The loan will account for around 60% of the investment in the project and is the largest financing of a private project in the Asia-Pacific region and the largest single foreign investment in China's history.

The remainder of the $US1.8 billion investment will be shared equally between the partners.

The plant, to be located in Huizhou in South China's Guangdong Province, is due to begin operations in 2005. By then, it is expected to be able to make 800,000 tons of ethylene and 2.3 million tons of chemical products a year.

Chinese banks will lend $2 billion while $700 million will come from eight banks including the Japan Bank for International Cooperation, the Export Import Bank of the United States and Gerling NCM of the Netherlands according to the China Daily.

"The financing for the project has set a benchmark for financing in the Asia-Pacific region," the China oil corporation said in a statement yesterday.

Chinese banks have also pledged an additional US$250 million in loans to be used when the construction of the project is near completion. It is likely to increase the total loans to US$3 billion, said a statement from CNPC.

According to the statement, annual sales of the JV are expected to reach 1.7 billion yuan (US$205 million) upon completion of the project.

China currently imports half of the ethylene it needs to be used in products ranging from compact discs to clothing.