Saudi Basic Industries Corp (SABIC) said it signed Thursday a framework agreement with China Petroleum and Chemical Corp (Sinopec) to build an ethylene derivatives plant with an annual production capacity of one million metric tons.

The two companies would hold an equaling 50 percent stake in the $1.7 billion joint venture in northern Chinese port city of Tianjin.

The plant, construction of which was expected to be finished in September 2009, would be the first China joint venture for Saudi Basic Industries Corp.

It would produce 600,000 metric tons of polyethylene and 400,000 metric tons of ethylene glycol after going into operation, the Saudi Arabian-based chemicals giant said.

Sources with Sinopec has confirmed the news.

"China is an important market for SABIC's global strategy. The agreement is a key milestone towards realizing SABIC's goal of establishing a manufacturing center in Asia," said Mohamed Al-Mady, SABIC Vice Chairman and CEO.