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Shell and CNOOC to expand petrochemical complex in China

15th January 2016

Shell and China National Offshore Oil Corporation (CNOOC) have signed a Heads of Agreement (HOA) to expand their existing 50:50 joint venture (JV) in Huizhou, Guangdong Province, China.

Shell petrochemical complex in China
Shell petrochemical complex in China

Under the HOA, subject to final agreements and regulatory approvals, Shell is expected to join an ongoing CNOOC project to develop additional chemicals facilities next to the JV’s existing Nanhai petrochemical complex, which will be owned and operated by the existing JV. 

The HOA includes the ongoing construction of an ethylene cracker and ethylene derivatives units, including a styrene monomer and propylene oxide (SMPO/PDO) plant. The new cracker will increase Nanhai’s ethylene production capacity by over 1 million tonnes per year, about double its current capacity.

“The expansion of the Nanhai petrochemical complex supports the Chinese long-term petrochemicals strategy. CNOOC and Shell are long-term partners. We’re delighted that Shell will contribute to the project and our joint venture with industry-leading technology to produce petrochemicals for China’s growing domestic markets,” said Yang Hua, Chairman of CNOOC.

As part of the HOA, Shell will apply its proprietary OMEGA and SMPO/POD technologies to produce ethylene oxide and ethylene glycol, increasing volumes and range of Nanhai’s high quality products, as well as enhance overall energy efficiency.

Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc, said: “This agreement demonstrates our confidence in the Shell-CNOOC partnership and our ongoing commitment to China, after over 100 years of Shell operations in country. It also underlines our confidence in the strong growth potential for chemicals in China. We look forward to further collaborations with CNOOC and growing together with all our business partners and customers in China.”

CNOOC has already begun construction of the new petrochemical complex and commercial production from the new facilities is expected in around two years’ time. The expansion would increase the total ethylene production at the Nanhai petrochemical complex to around 2 million tonnes per year. The site, with a strong track record of reliable and safe operations, converts a variety of liquid feedstocks into ethylene and derivative products, which are used in a wide range of consumer goods, including computers, plastic bottles, and washing liquids.

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