Shell and CNOOC agree to expand China joint venture

Royal Dutch Shell and China’s largest offshore oil producer CNOOC reached an agreement to expand their joint venture ethylene cracker in their joint venture, amid a rapid growth in the ethylene demand in the world’s second-largest economy.

The pair set up the joint venture CNOOC-Shell Petrochemicals Co Ltd in 2000 and currently operate a $4.1 billion petrochemical complex known as Nanhai, in the Daya Bay of Huizhou in Guangdong province.

The new agreement is expected to add chemical facilities adjacent to the current Nanhai plant, which will increase their ethylene capacity by more than 1 million metric tons a year, about double the current capacity, China Daily reported.

Plans also include a styrene monomer and propylene oxide plant, which will become the largest ever built in China, it said.

CNOOC has already begun construction of the new complex, and commercial production is expected to start in around two years, said officials.

The expansion comes as China expects to add another 5.75 million tons of ethylene this year to the current production of 23 million tons.

China Daily quoted Dong Xiaoli of CNOOC as saying the expanded project is in line with China’s long-term reform of the petrochemical industry, which will see more mixed ownership of State facilities, most likely involving private and foreign investment.

“We will bring in advanced patented technologies owned by Shell on the project to meet domestic demand for high-quality petrochemical products,” said Dong, general manager of CNOOC Oil & Petrochemicals Co Ltd.

Graham van’t Hoff, executive vice-president for Royal Dutch Shell Plc’s global chemicals business, said that the agreement underlined the company’s confidence in the strong growth potential of chemicals in China, adding he is hoping for further collaboration with CNOOC.

Other planned Chinese ethylene projects include a 1.5 million ton/year methanol-to-olefins facility in the Ningxia Hui autonomous region owned by mining giant Shenhua Group Corporation Ltd, and two 1-million-ton-capacity sites planned by PetroChina Co Ltd, the country’s largest oil and gas producer, the newspaper said.

 

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