is all about."
The company's high-tech plant will be designed to meet high environmental standards including measures to reduce waste and carefully control waste disposal to ensure no harm to the environment, it said.
Like Shell, other big petrochemical companies are also searching for a sophisticated and sustainable base in China, where rapid industrialization has put pressure on the environment and where water resources are unevenly distributed.
"We see great opportunities in China, namely the market, feedstock and technology," said Jean Viallefont, Total Refining & Chemicals' vice president for Asia, speaking at the China Petroleum & Chemical International Conference in Tianjin in September.
"We also see challenges, including sustainability, energy efficiency, water consumption and environmental concerns. [In China,] high-end projects are most preferred."
The effort to tackle such challenges is relatively new – but that means there is an opportunity to use the latest technology, according to Ed Rightor, director of strategic environmental projects at Dow Chemical.
"The emergence of industrial parks in China where energy can be shared and processes be highly integrated is relatively new," he said. "Additionally there's an opportunity for by-products of one process to be used as an input at another process which further improves efficiency. While this model has been applied elsewhere, new facilities have the opportunity to improve upon it with the best practice technology and operations."
Nangang's designers have scoured the world's top industrial parks to bring international best practices to Tianjin, Shushan said, with recycling a priority and low carbon clean manufacturing approaches in line with the most advanced international standards. The industrial zone is also constructing an energy-cogeneration public utility island to handle water, power, steam, gas, and waste.
Furthermore, Nangang aims not just to attract individual companies but industrial clusters as a whole. The resulting synergies between companies, which see one company making use of another company's waste products, both reduce pollution and save on raw materials.
"We are collaborating with the China Petroleum and Chemical Industry Federation (CPCIF) to start an accountability and care programme," said Shushan. "This means Nangang is the first park to make each constituency accountable for its social and environmental responsibility."
The efforts of Nangang and other industrial areas in China to focus on efficiency and clean manufacturing are also creating opportunities for companies in those sectors.
"In Germany we are really spoiled, we take these things for granted," said Rolf Fricker, partner at Munich-based consultancy Booz & Co, speaking about Nangang's steam recycling system. "But In China we have thousands of examples where there might be the possibility to save energy."
With its sophisticated infrastructure now taking shape, Nangang is attracting more big-hitting companies. By August, it had secured the arrivals of giants such as Dow Chemical, Shell, Rosneft, SABIC of Saudi Arabia, Air Liquide and Chinese State-owned enterprises such as Sinopec, PetroChina, CNOOC, Sinochem, Datang and China Salt. Huge projects including national and commercial crude oil reservoirs, a Sino-Russian refinery and a Sino-Saudi polycarbonate project are also underway.
As the global behemoths rumble in, Nangang's port has been expanded to include two new basins that can handle 12,000 ton tankers and another four basins that can take 20,000 ton super-tankers are under construction.
Nangang's coastal location means good connections between international and domestic Chinese markets, with good connections to western and north-eastern regions and a sizable local market thanks to the proximity of big cities such as Beijing and Tianjn with populations approaching 20 million each as well as more than 10 medium-sized cities such as Shijiazhuang and Qinhuangdao with populations of several million.
For Shushan, Nangang represents a more efficient and sustainable future not just for TEDA, China's first development zone, but for the country as a whole. And such a future would, he said, also be a prosperous one.
"In the 28 years TEDA has taken the view of making investors king, having the projects as the lifeblood and enabling investors to make profits," he said. "This approach is aimed at making TEDA the most successful economic frontline in northern China."
