Shell, BP actively contending for refinery investments in China

27-Dec-07
The rivalry between Shell and BP to build refineries in China seems persistent. BP was shortlisted instead of Shell to participate in the 15 mln tpa refinery project in Guangzhou in partnership with Sinopec and Kuwait Petroleum Corporation (KPC). After a year, a one mln tpa ethylene unit attached to the refinery is being considered at a total investment of over US$5 bln. This hefty investment outlay will make the project exceed the US$4.3 bln investment in the China National Offshore Oil Corporation (CNOOC)-Royal Dutch Shell (Shell) joint petrochemical project in Huizhou City in Guangdong Province. Construction will be complete and production will start at the refinery in 2010. Upon completion, it will process 300,000 to 350,000 bpd of crude oil. BP and Shell are both quite active in seeking downstream oil projects in China. BP now holds 9.4% of the shares of China's currently largest refining and petrochemical company, Sinopec's Zhenhai Petrochemical Company. Shell holds 50% of the shares in the 800,000 tpa ethylene unit at CNOOC-Shell Petrochemical Company in Huizhou. Despite a failed attempt to become a partner in CNOOC's new refinery, Shell still forges ahead with its expansion plan. Its US$2.5 bln, 12 mln tpa oil-refinery project is being constructed at the site of its Huizhou ethylene plant to ensure the raw material supply to this ethylene-cracking unit.
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