Shell pulls out of Chinese refinery plans

Warren R. True
Chief Technology Editor-LNG/Gas Processing

HOUSTON, Dec. 9 -- Royal Dutch Shell PLC reported last week it has withdrawn from talks with China Petroleum & Chemical Corp. (Sinopec) and Kuwait Petroleum Corp. that were to lead to construction of a $9 billion, 300,000-b/d refinery in China’s Guongdong province.

A Shell spokesperson told OGJ that, due to “strategic and commercial considerations, Shell has decided not to pursue the downstream opportunity currently in discussion between KPC and Sinopec.”

Regional media speculation agreed that the move opens the way for other international oil companies to join the joint venture. In its quoted comments, Sinopec made clear it would retain a 50% interest, leaving any other party to carve out a stake from KPC’s 50% interest.

Shell is seen as pulling away from new downstream ventures in favor of more oil and natural gas exploration and production.

A memorandum of understanding is in force between state-run KPC and Sinopec to build the refinery and petrochemical complex that will produce 1 million tonnes/year of ethylene. Kuwait is to supply all the oil for the project.

Chinese government approval for the project is expected in first-quarter 2010.

Contact Warren R. True at warrent@ogjonline.com.

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