CNOOC, Shell to build world-scale petrochemical complex in China

By OGJ editors

HOUSTON, Nov. 6 -- China National Offshore Oil Corp. (CNOOC) and Shell Petrochemicals Co. Ltd. units have agreed to proceed with the joint venture construction of a $4.3 billion world-scale petrochemical complex in southern China.

The decision followed the completion of a 20-month definition phase during which the JV finalized basic design engineering packages, updated an environmental and social impact assessment, prepared bid packages for the engineering, procurement, and construction phase of the project, and arranged financing.

The JV also has called for bids and expects to award before yearend major contracts having a total value of more than $1 billion for the process plants, plant automation, and project management services. Major construction work is expected to start early next year on the 430 hectare site at the Daya Bay Economic and Technical Development Zone in Guangdong Province, with start-up slated for late 2005.

Shell Nanhai BV and CNOOC Petrochemicals Investment Ltd. (CPIL), each with a 50% shareholder interest, signed a JV contract in October 2000. CPIL is 90% owned by CNOOC and 10% by the Guangdong Investment & Development Co.

Project details
Major features of the project are an 800,000 tonne/year (t/y) ethylene cracker, a 560,000 t/y styrene monomer and 250,000 t/y propylene oxide plant, a 320,000 t/y ethylene glycol plant, and a 240,000 t/y polypropylene plant. The complex also will contain a high-density, 200,000 t/y polyethylene plant with capability to produce linear low density polyethylene and a low-density, 250,000 t/y polyethylene plant with integrated support facilities and utilities. The entire complex has been designed to international standards to protect the environment and use energy and material efficiently.

A consortium serving as project manager will help manage the project until the plant starts up. It is composed of Bechtel Group Inc., Sinopec Engineering Institute, and Foster Wheeler Corp. (OGJ Online, Mar. 15, 2001).

When the complex is completed, the JV will produce about 2.3 million t/y of products, generating up to $1.7 billion in products sales, primarily supplying customers in Guangdong and the high consumption areas of China's coastal economic zones. The project is expected to strengthen industrial development in Huizhou, attract secondary manufacturing and service industries, and create job opportunities directly and indirectly.

"Daya Bay has a good investment environment and market prospects, and this project can greatly contribute to the economic development of China's East Coast," CNOOC Pres. Wei Liucheng said. "I believe that working together with the local government and Shell, we can build a world-class petrochemical plant, (and) create a pool of talent with an international mindset. . ." he said.

"This project has an excellent fit with CNOOC's long-term global strategy to develop its downstream business, and it is an important step forward for CNOOC in its aim to be an international petroleum company with good integration of its upstream and downstream business," he added.

Evert Henkes, CEO of Shell Chemicals Ltd., also said he was pleased that the project is going ahead on schedule. "Nanhai has an excellent fit with Shell Chemicals' global strategy to focus on the production of major petrochemical building blocks and polyolefins to large industrial customers," he said.

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