Sector News

Shell and CNOOC ink deal for $5.6-billion, phase 3 petchems complex in China

May 19, 2020
Energy & Chemical Value Chain

CNOOC Oil & Petrochemicals Co., a subsidiary of CNOOC (Beijing, China); Shell Nanhai, a Shell subsidiary; and the Huizhou, China, municipal government on Sunday signed a cooperation agreement to expand the CNOOC and Shell Petrochemical Co. (CSPC) 50/50 joint venture (JV) at Daya Bay near Huizhou, Guangdong Province, China, marking the JV’s phase 3 development at the site.

Due to coronavirus disease 2019 (COVID-19) pandemic travel restrictions, the agreement was signed in a virtual online ceremony, attended by officials including Party Secretary of Guangdong Li Xi; CNOOC chairman Wang Dongjin; Shell CEO Ben van Beurden; CNOOC vice president/downstream Chen Bi; and Huibert Vigeveno, downstream director at Shell.

The new agreement follows the signing in October 2018 of a memorandum of understanding (MOU) to explore expansion of the companies’ existing collaboration and the potential signing of a final investment decision (FID).

Shell has declined to reveal the expected investment cost but local reports put it at about $5.6 billion. Shell says it is too early to say when the FID will be taken. Naphtha feedstock will be supplied from CNOOC refineries, and from the domestic and international feedstock markets.

The project will include a naphtha cracker with capacity for 1.5 million metric tons/year (MMt/y) of ethylene, which will feed intermediates and polyolefins production facilities including propylene oxide/styrene monomer (POSM), polyols, ethylene glycol (EG), polyethylene (PE), and polypropylene (PP) units. Shell will for the first time in Asia apply its technology to produce linear alpha-olefins.

Thomas Casparie, executive vice president/global chemicals at Shell, says, “Our growth strategy is based on long-term chemicals demand. We are very selective in our investments, and this agreement underlines Shell’s confidence in both the chemicals business fundamentals and our strategic partnerships with CNOOC and the Huizhou government.” Van Beurden says the JV has developed into one of the largest and most competitive petrochemical facilities in China and the world.

The existing CSPC site was developed through two phased projects. Phase 1 started commercial operations in 2006 and the core 1.2-MMt/y ethylene plant within phase 2 started up in 2018, more than doubling CSPC’s ethylene capacity to 2.2 MMt/y and making it the largest single-site ethylene plant operating in China. It includes several units transferred to the JV from CNOOC. The site’s second POSM plant, which will be the largest in China, is under construction. The existing complexes convert a variety of liquid feedstocks into olefins and derivatives. CNOOC and Shell announced in January 2020 the signing of an MOU to explore construction of their first commercial-scale polycarbonate production unit at the site, which would mark Shell’s entry into this business.

ExxonMobil broke ground last month on a $10-billion petrochemical project at the nearby Huizhou Dayawan petrochemical park. ExxonMobil’s project will be built in two phases. The first phase, due for completion in 2023, will include a mixed-feed steam cracker designed to produce 1.6 MMt/y of ethylene, 1.2 MMt/y of PE, and 860,000 metric tons/year of PP.

By: Natasha Alperowicz

Source: Chemical Week

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