Chinese oil major Sinopec said it has signed the joint venture contract with BP to build a $2.7 billion mega ethylene complex in Shanghai.

In a statement, Sinopec said the parties plan to form the joint venture in late September. It quoted Sinopec President Wang Jiming as saying the Shanghai project was "Sinopec's largest joint venture with BP".

Sinopec and BP have been partners in other chemical plants, and are in talks for joint venture gasoline retail business. The Chinese state giant said last week the project was approved by the State Council, China's Cabinet, on August 28.

BP would hold 50 per cent equity, Sinopec would own 30 per cent and its subsidiary Shanghai Petrochemical Corp would take 20 per cent.

The cornerstone of the project is a 900,000 tonnes per year (tpy) ethylene plant, which was expected to come on stream by 2005.