UK-based chemical and energy group INEOS has signed a series of agreements with Chinese oil and gas company SINOPEC to establish a large footprint in China.

The agreements represent assets with a combined capacity of seven million tonnes per annum, and worth nearly $7bn.

Under the terms of the first agreement, INEOS will acquire 50% of Shanghai SECCO Petrochemical Company (SECCO), a subsidiary of SINOPEC.

SECCO manufactures ethylene, propylene, polyethylene, polypropylene, styrene, polystyrene, acrylonitrile, butadiene, benzene and toluene, with a 4.2 million tonnes capacity.

As per the second agreement, INEOS and SINOPEC will establish a 50:50 joint venture (JV) to manufacture the Acrylonitrile Butadiene Styrene (ABS), using its unique ABS technology.

The JV partnership will develop the 600ktpa Ningbo facility, which is currently under construction, with plans to further expand its capacity by 600ktpa.

Pursuant to the third agreement, INEOS and SINOPEC will also establish a 50:50 JV to build a new 500ktpa high-density polyethylene (HDPE) plant in Tianjin, China.

In addition to the Tianjin plant, the JV also plans to build two additional 500ktpa HDPE plants in the future to produce INEOS pipe grade under license.

INEOS chairman and CEO Sir Jim Ratcliffe said: “These agreements significantly reshape INEOS’ petrochemical production and technology in China.

“We are pleased to make these major investments with SINOPEC in areas that provide the best growth opportunities for both companies. Both parties recognise the potential for closer collaboration across a number of other areas as we look ahead.”

INEOS said that China is a key region for its growth and the three agreements will significantly strengthen its petrochemicals production and technology in the country.

All three transactions are expected to complete before the end of the year, subject to regulatory approvals and other conditions.

INEOS intends to finance the transaction through a combination of internal cash resources and external financing.