CNOOC Ltd and Royal Dutch Shell finalize investment in petrochemical complex in China

China National Offshore Oil Corporation CNOOC Ltd (ADR) and Royal Dutch Shell’s Nanhai BV company announced their final decision today on investing to expand their existing 50:50 joint venture in Huizhou China. The decision comes in continuation of the announcement of a Heads of Agreement in December last year between the two companies. The project, set to be taken over by CSPC, includes building a new ethylene cracker and ethylene derivatives units with the aim of boosting ethylene capacity by over 1 million tons per year. The facility would double ethylene capacity upon its completion. The CSPC plant is also going to include a styrene monomer and propylene oxide (SMPO) plant, the largest in China. Shell Petrochemical Company (CSPC) is set to take-over CNOOC’s ongoing project to build additional chemical plants next to CSPC’s complex in Huizhou, Guangdong province China, which is subject to regulatory approvals. Shell’s global chemical business Executive Vice President, Graham Van’t Hoff said: “I’m pleased to confirm that we are going ahead with this growth project. We are selective in our investments, and this decision underlines our confidence in the strong growth potential for chemicals in China. It will position Shell and our partner CNOOC well to help meet the growing needs of customers in this expanding petrochemicals market.” CNOOC’s General Manger Assistant and General Manager of CNOOC Oil & Petrochemicals Co. Ltd, Dong Xiaoli expressed his delight at Shell’s increased contribution to the project. Mr. Xiaoli believes that Nanhai petrochemical complex will support China’s long term petrochemical advancement plans. He thinks that Shell’s increased involvement in the joint venture will bring in top technology with improved value via integration with nearby CNOOC refineries, and aid in production of high quality petrochemicals for China’s ever increasing domestic needs. Shell is expected to bring in its trademark OMEGA, SMPO and Polyols technologies to the Nanhai Petrochemicals project. These technologies are forecasted to produce 150,000 tpa of ethylene oxide, 48,000 tpa of ethylene glycol and 600,000 tpa of high quality polyols. Shell’s increased involvement in the project is expected to enhance the volume and diversity of CSPC’s product range to nearly 2 million tons per year. It will also increase the overall energy proficiency of the project. The introduction of OMEGA and advanced polyols into the project is set to mark the first ever use of these high end technologies in China. CSPC’s safe and reliable factor site is currently engaged in conversion of a multitude of liquid feedstocks into olefins and derivatives. These products can also be used in different consumer goods including computers, plastic bottles and detergent liquids. CBN believes that with Shell set to take control of the CSPC plant in Guangdong China, it would mean better petrochemical returns for CNOOC. While Shell will get a chance to further diversify its business operations in China, CNOOC will benefit from the leading technologies from one of the world’s biggest and top oil companies in the world.