By WAYNE MA

BEIJING -- China Petroleum & Chemical Corp., also known as Sinopec, and BASF, the world's largest chemical company by sales, signed a preliminary agreement on Tuesday to build a "world-scale" iso-nonanol plant in southeastern Guangdong province.

Iso-nonanol is primarily used in plastics manufacturing.

It ultimately ends up in products such as wires, cables and flooring, and in the automotive, building and construction sectors, Sinopec said in a statement, without specifying the proposed plant's capacity.

At the moment, China relies exclusively on imports of iso-nonanol mainly from Germany and Singapore, Sinopec said, adding that China imported 318,600 metric tons of the chemical in 2011.

Under the memorandum of understanding, the financial terms of which weren't disclosed, Sinopec and BASF will each take a 50% stake in the joint venture and will also jointly operate the facility, which will be located in the Maoming Hi-Tech Industrial Development Zone, according to the statement.

A joint feasibility study for the project is expected to be completed by the end of this year, Sinopec added.

Sinopec and BASF already jointly operate a petrochemical plant in the eastern city of Nanjing, it said.

Dow Jones Newswires