With demand for increasingly sophisticated industrial locations in China soaring among big petrochemical companies keen to get closer to the country’s many consumers, 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) according to the Tianjin Municipality blueprint, was opened in 2009 and covers an area of about 200 sq km, including a port on the coast of the Bohai Sea. TEDA, voted China’s top development area for 15 years in a row, aims to turn it into the country’s leading centre for energy and chemical-related industry.
Its executives say Nangang has fostered a complete industrial chain comprising crude oil production, refinery, ethylene, synthetic resin, chemical new materials, and fine chemicals. In addition to being an industrial base for the petrochemical industry, they want Nangang to serve as a national energy reserve and a showcase of environmentally friendly development for the rest of China.
By 2015, TEDA executives believe Nangang’s overall industrial output will rise to approximately USD 24.5bn.
The park is already home to multinationals such as Dow Chemicals, Shell, Rosneft, Air Liquide, Veolia Water, Odfjell, and Sembcorp, and Chinese giants such as Sinopec, PetroChina, CNOOC, Sinochem, Datang, and China Salt.
Nangang is the newest blueprint building upon the nearly 30 years operational knowhow and service knowhow to enterprises in TEDA. TEDA executives 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.
China is the world’s biggest energy consumer, burning through more than Russia, India, Japan and Germany combined. And the country is also a rapidly growing market for petrochemical products such as marine chemicals, synthetic resin and new materials.
Firms such as Shell believe the Asia Pacific region will, for example, account for more than half of global demand for lubricants. Almost half of that demand will come from China, which is predicted to 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.
As a result, demand for increasingly sophisticated industrial locations in China is soaring as big petrochemical companies are keen to get closer to China’s many consumers but insist on sustainability. This means Nangang’s focus on strict safety and environmental management and sustainable development is vital to its success.
China has a patchy overall reputation for safety, but Nangang is determined that it will measure up to the world’s top-performing petrochemical parks. The park signed up to the Responsible Care (RC) programme, the global chemical industry’s environmental, health and safety (EHS) initiative to drive continuous improvement in performance.
RC has existed since the 1980s and claims to go beyond legislative and regulatory compliance, and thereby builds confidence and trust in an industry that is essential to improving living standards and quality of life.
Nangang is now the only petrochemical park in China that insists all of its petrochemical tenants commit to RC. The Nangang team measured the park’s performance against counterparts in Germany (e.g. Ludwigshafen), Singapore (e.g. Jurong) and US (e.g. Houston) and drew up overall risk management strategies and sub-policies which guide the park’s daily operations.
The Nangang team has located 63 “critical control points” and developed 102 contingency plans that are frequently rehearsed. The park also allocates strong resources on specialised disaster response equipment, with over 10 special fire stations planned to be built. The latest-established fire station, for instance, has 14 fire trucks and a portable, specialised water supply system.
“We understand that first-rate global investors in the petrochemical industry are more stringent towards safety and environment-friendliness than otherwise,” says Yuan Jie, vice-executive chief of the Administration of Work Safety (SAWS) Bureau at TEDA/Nangang. “We want to attract the first rate investors. Our environmental friendliness is partly done to help raise our attractiveness to first-rate investors.”
“More importantly, adopting RC helps build the capacity of Chinese companies and so renders them more able to break through the ‘green barriers’ that often appear when they target overseas markets. If we can develop the expertise to get over these barriers, then Chinese companies will have more potential partners to work with and it’s healthier for their global integration efforts,” Yuan Jie adds.
Chris Faulkner, CEO of Breitling Energy Companies, says China should learn from the US.
“I think China has to adopt a responsible care program and learn from our mistakes in the early days of our oil and gas development in North America,” he says.
“It’s never too soon to start engaging stakeholders, and that includes the public. There must be a full commitment to continuous improvement in all aspects of a company’s environmental, health and safety performance, which ensures openness about our activities and achievements along the way. Everyone must be in the loop in order for all of us to succeed.”
Companies in Nangang get incentives to meet RC requirements and there are also plans for sanctions on those companies that miss targets.
Globe Express Services is a specialised logistics service provider for the petrochemical industry. It had its RC program profiled during the latest press conference on Nangang Responsible Care Annual Report of 2012. The company allocated 3.2 per cent of total investment to environment protection facilities, including ventilation systems, environment risk-detection, contingency plans, pollution alleviation facilities and the planting of greenery.
There are also regular training workshops to share best practices between companies. At one such event last year, Dow Chemical gave a presentation on transparency, while Clariant focused on how to conduct better self-assessment. At another, BlueStar Tianjin Chemical Co.’s EHS director came to deliver a presentation to 20 tenant representatives on “The Importance of Top-Leadership-Commitment to RC and How to Make the Top-Down Approach Effective in Implementing RC”
Challenges and Opportunities
But Yuan Jie freely admits that challenges remain.
“The incentives and guidelines are not yet legally-binding policies, so we need state-level policy support to better implement RC. It takes time for stakeholders to gain awareness, become committed and develop the skills for RC. We also need more industry-specific and even specialty-focused key performance indicator systems to improve the evaluation of RC.”
However, Breitling Energy’s Chris Faulkner says it’s important that responsible care is enshrined in the overall industrial approach.
“There’s just no getting around the fact that our energy needs far outstrip our ability to generate energy from alternative sources. Where we especially need to do better is in communicating our plans and our achievements in new technology innovations that are reducing our environmental impact,” he claims.
“To earn that social license to grow, we must engage with the public and demonstrate that we’re committed to balancing the social, economic and environmental issues related to energy expansion so that we can deliver on both our own and our country’s high expectations.
To this end, Nangang industrial zone is also constructing energy-cogeneration public utility system to handle water, power, steam, gas and waste.
Furthermore, attracting industrial clusters as a whole leads to synergies between companies that see one company making use of another company’s waste products. This both reduces pollution and saves on raw materials.
“The emergence of industrial parks in China where energy can be shared and processes highly integrated is relatively new,” says Ed Rightor, director of strategic environmental projects at Dow Chemical.
“There remains some opportunity for heat integration and this could yield additional efficiency if that is executed at this industrial park. 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.”